As Russia’s determination to place Moscow firmly on the map alongside the world’s premier and established financial centers, the city’s major excecuting venue, Moscow Exchange, has today announced that it has sold its stake in MICEX-IT for 440 million rubles.
Cross-Sector M&A Transaction
Unlike the wealth of other mergers and acquisitions which have taken place recently in the electronic trading industry, the buyer is not an industy peer, instead being fabrikant.ru, which is a business to business online market place which offers its commercial users the ability to conduct the procurement of goods and services to industry via its online portal.
Moscow Exchange has increased its availability by using dedicated point-to-point connections provided by Canadian infrastructure provider TMX Atrium during the course of last year, with demand from Russian FX traders to access western low-latency infrastructure resulting in investment in high speed connections between Moscow and Frankfurt as well as Moscow and London.
This also has afforded Western traders to access Moscow Exchange with latency standing at 40 milliseconds between London and Moscow, and 120 milliseconds between Chicago and Moscow according to TMX Atrium’s provision of data to Forex Magnates, increasing the viability for trading desks wishing to access the increasingly popular ruble liquidity pools.
As last year drew to a close, Emmanuel Carjat, Managing Director of TMX Atrium, explained to Forex Magnates that, “The amount of FX trading is increasing massively within Russian venues. Banks are looking to get access to Russian liquidity, and all of the world’s Tier one banks have announced that they are going back to Russia.”
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When considering this particular interest among those creating the demand for FX executed at the Moscow Exchange, it is worthy of note that market participants and central banks alike played a significant part in making the ruble more attractive simultaneously to the increase in accessibility of the venue, first of all with major FX firms such as Saxo Bank adding ruble pairs to tradable instruments, followed by Russia’s Central Bank having widened the free-float range to three rubles.
Venue Set for Future of FX?
Whilst Moscow Exchange has not divulged its reason for offloading MICEX-IT, a point of interest is that this particular division of the company is an operator of the MICEX electronic trading floor under the name of Goszakupki which is dedicated to state purchases.
This is one of five electronic trading floors which are accountable directly to the public sector, and whose activity is determined by the Economic Development Ministry of the Russian Federation, and is used primarily to conduct state and municipal orders.
With this business unit being sold for such a transaction cost, and the venue having invested significantly in making itself more attractive for currency trading, this could be a corporate direction to watch closely.
“There is a real desire to make the ruble a reserve currency,” explained Mr. Carjat during a conversation with Forex Magnates late last year. “In order to do this, the Russian venues and government are putting everything in place from an infrastructure perspective, so that the ruble can really be considered a reserve currency.”