After record trading activity in the Yuan-Ruble market in September, a leading financial institution from China has reported that it is co-operating with Russia’s main financial cash and derivatives exchange. The Moscow Exchange (MOEX) and Bank of China have signed a cooperation agreement aimed at expanding collaboration between the Russian and Chinese financial markets.
The landmark collaboration follows on from increased volumes in the benchmark CNY RUB contract, coupled with recent news from the BRICS Summit which saw leaders of the five nations plan a new development bank. Bank of China President Chen Siqing and Moscow Exchange CEO Alexander Afanasiev signed the agreement during an official visit between the Chinese and Russian Prime Ministers.
“This bilateral agreement on strategic cooperation between Bank of China and Moscow Exchange will help to expand clearing and settlement transactions in our countries’ national currencies. Bank of China and Moscow Exchange will implement the projects outlined in the agreement, as well as expand the existing CNY product line. Bank of China (Eluosi) in Russia, with support from the head office, will continue its cooperation with Moscow Exchange,” said the CEO of Bank of China Zhao Lianjie.
The Chinese-Russian friendship took heed in 2010 when Bank of China became a market maker on the CNY RUB contract, since inception the contract has gradually increased its position as a leading hedging instrument on the exchange. Over 50 Chinese banks are registered in Russia to offer special-purpose accounts for Yuan transactions. The Chinese Renminbi has seen an overall increase in its global ranking according to the last BIS FX Survey issued in 2013.
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MOEX reported that in September the total CNY/RUB trading volume increased 60% month-on-month to $1.06 billion, a record monthly figure. The average daily trading volume in September set a record at $53 million. The exchange also reported that one hundred and thirty members executed yuan trades in 2014.
“The cooperation agreement between Moscow Exchange and Bank of China will take our collaboration to a new level, helping to develop the Russian and Chinese capital markets. Together we plan to create new products, including derivatives instruments. Moscow Exchange and Bank of China will work together on programmes that will allow Russian and Chinese investors to use a wider array of financial instruments denominated in the Russian ruble and the Chinese yuan.
This will help us to meet demand from our clients, who are increasingly using these national currencies for international trade and on global financial markets. Growing CNY trading volumes on the Moscow Exchange are further evidence of this, ” said Moscow Exchange CEO Alexander Afanasiev in a statement.
Bank of China’s President Chen Siqing, visit coincides with China’s Premier Li Keqiang visiting his BRICS counterpart, during his stay Mr Keqiang signed a new deal with Russia which will enhance the two countries cooperation on various areas which include energy and a currency swap which is valued at $25 billion. The move gives Moscow some comfort from the hurdles it faces from the ongoing pressure from the EU and US on the Ukraine conflict.