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Capital Markets

Russia: RTS/Micex merger to boost Moscow’s position

Anti-monopoly regulator approves plan; New securities laws awaited

Ruben Aganbegyan, head of Micex, will be chief executive of the combined RTS and Micex exchange

Ruben Aganbegyan, head of Micex, will be chief executive of the combined RTS and Micex exchange

Russian bourses RTS and Micex plan to complete a merger this year after the federal anti-monopoly service approved the deal in September. The two exchanges say their merger will spur the development of the Russian capital markets, a key element in creating an international financial centre in Moscow.

The development of a globally competitive financial system in Moscow is one of the main components of Russia’s economic modernization policy agenda. Ruben Aganbegyan, head of Micex, will be chief executive of the combined exchange. He claims the merger between Micex and dollar-denominated RTS will act as "the force that drives the creation of the international financial centre".

Alexander Merzlenko, deputy chief executive for Russia at investment firm Renaissance Group, says the merger will also force through legislation to create a central securities depository in Russia. He says this will make the Russian market "much more competitive for investors on a global scale".

Ritan Kirdan, director of fixed-income research at Russian investment bank Aton, says: "Investors do not see a single stock exchange as essential to Moscow’s development into an international financial centre but the merger is definitely a plus for the development of the architecture of Russia’s financial market."

Parallel to the merger will be the adoption of a new securities clearing law on January 1, 2012. The law will introduce centralized multilateral and wholesale clearing for securities and other classes of liabilities.

Central depositary

Meanwhile, it is hoped a central depository in Moscow will further speed up market operations, reduce ownership risks and cut transaction costs. However, there is only a draft agreement for a central depository at present. "It has been suggested that a central depository will be adopted in the first quarter of next year, but there is no guarantee for this," says Kirdan.

Together, it is hoped the merger and the new securities laws will improve conditions on Moscow’s financial market, making it more attractive for investors and issuers as the authorities seek to slow the flow of overseas listings by Russian companies.

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