Russia's Moscow Exchange plans to develop gold bullion market


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By Dow Jones Business News, April 19, 2013, 07:15:00 AM EDT
By Jacob Bunge

Russia's main exchange operator aims to harness the country's resource riches as the company bids for a position among the global exchange elite, according to its chief executive.

Moscow Exchange plans to develop markets in gold and grains and will utilize its ownership in smaller local exchanges as the company seeks to become a regional trading power, according to CEO Alexander Afanasiev.

"Many of the customers of Moscow Exchange, particularly international clients, might see us as a hub for entering other [former Soviet Union] countries for international investing," Mr. Afanasiev said following a visit to the U.S. last week, in his first interview since the exchange's February flotation. The commodities push places the company alongside foreign-based exchange rivals such as Canada'sTMX Group Inc. (X.T) and ASX Ltd. (ASX.AU) in Australia, both working to parlay those nations' commodity strengths into trading business. Moscow's largest financial markets operate under one roof following the December 2011 merger of the country's two main exchange operators. The enlarged Moscow Exchange has been revamping its stock markets in recent months, upgrading infrastructure for the settlement of trades and pushing for an overhaul of pension-plan rules that could drive more investment in Russian securities.

To hasten expansion efforts, Moscow Exchange is discussing possible alliances with international peers, including Germany'sDeutsche Boerse AG (DB1.XE, DBOEF) and U.S.-based operators CME Group Inc. ( CME ) :doodoo: and NYSE Euronext ( NYX ), Mr. Afanasiev said.

Moscow Exchange's stock, futures and currency platforms cover a broader range of asset classes than many of its foreign-based competitors, but Russia has struggled against the perception that its financial markets are clubby and tough for outsiders to navigate. Domestic restrictions around securities investing have prompted some Russian companies to list shares in London and elsewhere, while prices for the region's wheat harvests generally remain set in Chicago and Paris.

Moscow Exchange already runs the number-nine derivatives market globally in terms of trading activity, according to data from the Futures Industry Association. Its strength has been in financial futures, such as contracts linked to the RTS Russian stock index, with more than 320 million contracts traded in 2012.

Mr. Afanasiev, a former Russian banker who joined the exchange in 2005 and was named CEO last June, aims to expand Moscow's commodities franchise into bullion trading by the end of the year, planning a new market in physical metals like gold. Russia ranked fourth last year in terms of global gold production with 205 tons yielded, according to a February report from the U.S. Geological Survey. The effort will tap existing gold-storage facilities in Moscow, Mr. Afanasiev said.

The country's first exchange-traded funds linked to precious metals like gold and platinum are set to launch in the coming weeks
:paperbag: , he said.

Moscow Exchange's ruble-denominated grain markets have potential to be more widely used across the Black Sea region, among the world's biggest growers of wheat, according to Mr. Afanasiev.

To extend grain efforts Moscow could build on its relationship with Kazakhstan's commodity exchange, where Moscow Exchange owns a 61% stake, he said. The Kazakhstan market runs trading in wheat, barley, rye and sunflower seeds.

As it revamps its derivatives and securities markets Moscow Exchange is weighing alliances with CME and NYSE around risk-management services, order routing and pricing data
:flushed:, Mr. Afanasiev said.

Moscow Exchange is also discussing the cross-listing of some futures contracts with Deutsche Boerse, he said, and may offer a version of the German exchange group's money-market trading service. The two exchange companies last November sealed an agreement to explore partnerships.

Representatives for Deutsche Boerse, CME and NYSE declined comment.

Shares in Moscow Exchange have fallen 21% since its initial public offering Feb. 15, touted as a milestone in the Vladimir Putin government's longer-range ambition to elevate Moscow as an international hub for finance. Russia's Micex stock index has declined 12% over that time.

-Lukas Alpert in Moscow contributed to this article.

Write to Jacob Bunge at

(END) Dow Jones Newswires
Copyright (c) 2013 Dow Jones & Company, Inc.
OAO Moscow Exchange will introduce trading of gold and silver as early as this month as part of plans to make metals more accessible to smaller banks by reducing transaction costs.

The exchange will quote gold and silver in Russian rubles per gram, with minimum trades starting at 10 grams of gold and 100 grams of silver, the bourse’s Deputy Chief Executive Officer Andrey Shemetov said in an e-mailed response to questions yesterday. Platinum and palladium contracts will start trading in the first half of 2014, he said. Russia is the world’s largest developing-nation producer of gold after China.

Most metals trading in the country takes place via the over-the-counter market, which is dominated by Russia’s biggest banks, such as OAO Sberbank. Smaller lenders including Moscow-based Absolut Bank ZAO take on higher costs and risks because they turn to the market makers to close positions, limiting their ability to offer precious-metal trading to clients.

“It’s a cheaper way of tapping into ruble-denominated gold,” Ivan Fomenko, head of asset management at Absolut Bank, which offers metals accounts to clients, said by phone on Oct. 9. “You will be able to buy, sell, swap easily. It’s awesome.”

Fomenko couldn’t provide a cost-savings estimate.

The Moscow Exchange is following Shanghai Gold Exchange in listing precious metals to augment over-the-counter, or OTC, trading and broaden the range of instruments available for hedging and liquidity purposes. The bourse will also introduce swap agreements for the metals that aren’t available on the OTC market, Shemetov said.
‘Unusual Move’

It’s an “unusual move” for the stock and currency exchange to list physical metals, and has the potential to affect the gold market as trading volume grows, Marcus Grubb, managing director of investment research at the World Gold Council, said in an e-mailed response to questions on Oct. 9.

Ok, but are they going to operate a 100% gold/silver backed exchange, or is this to be yet another fractional reserve re-hypothecation bucket shop?
Time will tell, but I think the Russian puppet masters are pretty much on board with China with respect to the their part in NWO currency wars drama. I'm going to guess they want a Russian version of the SGE to spur more buying of gold in the country.
That GATA link is a copy of the Bloomberg article I posted above.

MOSCOW. June 29 (Interfax) - The Moscow Exchange plans to start trading in perpetual gold futures in the near future, Maria Patrikeyeva, head of the exchange's derivatives market, said.

"We launched settled quarterly gold futures yesterday, and in the near future, in July, we will launch new perpetual gold futures," Patrikeyeva said at the press lunch "Options Market on the Moscow Exchange: New Opportunities."

The Moscow Exchange began trading in settled futures contracts for gold in Russian rubles on June 28.

They cannot deliver everything because there is not enough gold production to meet demand. Gold is hypothicated to increase transfer efficiency and satisfy gamblers.

If it's a free market they will need the option to pay in rubles which is simply another scheme.
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