REPO Mode
A REPO transaction is a transaction in securities which consists of two legs. Their days of settlement are determined by the settlement code. On the day of conclusion of a REPO transaction, the seller of securities must deliver securities while the buyer must pay for them (the 1st leg of a REPO transaction).
The REPO mode enables to conclude transactions with any day of settlement beginning from the day, following the day of conclusion of the transaction, to the specified day of its settlement inclusive. The day of settlement of a REPO transaction is determined by the formula: R + n, where R is the day of conclusion of a REPO transaction and n is the maximum number of calendar days (n assumes the value from 1 to 90) after which the transaction must be settled, that is the last day of settlement of the second leg of a REPO transaction. Settlement codes R01:R90 are used in the Trading System to denote the day of settlement.
In the REPO mode, 2 types of orders can be entered into the Trading System from a participant's workplace: "nontargeted" and "targeted" REPO orders. The entering, representation and functional properties of nonaddress and address REPO orders are realized on the basis of the negotiated deals mode. The price of the second part of a REPO transaction is calculated each settlement day from the day, following the day of conclusion of this transaction, to the day of fulfilling obligations connected with the second leg of the REPO transaction. The REPO rate (as annual interest rate) must be indicated in the address REPO order to calculate the price of the second leg of a REPO transaction. A REPO transaction can be settled ahead of time beginning from the settlement day following the day of conclusion of the transaction.
The following types of orders are rejected by the Trading System which can allow a participant in trading in securities to conclude transactions on his own behalf, on the instructions and at the expense of clients (including issuers of securities), or on his own behalf and at the expense of funds, kept in trust management, as a result of which the owner of these securities does not change. Also rejected are orders which can lead to cross-transactions (a cross-transaction is a transaction concluded by a participant in trading on MICEX SE on his own behalf and at his own expense, in which one and the same participant in trading acts as the seller and the buyer).
When a transaction is settled in any trading mode in the clearing system, the Clearing organization (MICEX) controls the observance of the "delivery against payment" principle.
This protects participants and their clients against the loss of funds or securities. On the day of settlement of a transaction, securities and funds are blocked in MICEX Settlement House and the National Depositary Center. The delivery and payment take place only after counterparts perform their obligations and the Clearing organization gives an appropriate order.
To avoid errors in prices, participants' workplaces provide control over prices specified in the entered orders. The external control parameters are specified by the broker. Participants can use their own control parameters in the Trading System, which are specified at the workplace. When an order is entered, the price of the exchange and/or address order is checked to see if it fit the predetermined range of values. In the course of trading, participants can change their control parameters
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MICEX Stock Exchange
