Major corporations will share their currency with the market

Moscow exchange to the end of the year will give the Russian companies direct access to foreign exchange and money market, reported on Thursday, October 27, managing Director for cash and derivatives markets of the Moscow exchange Igor Maric. Experts and market observers doubt that the emergence of new players in the money and foreign exchange market facilitates the flow of liquidity into the market. However, it is not profitable for large banks who may lose their cash flows, which are now placed in their accounts of the Corporation.

As noted by Maric, direct access to the currency market will receive at least 50 large companies that can start to place their funds in the foreign exchange market before the end of this year. “It will give up to $1 billion in additional daily momentum,” he said. According to data from the Moscow exchange, in 2016 the average daily turnover in the foreign exchange market amounted to $20 billion.

According to Maric, it is also planned to allow about 75 Russian corporations directly to the money market trading platform in the first quarter of 2017. We are talking about a REPO with a Central counterparty, that is, when market participants do not Transact with each other and with the National clearing centre, guaranteeing the fulfillment of obligations.

According to estimates of the Moscow exchange, now the volume of open positions on the REPO market with the Central counterparty is of the order of 1.1 to 1.2 trillion rubles a day. The admission of corporations to the transactions on the money market in a few years will increase the market turnover more than 20%, said Maric.

Large companies now place their surplus funds in the foreign exchange and money market, but do so through intermediaries such as brokers and banks. “Now corporations place money in banks, of course, in a limited range of banks here refers to the fact that they can place the money with all brokers, all banks that have access to organized market. The overall market gets more liquidity,” says Maric.

Head of investment business of the Bank “Opening” Konstantin Tserazov recalls that the idea of tolerance companies in the real sector to direct trading in the foreign exchange and money market were discussed for a long time. In General, its implementation can be called justified — at least the companies will have a choice, he said.

According to Tarasova, companies are likely to use the foreign exchange and money market for liquidity management, while unlikely to change the ultimate volume of purchased and sold currency to be placed free of residues. However, he does not exclude that due to the direct access of companies to the market it will increase the frequency of transactions will increase the liquidity of the market as a whole.” But it will not happen immediately — at the end of the transition period, while new participants will join the market, the company will set the limits, select qualified personnel,” says Carasov.

Chief economist of “Renaissance Capital” Oleg Kuzmin believes that direct access to trading currencies and repos is only available to large companies that have Treasury and trading. “This is primarily of interest to exporters, such as Rosneft, Gazprom, LUKOIL… That is the largest companies who pay taxes, the biggest clients of banks”, — said the expert.

Press Secretary of “Rosneft” Mikhail Leontyev refused to comment on the proposal of the Moscow exchange on the participation of large companies in foreign currency transactions on it. He said that the exchange transaction of “Rosneft” were not spontaneous, but planned in advance.

Direct access to the foreign exchange and money market will use only a private company, the head of the dealing center Metallinvestbank Sergey Romanchuk. “All the individual transactions, because, first, it is operating costs for companies, and secondly, banks and so give competitive rates on the REPO market. The growth of liquidity in the money market at the cost of liquidity will not be affected,” — he said.

According to Treasurer of the Bank from the top 10, stock exchange, expanding the circle of participants, trying to make more money on commissions. “For the insignificant companies how to trade on the market directly or through intermediaries, because the service charge is minimal,” he explains. When large companies begin to trade on the market yourself, the part of the banks that actively attract the funds of corporate customers, may lose their financial flows. “This is primarily state-owned banks, their interests are clearly contrary to the initiatives of exchange,” — said the banker.

“We assume that in the first stage, corporations will not be easy with this location because they have no internal infrastructure to conduct such operations, the creation of which will take time,” — said the press service of VTB.

To bid on the money market of the Moscow exchange, only the largest corporations, meeting the minimum capital requirements (not less than RUB 10 billion, and has a certain rating). In addition, the Corporation should be allocated to the division’s liquidity management. Certain requirements is going to be applied to the professional qualification of employees of companies responsible for operations on money and FX markets. “We are talking about certificates, availability of specialists with certificates of the Bank of Russia confirming their experience. It is necessary that they adequately behave on the financial market, not create additional operational risks,” said Maric.

Analysts believe that the direct access of companies to trading on the exchange will not have a material impact on the ruble. “The ruble is determined by the flows of the balance of payments”, — says chief economist of “Renaissance Capital” Oleg Kuzmin. Therefore, he says, direct access to trading corporations would not change the position of the Russian currency — if only in terms of the point of impact on volatility.

Manager of research and Analytics PSB Alexander Polyutov sure that in the event of a liquidity inflow on the market from companies, the Central Bank will smooth out the volatility of the ruble by absorbing the excess currency. “The main factors for the ruble in the first quarter of 2017 will still be the monetary policy of the Bank of Russia and the fed and oil prices”, — he said.

With the participation of Lyudmila Podobedova, Igor Orlov