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Capital Markets

Russia’s new market infrastructure takes shape

A central securities depository, liberalization of the local bond market, movement to T+2 settlement and a stock exchange merger – it’s all very welcome in Russia’s capital markets. But work remains to be done if its infrastructure is to catch up with its peers.

Two decades after Russia started to privatize its state-owned industries and began to establish a financial market infrastructure, the Wild East era of capitalism is drawing to a close. Although the skulduggery associated with Russia’s oligarchies was largely curtailed some time ago, a reform of the country’s creaking market configuration has taken longer than expected.

"Market infrastructure changes have been talked about for a decade, but things only began to happen two years ago when the government announced plans to make Moscow into a major international financial centre," says Alex Krunic, head of product sales for direct custody and clearing at JPMorgan, and a member of the international consulting committee on upgrading post-trade infrastructure at the National Settlement Depository (NSD).

Although the idea of a Moscow International Financial Centre (MIFC) to rival London or New York raises smiles among market participants – off the record: no one publicly criticizes the government’s plans – it has considerably boosted market infrastructure reform. "We’ve been pleased to see the efforts made in a number of financial market infrastructure areas," says Noel Edison, director, FI, insurance and financial services at the European Bank for Reconstruction and Development.

"The reforms completed or close to completion are significant," agrees Krunic.

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