The MICEX has worked out the draft Trading Agreement, prepared in the framework of the project to transfer clearing functions in the exchange-based currency market to the National Clearing Center (NCC). Soon, the MICEX will submit the draft Trading Agreement to the Bank of Russia and leading operators in the exchange-based currency market. Under the Agreement, the MICEX incurs subsidiary liability before participants in the UTS for the obligations of the NCC in trading in the UTS. The extraordinary general meeting of shareholders of the MICEX decided that if the NCC fails to fulfill its obligations, the amount of the MICEX’s liability before participants in trading in the UTS should be 2.6 billion rubles (about 100 million US dollars).
At present, the MICEX is transferring the functions of clearing in the exchange-based currency market to the newly-established affiliate company The National Clearing Center. In the framework of this project, the NCC will act as central counterparty in transactions. This required the preparation of a new set of agreements for the exchange-based market, one of the key elements of which will be the Trading Agreement. The main terms of the Trading Agreement were adopted by the extraordinary general meeting of shareholders of the MICEX, held 27 April 2007.
The Trading Agreement establishes the order and the terms of purchases and sales of foreign currency in the UTS with the use of the analog of manual signature. It also states the MICEX’s liability with regard to securing the fulfillment of the NCC’s obligations for transactions, concluded in the course of the UTS, in case the NCC fails to fulfill appropriate obligations itself.
This Trading Agreement will be one of the key elements of the set of agreements on which the NCC bases its work. Another important element is the tripartite agreement concluded by the Bank of Russia, the MICEX and the NCC. This agreement regulates the participation of the Bank of Russia in additional sessions. The new tripartite agreement is the logical development of the current agreement concluded by the Bank of Russia, the MICEX and the MICEX Settlement House.
The MICEX continues to increase the capital of the NCC, which is expected to grow from today’s 235 million rubles to 700 million rubles in the nearest future. The stated capital of the NCC is 1.5 billion rubles.
According to the MICEX President Alexander Potemkin, the new decisions show that the MICEX is prepared to considerably modernize the system of clearing in the exchange-based currency market. After the Trading Agreement with participants in trading is signed, the functions of clearing in the exchange-based currency market will be transferred to the NCC (in July this year).
Brief information:
The National Clearing Center (NCC) was established on 24 October 2005 with the authorized capital of 235 million rubles and the stated capital of 1.5 billion rubles. The founders of the NCC are the Moscow Interbank Currency Exchange (98% of the authorized capital) and Not-for-Profit Partnership The National depository Center (2%). The NCC holds the Bank of Russia’s license to carry out banking operations in Russian rubles and foreign currency (without attracting individuals’ deposits). The NCC will specialize in clearing in exchange-based and OTC markets. This includes determining obligations of participants in clearing, offsetting these obligations and organizing the execution of obligations for transactions in compliance with the RF law.