MOEX Rolls Out New Risk Management, Trading Alterations to Offering

MOEX has built up for a number of changes to its offering this summer, including new pairs and risk management

Moscow Exchange (MOEX) will be altering a number of its services and product offerings in the foreign exchange (FX) space, which will see a variety of changes to its futures contracts as well as a new currency pair, among other differentiating factors, per a recent MOEX statement.

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MOEX’s FX volumes have been on the rise recently, as illustrated in its monthly turnover report published earlier this month. On the back end of increased demand, MOEX has opted to expand a number of opportunities and capabilities to FX market participants, which will collectively aim to improve risk management capabilities for venues and clients.

New Additions

The range of changes seen to MOEX’s offering will take effect only on July 4, 2016. Of these changes, MOEX will offer new deliverable futures contracts on USD/RUB, EUR/RUB and CNY/RUB currency pairs. In particular, the contract lot will be stipulated at 100,000 currency units, with a tick size of RUB 0.01 for USD/RUB and EUR/RUB and RUB 0.001 for CNY/RUB.

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Moreover, MOEX has also chosen to unveil a new currency pair for market participants, as it will now be offering the CHF/RUB pair – the primary impetus behind the launch will be to help calculate risk parameters for CHF-denominated bonds, in essence making the currency eligible as collateral.

Finally, MOEX will be beefing up its risk management capabilities, which will include provisions for its collateral requirements. Given an inter-product spread, opposite positions in EUR and USD collateral requirements will be reduced, helping enable trading firms to mitigate their respective funding costs.

MOEX will also aim to help appropriate client risk in the form of trading account registration – this will result in the registering of second and third tier client accounts, tapping into MOEX’s panel of risk management tools.

Alexander Afanasiev, CEO, MOEX
Alexander Afanasiev, CEO, MOEX

According to Alexander Afanasiev, Chief Executive Officer (CEO) of Moscow Exchange, in a statement on the new initiative: “In recent years, Moscow Exchange’s FX Market has transformed from a segment of the domestic interbank market to the global trading platform for ruble operations. Today, it is the main marketplace for FX transactions and the centre for establishing the national currency rate.”

“The market enhancements we are announcing today will create new business opportunities for market participants and their clients in FX trading and risk hedging, with fast and effective technology providing new strategies to combine spot and long-tenor FX instruments. This will facilitate market liquidity, and reduce costs and risks for Russian and international participants,” he noted.

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