To improve the range of its exchange services, the MICEX Group has introduced a new trading mode, “Equity Repos”, along with a new scale of charges with lower commission rates for market participants executing equity repos in the new trading mode.
On 2 October 2006, the MICEX Group put into effect the new version of the Rules of Trading in Securities on the MICEX Stock Exchange and the new version of the Rules of Clearing Provided by the MICEX in the Securities Market. These documents determine new possibilities and services now available for market participants in the new “Equity Repos” trading mode:
- when submitting orders and transacting equity repos, counterparties can determine the repo amount, the number of securities and the initial discount on the previous trading day’s market price of corresponding shares (change in the mechanism of repo execution);
- when concluding an equity repo, counterparties can determine the maximum and the minimum discount (as an option), which secures the daily reappraisal of the current value of the discount on the deal during the whole period of the repo and the re-calculation of compensation payments (if the current value of the discount exceeds the established minimum and maximum values);
- equity repos can be transacted without checking the security for the first part of the repo; execution of obligations for the first part of the repo can be delayed (obligations can be executed on the first or the second work day after the day of the deal);
- equity repos can be transacted for the period of up to 180 calendar days.
Trading in the “Equity Repos” trading mode is held each trading day from 10:00 till 19:15.
The “Equity Repos” trading mode is available for all participants in trading on the MICEX Stock Exchange who use the Trading System work places (Version 3.20.) or appropriate versions of broker systems (working via the MICEX universal gateway). All participants in trading on the MICEX Stock Exchange can temporarily execute equity repos in the old “Repo” trading mode.
The launch of trading in the “Equity Repos” mode is accompanied by the introduction of the scale of charges oriented at repos executed in the new “Equity Repos” trading mode. The new scale of charges equalizes commission rates with rates currently charged for deals made in the “Bond Repos” trading mode.
In the new trading mode the total amount of commission charged for equity repos which are not intra-day is 0.00035% of the repo amount (or 0.126% of yearly interest) for each day during the repo period. The new MICEX SE’s rate for equity repos executed in the new “Equity Repos” trading mode is 0.0001% of the repo amount multiplied by the repo period (in calendar days), including VAT. The rate is charged from each party to the deal. The fee charged by the MICEX for providing the integrated technological service is the same. The commission rate charged by the MICEX for clearing deals made in the new “Equity Repos” trading mode is 0.00015% of the repo amount multiplied by the repo period (in calendar days), including VAT. The commission is charged from each party to the deal involved in multilateral clearing.
For intra-day equity repos executed in the new trading mode the total commission rate is equal to the current rate for intra-day equity repos executed in the “Repo” trading mode: 45 rubles, including VAT (15 rubles is the MICEX’s commission for clearing, 15 rubles is the MICEX SE’s commission and 15 rubles is the MICEX SE’s fee for providing the integrated technological service). The commission is charged from each party to the deal.
First deals in the new trading mode were made by NOMOS-Bank and Elektronika Bank.
Trading in the “Equity Repo” mode and the new scale of charges give participants in the MICEX exchange-based stock market more possibilities to increase liquidity in the repo market. It also improves the potential and the attractiveness of the orderly securities market in terms of management of financial assets.
The MICEX Stock Exchange is Russia’s leading stock exchange, where shares and corporate bonds of over 500 Russian issuers (with the total capitalization of almost 20 trillion rubles) change hands daily. About 550 organizations - professional participants in the securities market trade on the MICEX SE. Their clients are over 220 investors. In January-September 2006 the value of transactions made on the MICEX SE reached 13.6 trillion rubles (501 billion US dollars) or more than 90% of the total turnover on leading floors operating in the Russian stock market. In the first nine months of 2006 the value of equity repos reached 2.1 trillion rubles.