The new versions of the MICEX SE’s Rules for Trading in securities and the National Clearing Centre’s Rules for Clearing in the securities market come into force on November 1, 2011. The rules reflect the innovations contained in a number of important projects, such as:
1. Clearing in the stock market involving the central counterparty;
2. Creation of a new mode of trading large blocks of securities with a hidden book of orders (dark pool);
3. The launch of the post-trading auction;
4. The possibility of withdrawing funds in the course of trading (in the real-time mode) in the amount of the planned position.
According to the MICEX President Ruben Aganbegyan, "The changes that come into force on 1 November will boost the development of the entire Russian stock market. Transition of clearing to the organization with access to the inter-bank market and the Central Bank’s refinancing system will significantly improve the reliability and stability of Russia's clearing and settlement infrastructure. This approach is consistent with best international practices. The introduction of the post-trading auction is a convenient technology which participants are accustomed to on other countries’ exchanges. The possibility of withdrawing funds in the amount of the planned position greatly improves the flexibility of cash management."
Transition of clearing
In accordance with the Rules for clearing and the decision of the Directorate of the MICEX Stock Exchange of 10.10.2011 (Minutes N118), beginning from November 1, 2011, Bank "National Clearing Centre" will start clearing of trades in securities executed in the course of trading on the MICEX Stock Exchange.
The NCC will act as the central counterparty for trades in securities executed on the MICEX stock market with 100% advance deposition and T+0 settlements, including trades with settlements in foreign currency, with the exception of placements, repurchases and repos.
As a result of the involvement of the central counterparty:
• the will be a prerequisites for further implementation of the technology of trading with advance partial deposition and T+n settlements, as well as prerequisites for the creation of the repo market with the central counterparty, which will help to introduce new instruments and mechanisms of executing and settling trades: repos "with a basket”, cash-driven repos, repos with the blocking or replacement of the security, etc.
• it will be possible to merge the clearing for the MICEX Group’s foreign exchange, stock and derivatives markets within one organization with the creation of a unified position for all markets
Trading in large blocks of securities
In November 2011, the MICEX Group will launch in its stock market a new mode of trading in large blocks of securities, the so-called dark pool of liquidity. The new trading mode enables to execute large trades in securities at prices formed on the basis of the main trading mode.
Trades in the new mode will be executed at the mid-point price within a certain price range in the main trading mode, using a hidden book of orders. This will help to avoid possible significant impact on the price change when executing large-scale trades. For the first time in the Russian market, a technology is offered that uses the mid-point price, which will ensure the execution of large trades at the best market price.
In the new trading mode, the make-up of participants will be the same as in the main trading mode, as well as the common clearing and settlement system, which will ensure a single position for all stock market trades.
The date of the start of trading in the new mode, as well as certain features of trading will be determined and announced later.
On November 14, 2011, the main trading mode will be complemented by a new period of trading, "the post-trading auction." The mechanism of holding the post-trading auction is similar to the mechanism of pre-trading period of the main trading mode, except that in the post-trading auction participants receive information on orders with 20 best prices submitted in the course of the post-trading auction. The auction will be held after the end of the trading period in the main trading mode and will last for 5 minutes (18:45 - 18:50).
Withdrawal of funds in the amount of the planned position
The transfer of clearing to the NCC as of November 1, 2011, will make it possible to withdraw funds in the course of trading in the real-time mode in the amount of the planned position. This will enable a clearing participant who has executed a selling transaction with 100% advance deposition in the course of trading to withdraw the money owed to him in this transaction immediately after its execution, without waiting for the settlement of the transaction effected following the results of trading. It will also be possible to execute trades with settlement code Z0 and submit Urgent reports for settlement through the planned position in cash.
The new version of the Rules for Trading in securities on the MICEX Stock Exchange was approved by the Board of the MICEX Stock Exchange on 23.09.2011 (Minutes N5) and registered by the RF Federal Financial Markets Service on 13.10.2011. The text of the Rules for Trading can be found at: http://www.micex.ru/articles/file/10126/trading_rules_.doc
The new version of the Rules for Clearing Provided by Bank "National Clearing Centre" in the Securities Market was approved by the Supervisory Board of Bank "National Clearing Centre" on 31.08.2011 (Minutes N3) and registered by the RF Federal Financial Markets Service on 06.10.2011. The text of the Rules can be found at: /viewCatalog.do?menuKey=119