FX Swaps Leads Drop in MOEX Turnover as Spot Volume Goes Off-Script

Spot volumes in particular continue to surge and the momentum seen throughout March had continued into April.

Currency trading at Moscow Exchange (MOEX) halted its upward route in April as volatility calmed relative to March when coronavirus fears sparked a wave of speculation and hedging activity.

The meltdown in financial markets over the virus has sparked a jump in MOEX’s FX trading volumes in March to RUB 36.30 trillion ($486 billion). This figure was up 50 percent month-over-month from the RUB 24.1 trillion ($366 billion) that exchanged hands in February 2020. Still, the Russian bourse has just reported a 20 percent drop in its monthly volumes, which came in at RUB 29.1 trillion ($393 billion) in April.

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Compared with volumes from the same month a year earlier, April’s reading was slightly lower in Ruble terms when weighed against RUB 30.8 trillion in April 2019.

Average daily volumes reached RUB 1.23 trillion ($17.6 billion) in the last month, down 24 percent against RUB 1,727 billion ($31.6 billion) in March, Moex said in a statement. Year-over-year, the ADV figure was down 20 percent in dollar terms from RUB 1.40 trillion ($21.7 billion) in 2019.

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MOEX consolidates local market

Delving further into the details, April turnover included spot trades of RUB 8.8 trillion, up from RUB 7.2 trillion in March, and ‎swap trades coming in at RUB 20.4 trillion compared with RUB 24.6 trillion ($316 billion) the previous month.

The metrics show that spot volumes, in particular, continue to surge, and the momentum seen throughout March had continued into April. On the other side, the drop in MOEX’s FX turnover is primarily caused by the fall in FX swaps, used mostly for liquidity management and hedging of foreign currency portfolios. In 2019, the foreign exchange swaps accounted for nearly 50 percent of the total FX market turnover, according to the BIS triennial survey.

Amid concerns over the economic impact from the coronavirus outbreak, there was a brighter side for FX platforms, which attracted a rush of business as investors scrambled to protect portfolios.

MOEX, in particular, continues to develop its infrastructure as part of a state-backed drive to make Russia’s largest institutional trading venue one of the world’s leading financial hubs. Most recently, the exchange acquired a minority stake in BierbaumPro, which owns proprietary OTC FX platform NTPro.

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