Moscow continues to show its commitment to making further inroads into competing with other regions with the offering of OTC derivatives on its executing venues.
This week, Moscow Exchange announced its ability to clear OTC derivatives via a qualified central counterparty (CCP) which is intended to allow banks and dealers to clear a series of asset classes including FX and cross-currency swaps.
The counterparty which will be used is the National Clearing Centre (NCC), which just last week became Russia’s first qualified CCP subsequent to an announcement by the Central Bank of Russia (CBR) on October 18, that the NCC’s management quality met the requirements for banks acting as CCPs to be recognized as a qualified CCP.
This week’s introduction of OTC derivatives clearing, according to the Moscow Exchange, will reduce participants’ capital requirements and increase profitability due to more efficient liquidity management.
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New instruments were introduced on 28 October; interest rate swaps on RUONIA, MOSPRIME and LIBOR rates, USD/RUB cross-currency swaps, and USD/RUB FX swaps with maturities from intraday to five years. The exchange expects to offer clearing of OTC FX and Equity options next year.
Centralization of OTC derivatives is part of Russia’s commitment at G20. The CBR and commercial banks, including Sberbank, VTB Bank, Deutsche Bank, Credit Suisse, Raiffeisen Bank, Promsvyazbank, ING bank, UniCredit Bank and Metallinvestbank, were integral to the project implementation.
Moscow’s executing venues have been gaining popularity this year, as demonstrated by an increasing demand for dedicated connectivity between London and Moscow, marked out by infrastructure firms such as TMX Atrium having gradually expanded Points of Presence connectivity during the course of the year, connecting some the world’s largest financial centers to Moscow’s continually evolving electronic trading facilities.