September 1, 2005

To raise the attractiveness of the orderly currency market, the Moscow Interbank Currency Exchange (MICEX) has established, for the period of 1 September 2005 — 15 February 2006, a new size and a new procedure of payment of commission for SWAP deals in US dollars concluded in the Unified Trading Session of interbank currency exchanges (UTS). The MICEX has established a unified rate of commission equal to 0.001% of the amount of each SWAP deal in US dollars. Thus, the commission rate is decreased two to four times. Later, basing on the results of the analysis of the commission rate applied during the above-mentioned period, the MICEX Exchange Council will decide whether the new size of the commission rate and the order of its payment are advisable and whether they should be adopted as permanent.

Before, the size of the commission rate, paid by a trader (from 0.004% to 0.002%) for SWAP deals in US dollars, depended on the total daily volume of the trader▓s operations in US dollars in the UTS. On 31 May 2005, the MICEX established, for the period of three months, a new rate of exchange commission equal to 0.001% of the amount of the SWAP deal in US dollars if the trader has exceeded the threshold value of the daily volume of SWAP deals equal to 100 million US dollars.

The statistical analysis of the exchange currency market for the period of June-July 2005 shows that the monthly average volume of SWAP deals in US dollars in the UTS exceeded by more than 34% the monthly average figure for January-May 2005 and reached 10.5 billion US dollars. However, the existence of the threshold value of the daily volume of SWAP deals restricted the circle of traders who could use the advantages of the preferential order of payment of the commission and thus reduce their costs when carrying out operations in the exchange currency market. To extend the preferential terms to all market participants, the MICEX Exchange Council decided, on 30 August 2005, to abolish the threshold value of the daily volume of SWAP deals in US dollars. Thus, the MICEX established, for the period of 1 September 2005 — 15 February 2006, a unified rate of commission for SWAP deals in US dollars in the UTS, which is equal to 0.001% of the amount of each deal.

Currency SWAP operations have the form of two conversion transactions of purchase and sale of currency. Economically, these operations are similar to interbank credits and are used by business banks to manage balances in correspondent accounts in Russian rubles and foreign currency. Besides, currency SWAP deals are used by participants to regulate their currency positions. Recently, rates for overnight deposits in US dollars and Russian rubles have moved together considerably, while the SWAP difference averages 1-3%. In these conditions, to maintain the attractiveness of SWAP operations, the MICEX Exchange Council decided to cut the commission so that its proportion in the prices of SWAP deals would remain on the level acceptable for participants. In particular, after the reduction of the commission rate to 0.001% of the amount of the deals, its level, converted to deposit rates, will amount to 0.36% of yearly interest.

According to the MICEX CEO Alexander Potemkin, it is important that the Exchange promotes the development of a modern money market in Russia. The MICEX is becoming one of the main centers of the country▓s money market and is creating appropriate conditions for the formation of the yield of exchange financial instruments corresponding to the price of money in the over-the-counter interbank market. Alexander Potemkin also says that in the near future the MICEX will consider changing the commission for other instruments of the exchange money market, in particular, for REPO transactions in non-government securities.

Overnight currency SWAP deals, concluded in the MICEX trading system since 2001, are a popular instrument of the currency market. At present (as a result of the first eight months of 2005), the daily average volume of SWAP operations in US dollars in the UTS amounts to 450 million US dollars.