Plans for Joint Moex-EBS USD/RUB Benchmark Rate Fix Postponed Indefinitely

After two years of discussions, ICAP's EBS and the Moscow Exchange fail to agree on mutually accepted terms for launching

moex_logoIt was reported today that plans to launch a joint USD/RUB benchmark by the Moscow Exchange (Moex) and electronic trading platform EBS have failed. This comes after two years of discussions between the two sides on how such a benchmark rate should be calculated and published. Moex has reportedly already started pushing ahead with the development of its own independent benchmark.

“We’ve decided to postpone the launch of a joint Moex-EBS RUB fixing. There are no ideas at the moment about how and when it can happen. We’re focusing on the development of the Moex FX Fixing. It’s already used in our FX futures and some other exchanges are interested in it,” Igor Marich, head of money markets at Moex in Moscow, was quoted by FX Week.

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EBSEBS originally unveiled plans for a USD/RUB reference rate in partnership with Moex in April 2013 at the biennial International Ruble Settlement Forum, in response to concerns about the incumbent benchmark for the currency pair provided by CME and the Emerging Markets Traders Association. But according to the report, the talks stalled and the process suffered from repeated delays and eventually the support for the project died out. The main point of contention was about which of the two organizations would operate as the fixing agent.

Moex is also said to have been uncomfortable with allowing the information services arm of EBS’s parent company, the global inter-dealer broker ICAP, to take data from both EBS and Moex to calculate the reference rate. Additionally, ICAP Information Services reportedly wanted to charge a 2% revenue fee from EBS and Moex, which might be a standard practice in benchmark arrangements but the Russian venue was not eager to pay. The organizations were initially able to overcome some of their disagreements and develop a USD/RUB reference rate that has never been published. Although they could have used alternative fixing agents to overcome the impasse, the cooperation has proven fruitless.

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