General Principles

MICEX’s activities in the foreign exchange market are focused on the organization and execution of foreign currency trades. During a unified trading session of the inter-bank currency exchanges (hereinafter referred to as a “UTS”), MICEX acts as an Administrator that provides for the execution of trades and also fills the role of an Information Technology Center. Transactions are executed in accordance with the procedures specified in the Rules for Conducting Foreign Currency Purchase and Sale Transactions during a Unified Trading Session of Interbank Currency Exchanges (hereinafter referred to as “UTS Rules”), as approved by the Exchange Council and in accordance with the Bank of Russia.

The clearing of trades executed during a UTS is performed by the ZAO National Clearing Center JSCB (hereinafter referred to as “the NCC”), a clearing institution established especially to operate within the framework of the MICEX Group and execute the functions of a central counterparty in relation to all transactions with foreign currency. Clearing is performed in accordance with the Rules for Performing Clearing Activities by the Joint Stock Commercial Bank National Clearing Center (a Closed Joint-Stock Company) during a Unified Trading Session of the Interbank Currency Exchanges (hereinafter referred to as “the Clearing Rules”).

UTS trading participants are credit organizations that have become members of the MICEX FX Market Section (hereinafter referred to as “Section members”) in accordance with the Rules of Membership in the FX Market Section at MICEX and are permitted to trade and utilize clearing services.

The FX Market Section at MICEX is a kind of association for foreign exchange market participants which is not endowed with the rights of a legal entity, the main task of which is to create conditions which enable all foreign exchange market participants to trade in foreign currency.

The Bylaw on the FX Market Section at the Moscow Interbank Currency Exchange governs the work of the FX Market Section. The FX Market Section Council manages the Section.

The trading system provides all members of the Section with equal opportunities to place and fulfill bids and offers for the purchase and sale of foreign currency, as well as receive trading information. Trading participants may execute transactions on their own behalf and based on their clients’ orders and also on their own behalf and at their own expense.

Section members’ orders are displayed on the trading terminal screen anonymously. Deals are made automatically as matching orders entered into the system. Members of the FX Market Section may conclude deals during a UTS and also have the possibility of registering off-system deals with the other party indicated. Trading during a UTS is held in the method and in accordance with the procedure stipulated in Part 5 of the UTS Rules.

Once a transaction is executed, the Section member is responsible for all obligations related to implementation of the deal and the NCC guarantees fulfillment of the member’s claims arising out of it. Section members who are in arrears with the NCC are not permitted to trade. Constant monitoring of Section member banks’ current financial standing permits, in the event of a sharp decline in their standing, the question of suspension from trading to be resolved in real time.

The parties’ responsibilities during the process of executing foreign exchange transactions and fulfilling their obligations is defined by the Agreement on the Procedure and Conditions for Executing Foreign Currency Purchase and Sale Transactions via Centralized Clearing (hereinafter referred to as “the Trade Agreement”). This document also provides a guarantee that the NCC will fulfill its obligations to ZAO MICEX with respect to those transactions concluded during a UTS session in the amount of 2.6 billion rubles in the event that NCC fails to fulfill its respective obligations independently.

Section members execute transactions within the Clearing Participant Trading Limits, established in accordance with the Clearing Rules, equal to the deposit limit as established by the quantity of funds transferred by the member in advance.
For USD/RUB transactions, the advance funds deposit ratio in US dollars and Russian rubles is 1.8% of the planned operation volume for the USDRUB_TOD instrument and 2.7% of the planned operation volume for the USDRUB_TOМ instrument in advance.

In addition, members of the FX Market Section have the right to participate in trading in US dollars without depositing advance funds using the net-operation limit set in accordance with Part 8 of the Bylaw of the NCC Risk Mitigation Fund (hereinafter referred to as “the RMF ”). In order to set the net-operation limit, the trading participant should become a participant in the NCC Risk Mitigation Fund (hereinafter referred to as “the RMF”) and make a contribution to the RMF in the amount of 20 thousand US dollars. In the event of withdrawal from the Fund, the contribution and interest on the same shall be returned to the member in full.

The net-operation limits for participants in the Fund are established on a quarterly basis, subject to the amount of their own funds and are approved by the Management Board of the NCC. The amount of the net-operation limit will not exceed 150% of the amount deposited by the relevant participant in the RMF. Furthermore, the net-operation limit of the RMF may not exceed 70 million US dollars.

The RMF participant’s trading limit is equal to the deposit limit and net-operation limit calculated in accordance with Part 8 of the Clearing Rules.

For EUR/RUB transactions, the advance funds deposit ratio in Euros and Russian rubles for the EURRUB_TOD instrument is set at a rate of 4%, while the EURRUB_TOМ instrument is set at 6%.

For transactions with Ukrainian hryvnas, Byelorussian rubles, and trading Kazakh tenges for Russian rubles, Section members must provide funds in a hard currency, the sale of which occurs during a UTS and in planned operation volumes.

Section members enact settlements on executed transactions with the NCC instead of directly with each other. The NCC performs settlements in compliance with the “payment against payment” principle, according to which the NCC effectuates settlements with Section members upon members’ fulfillment of their respective obligations. When calculating each Section member’s individual currency obligations, net results are created for each current date and each transaction concluded by a Section member during trading in the respective trading session.