The government securities market

The MICEX offers different terms of concluding and executing transactions in the market of government securities. Participants in trading can conclude transactions:

• with preliminary reservation of funds and securities (settlement code Т0);
• without preliminary reservation of funds and securities (settlement code Sn).

Settlement code Т0 - settlement code used when concluding a transaction in bonds. It means that a transaction is executed on the day of its conclusion. In this case, the sufficiency of funds or bonds for the execution of the transaction is checked.

Settlement code Sn - settlement code used when concluding transactions in bonds. It means that a transaction is executed on the n-th calendar day from the day of its registration in the trading system. In this case, the sufficiency of funds or bonds for the execution of the transaction is not checked (except for the MICEX commission).

The mechanism of guaranteed execution of transactions exists for transactions with settlement code Т0. For transactions with settlement code Sn, both parties must enter orders for the execution of the transaction on the day of its execution.

Clearing and settlements for transactions in bonds have the following features:

• transactions are executed on the basis of the "delivery vs. payment" principle;
• position of participants in trading are monitored in the real-time mode (control of coverage sufficiency);
• multilateral netting.

The execution of transactions on the basis of the "delivery vs. payment" principle means the synchronous transfer of funds and securities, which ensures both parties against the risk of losing funds and securities.

The monitoring of participants' positions in the real-time mode means that the MICEX checks the sufficiency of funds/bonds, which are necessary for the execution of the transaction.

The necessary amount of funds/bonds must be deposited by Dealers/Investors in advance in the Settlement/Depository systems. The MICEX establishes appropriate values of money positions/ depo positions.

When a Dealer enters an order to conclude a transaction with settlement code Т0 or to executе a transaction with settlement code Sn, the MICEX checks money positions or depo positions for this order. An order will be registered only if the check gives positive results (after the fulfillment of obligations the values of positions will remain positive). After registering an order, the MICEX increases/decreases the appropriate money position/ depo position.

Following the results of trading, the MICEX determines the obligations of each participant in trading by means of multilateral netting (the mutual offset of obligations and claims), which enables to reduce the number and the volume of transactions and keep down the costs of transactions.

• The government securities market
• Money market