The MICEX Group is among exchanges selected by the RF Government to conduct electronic trading for the purposes of state purchases

January 26, 2010

The MICEX Group is one of exchanges that have won the right to conduct electronic trading for the purposes of state purchases. The selection was organized by the RF Economic Development Ministry and the Federal Antimonopoly Service under the government of Russia. The results of the selection were announced on January 25, 2010. The application for participation in the selection, prepared by a number of subdivisions of the MICEX Group, was submitted on behalf of MICEX-Information Technologies Company.

The RF Government selected 5 electronic exchanges that offered the best projects of the electronic market for open auctions to be held electronically. Among them are Unified Electronic Market (Moscow), Electronic Trading System based on the electronic purchase platform of Tatarstan, automated trading system Sberbank-AST and RTS Index Agency. Eighteen applicants participated in the selection.

In accordance with the terms of the selection, the new market is to be launched in the summer of 2010. The new list of goods and services that state purchasers will be required to buy at electronic auctions will be announced by July 1, 2010.

The creation of the system of e-auctions for the purchase of goods and services for state needs is an important national priority. It is expected to make the placement of government orders more transparent and open to competition. At the meeting of the RF Government on December 17, 2009, Prime Minister Vladimir Putin instructed Cabinet members to take the purchase of products for federal needs at electronic auctions under their personal control. According to the Prime Minister, “this is an anti-corruption measure, as the use of Internet technologies eliminates personal contacts between authorities and suppliers of goods at the stage of placement of an order.” Besides, such auctions help to save budgetary funds.

Placement of government orders in the form of on-exchange trading is interesting for government customers and suppliers of goods. The exchange helps to expedite the placement of orders and the processing of its results. It provides the most transparent mechanism of control over the use of the budgetary funds. In addition, on-exchange trading takes into account the needs of the customer with regard to its geographic location. It provides publicity and transparency of purchases of goods. All this guarantees the formation of the most market-based price for a particular asset.

The MICEX Group has ample experience of organizing purchases for state and municipal needs. Since 2003, The National Mercantile Exchange (NAMEX), part of the MICEX Group, has participated in the organization of on-exchange trading during state interventions in the grain market. In 2008 the volume of trading on NAMEX during commodity and purchase interventions amounted to 29.2 billion rubles (6.2 million tons of grain), or 62% of the Russian total on-exchange volume of trading in goods in 2007. The Evaluation Committee of the RF Ministry of Agriculture selected NAMEX to conduct state purchase and commodity interventions to regulate the market for agricultural products, raw materials and food in 2009–2012.

Since 2006, The MICEX – the Volga Region, which is also part of the MICEX Group, has develops technologies used when placing government orders. The MICEX – the Volga Region has developed a trading system that enables to place government orders in the forms of an open auction, an electronic auction and on-exchange trading. In 2008, the total volume of trading in the Commodity Market Section of The MICEX – the Volga Region amounted to 2 428.7 million rubles. Trading was held in the State (Municipal) Needs department, which is used to place government orders for the needs of Nizhny Novgorod Region.