Moscow Interbank Currency Exchange (MICEX) was founded in 1992. 600 Russian issuers trade in shares and bonds here daily, including Gazprom, Lukoil, Sberbank, Tatneft, etc. The total value of assets is 24 trillion rubles. The Interbank Currency Exchange includes 550 professional securities market participants. They serve 280 thousand investors. About what the Interbank Currency Exchange does, you will learn from this article.
History of development
In November 1989, Vnesheconombank of the USSR held currency auctions. For the first time, the ruble to dollar exchange rate was fixed on them. After the creation of the MICEX, all currency trading between enterprises and banks was held on this site. Since July of that year, its rate was used by the Central Bank for quoting the ruble against foreign currencies. Here, for the first time, tenders of T-bills were held. In the mid-90s, preparations began for transactions with corporate securities and futures. In August 2006, the MICEX accounted for 95% of trades in Russian companies and 69% of the global volume. The volume of transactions reached 20.4 trillion rubles. Gradually, the MICEX network of partners spread throughout the Russian Federation. One of them is the Siberian Interbank Currency Exchange. In January 2015, the IMB was nationalized in the ARC.
Priority objectives of the organization:
• bidding;
• determination of the exchange rate of monetary units;
• ensuring the turnover of capital of the country;
• formation of a large financial center;
• creating a competitive market.
Main functions:
• Organization and holding of tenders.
• Monitoring compliance.
• Providing informative, settlement, clearing and other services.
Activities
On the MICEX, electronic trading is held in US dollars, euros, hryvnias, tenge, Belarusian rubles, and swaps. A risk management system is functioning that ensures timely fulfillment of obligations. One of its principles sounds like “payment against payment”: the Interbank Currency Exchange settles with the participant only after he fulfills his obligations.
Transactions are made in electronic form on modern depository systems, to which platforms and terminals are connected. All payments go through the Clearing House of the Interbank Currency Exchange, and through the Central Bank through the Depository Center.
In 2006 - with the expansion of the customer base - the index grew by 68%. They began to trade shares of mutual funds on the stock exchange, stimulating their development. An additional impetus was the accession of clearing services specialists to the process of the institute.
Moscow Interbank Currency Exchange - an institution in which the initial placement of the Central Bank takes place. It has long been a leader in the number and volume of corporate bonds. Since 2006, investors began to place shares on the MICEX. The first customers were Rosneft, OGK-5, Severstal and others. At the same time, the Innovation Companies Sector began to operate. Its goal is to create conditions for effective investment. Listing agencies were created to improve the quality of service on the exchange.
GS and money market
The Interbank Currency Exchange is a nationwide trading system of state securities. Market participants have access to all instruments: GKO, OFZ, OBR, etc. They can use the whole range of operations: primary, secondary placement, conclusion, execution of transactions. To date, more than 280 dealers operate on GS. The market share of this segment exceeds 17%. In order to effectively invest temporarily available funds, the Moscow Interbank Currency Exchange provides a large number of tools for market analysis: it publishes indicators, a zero-coupon yield curve. The Central Bank of the Russian Federation uses this system for deposit and credit operations. Their list has been expanded through “on-demand” transactions.
Derivatives market
Its share exceeds 97%. Trading on the Interbank Currency Exchange with futures contracts began in 2006. In order to ensure the execution of transactions, reserve and guarantee funds were formed in the amount of 250 million rubles each, the range of derivatives was expanded by the introduction of portfolio SPAN. Interest rates futures are traded on this market, which the National Currency Association and the International Swap Association (ISDA) use as data for the ruble rate. In this segment, there are market makers who support bilateral quotes and liquidity. The total number of professional members of the section is 190 organizations, and the number of participants is 130 credit and financial companies.
The international cooperation
In the context of globalization, the Interbank Currency Exchange of Russia will develop a strategy for integration into the world market. The number of foreign participants is increasing, the share of transactions of non-resident investors is 20%. The organization collaborates with NYSE, NASDAQ, Chicago, London, German, Vienna and other similar structures. Many have signed memoranda. Since 2002, the MICEX participates in the World Federation of Exchanges. In 2007, her participation level was increased to affiliate.
The sector of innovative and growing companies
Since June 2006, the KFM sector appeared on the MICEX. He allows companies with small capitalization to enter the market. Such securities must meet the requirement of liquidity level. To get into the sector, the revenue growth rate must exceed 20% per year.
Interbank Currency Exchange: Exchange Rates
One of the activities of the organization is the trade in banknotes of different countries. Most of the courses are formed here. They demonstrate the state of the Russian economy. Although the word “currency” sounds in the name, over the years of its existence, the scope of the exchange has expanded greatly. For more than 10 years, the MICEX has been providing access to trading via the Internet.
Until 1998, the purchase and sale of monetary units from around the world took place in the form of auctions. The seller sold dollars, marks, pounds and francs for the national currency through competitive bidding. Now they go online through SELT at 8 sites. Based on these transactions, the exchange rate of the Interbank Currency Exchange is formed. With the increase in trading volumes, a “payment versus payment” risk management system appeared.
Stock market
This is the largest trading platform on which securities are sold. 98% of transactions in the domestic stock market take place here. In circulation are more than 1,500 different securities. The total capitalization of issuers is 29 trillion rubles.
In the stock market, companies carry out an initial public offering of securities with the aim of attracting additional investment. Young and promising people who came up with an interesting and useful project may try to post it on the RII exchange. At the moment, this is the only real way to attract the funds of all those interested in the idea of persons. The legal status of the company should be designated as OJSC, and capitalization should be at least 50 million rubles. A large number of companies and wealthy people are ready to invest in interesting projects. And they turn to RII for ideas. Young companies may be interested in great growth prospects. A similar organization in the USA is called NASDAQ. It is traded on: Apple, Microsoft, Amazon.com, Google, Dell, Intel, etc.
Development indicators
We should also mention the MICEX index. It shows how the price of the Central Bank changed for 30 liquid Russian companies: Lukoil, Gazprom, Sberbank, Rosneft, MTS, VTB, Aeroflot and others. The stock index shows the general state of the market. If companies work for profit, then investors buy their shares, that is, the index is growing. The family of indices of the domestic exchange includes 8 industry, three capitalization and two composite. For bonds, municipal (MICEX MBI) and corporate (MICEX CBI) are calculated.
Suppose a private individual decided to invest temporarily available funds in shares, and after a while - check their value. Central Bank 3 out of 5 companies bought rose in price, and the other two fell. But if you sell them all, the investor will still remain in profit. The total yield will be, for example, + 20%. This is an indicator that signals the state of the market. At the MICEX, 280 dealers trade GS.
Bonds can also be placed on the stock market. In 2013, 400 issuers carried out 700 issues totaling 4 trillion rubles. For comparison: in 2010, 66 organizations were registered that traded bonds totaling 965 billion rubles. The developed infrastructure played an important role in the increase in volumes. In the stock market, participants can enter into transactions during placement and circulation, and qualified investors can conduct repos.
Clearing and custody services
These operations are performed by the Clearing House. Cashless transactions are carried out through the website of the Interbank Currency Exchange. The Clearing Center is the first specific organization in Russia. It leads in the volume and turnover of stored assets. Clients give them the Central Bank, the depository performs all operations and settlements.
Summary
Moscow Interbank Currency Exchange is the largest structure in Russia, which provides information, depository, electronic trading services, clearing and settles transactions. All MICEX units serve about one and a half thousand market participants - the largest banks and brokerage companies. The main objective of the exchange is the development of market mechanisms for determining the exchange rate and the effective allocation of temporarily free funds.