moscow, 11feb10national foreign exchange association, russia 1 rub on global markets and in russia...
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Moscow, 11Feb10 National Foreign Exchange Association, Russia
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RUB on global markets and
in Russia in 2009
Dmitry Piskulov, Ph.D. (Econ.)
Chairman of the Committee for
Professionalism;
ICAP , Senior Adviser
What RUB markets?• Mainly OTC markets: interbank, less
between Investment firms
• On-shore (within Russia) + off-shore (outside Russia) = Global RUB markets
• RUB Instruments:• Foreign exchange (cash TOD,TOM)• swaps + outright forwards• Interbank deposits• Derivatives (NDFs, IRS, CCS, FRA)• OTC Equities (potentially for non-residents)Moscow, 11Feb10 National Foreign Exchange
Association, Russia2
Where RUB markets?
• Main locations: • Russia (Moscow, St.Petersburg): cash (spot) FX• UK (London) + Europe: RUB FX and IR derivatives• USA (NY) • Asia (Tokyo, HK, Dubai)
• Main participants:- Banks- Investment companies- Institutional investors (hedge funds)
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Moscow, 11Feb10National Foreign Exchange
Association, Russia4
Why RUB markets important
Plans of Russian political and economic authorities: • Concept of Moscow as International Financial Center
(adopted) to compete with Dubai, Shanghai, Mumbai; • Strategy of development of Russian financial market till
2020 – focus on securities, forwards and derivatives instruments, clearing infrastructure:
• RUB to become international (regional) reserve currency
Shortcomings of above programs:• Focus on the securities markets• Negligence of RUB settlements • Access for foreigners?
Russian on-shore FX mkt 2007Rank Country 2007 ADT, $ bln. Share of global %
1 United Kingdom 1,359 34.1 %
2 USA 664 16.6 %
3 Switzerland 242 6.1 %
4 Japan 238 6.0 %
5 Singapore 231 5.8 %
6 Hong Kong SAR 175 4.4 %
7 Australia 170 4.2 %
8 France 120 3.0 %
9 Germany 99 2.5 %
10 Denmark 86 2.2 %
11 Canada 60 1.5 %
12 Russia 50 1.3 %
13 Belgium 48 1.2 %Moscow, 11Feb10 National Foreign Exchange
Association, Russia5
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Domestic FX market in Sep 09Domestic OTC market average daily turnover (ADT) in bln. US$ by BIS methodology (Bank of Russia)
Total ADT,US$ bln.
of them: CCY /RUB
Cross-borderof CCY/RUB
FX spot $27.8 $ 22.0 $11.6
Outright forwards
$0.66 $ 0.49 $0.28
FX swaps $19.7 $ 14.3 $5.3
Total: $48.3 $31.6 $13.0FX options $0.09 $0.07 $0.04
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Crisis on FX interbank marketsFX average daily turnovers dropped globally in 2008 but began to rise by end of 2009
Month UK market Russian market*
Apr 08 $ 1,696 bln.
Jul 08 $119 bln.
Apr 09 $ 1,269 bln. $53.7 bln.
Oct 09 $ 1,549 bln. $ 54.2 bln.
Change % - 8.7% -54%
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RUB markets outside Russia
• Turnover: $11-12 bln. daily (FX, MM, IRD)• Link Moscow-London (transactions done in
Moscow in the name of London HO)• Number of banks (dealing codes) (according to
ICAP EBS: banks that entered RUB SSI)• Active: 50 (already dealt in EBS)• Potential: 140 (entered RUB SSI in EBS)
Increase in participants and thus global
volumes subject to settlements solution!
RUB instruments outside Russia
More RUB derivatives than cash products• FX swaps• FX spot• NDFs• Outright forwards• Interest rate swaps (IRS)• FX options• Cash deposits • Currency swaps (incl. CCS)• Forward rate agreement (FRA)Moscow, 11Feb10 National Foreign Exchange
Association, Russia9
RUB FX in LondonSource: UK FXJSC semi-annual survey, January 2010
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Oct 08 Apr 09 Oct 09
Percentage of RUB in total UK FX
0.7% 0.7% 0.7%
USD/RUB turnover $10.9 bln. $8.6 bln. $10.8 bln.
Rank of RUB 15 17 16
Total ADT of UK market, $bln.
$1699 bln. $1356 bln. $1549 bln
Volumes of RUB FX instruments in London
Instruments Apr 2009 Oct 2009
FX swaps $4.0 bln $6.1 bln
FX spot: $1.8 bln $1.8 bln
NDF $1.2 bln. $1.3 bln.
FX options $0.5 bln $1.2 bln
Outright forward $0.9 bln $0.3 bln
Ccy swaps $0.14 bln $0.1 bln
Total: $8.6 bln $10.8 blnMoscow, 11Feb10 National Foreign Exchange
Association, Russia11
UK FXJSC: Average daily volumes in 2009
Global banks RUB trading
• Global banks – main promoters of RUB instruments
• RUB FX pricing and execution hub location: struggle between Moscow and Head office:
in London: 30%in Moscow: 60% other (NY,Tokyo, Vienna,
Helsinki, Dubai, Hong Kong): 10%
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Moscow, 11Feb10 National Foreign Exchange Association, Russia
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Prospects of RUB as international currencyInfrastructural prerequisites for global RUB
trading (tasks for Russian authorities, CBR):
1. Promotion of RUB instruments in global electronic trading platforms (such as EBS, Reuters, Bloomberg etc.)
2. To remove obstacles in RUB clearing and settlements for international participants:- RTGS (BESP of CBR)
- CLS Bank clearing currency (next ZAR, MXN)
3. Monitor RUB global trading volumes
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About NFEA
• Established: October 1999 in Moscow as non-commercial organization;• Membership: legal entities (local and global banks and brokers) working on/related to
Russian spot/forward foreign exchange and money markets.• Management: the Board (28 market practitioners), 4 co-chairmen, 3 Committees (on
Market Indices; for Professionalism, Ethics & Education; on Legal Affairs) • Projects up to date:
– 1999-2001, 2006: Elaboration of Standards (Code of Conduct and Rules to Conduct Operations (Committee for Professionalism, Ethics & Education),
– Market indices: MosIBOR (2001, RUR interbank % rates), RIBER (2004, USD/RUB), MosPrime Rate (2005, RUB money market reference rate)
• Projects in progress:- NFEA FX SWAP RATE – new index for USD/RUB and EUR/RUB forwards- Standard Documentation on Russian OTC derivatives transactions (Russian
analogue of ISDA Agreement) – completed in 2009- Legal documentation on syndicated loans;
• International cooperation and working contacts: - ACI-The Financial Markets Association - ISDA (inclusion of MosPrime rate into ISDA definitions 2006)
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Contact Details
13 Bolshoy Kislovskiy Per., Moscow, 125009, Russia, Tel.+7 (495) 705-9693, Fax: +7(495) 705-9675.www.nva.ru, www.nfea.ru
@ The Copyright National Foreign Exchange Association, 2008. All rights reserved. Any reproduction is only permitted with prior consent of NFEA.