On 23 December 2015, the National Mercantile Exchange, which is part of Moscow Exchange Group, launched on-exchange trading in deliverable forward contracts with wheat as the underlying asset. Trading is carried out as a bilateral anonymous auction. The contract exercise period ranges from three days to six months. National Logistics Company organises transportation, alongside survey companies. The grain is stored in accredited grain elevators.
NCC Clearing Bank performs the functions of the central counterparty to the trades, as well as the operator of commodities deliveries, for which purpose it has obtained the relevant accreditation from the Bank of Russia. NCC Clearing Bank accredits commodity warehouses, maintains trading and commodity accounts to inventorise the property of clearing members and their clients based on a property storage contract, and conducts transactions with trading and commodity accounts related to the execution of property transfer obligations.
Trading members are offered forwarding services unparalleled in Russian and global exchange-based trading. The service allows the buyer to purchase the underlying assets on condition of delivery to a specified point (any railway station in Russia). Forwarding services to trading members were made possible due to a partnership between Moscow Exchange Group and Rusagrotrans, Russia’s largest grain car fleet operator.
The project launch required the accreditation of grain elevators in the Volgograd and Stavropol regions. Once the elevators were accredited, an electronic document management system was set up, followed by inventory control performed for trading and commodity accounts of trading and clearing members.
Implementation of the project required a new trading and clearing system, UROZHAI, which will make it possible in future to launch trading in derivative instruments with any commodity as the underlying asset.
Authorised by the Ministry of Agriculture, National Mercantile Exchange has since 2002 been involved in government commodity and procurement interventions on the grain market. In 2015, the Ministry of Agriculture conducted procurement interventions to purchase gain for the State Intervention Fund.
In 2015, more than 600 agricultural production participants were involved in procurement interventions, a four-fold increase on 2014.
Over 2.2 mln tons of grain, worth a tolal of RUB 22.4 bln, were purchased through the Exchange for the Intervention Fund (RUB 2.1 bln in 2014). Most of this was committed to the Ural and Siberia federal districts, which are traditionally active participants in state interventions.
In 2016, Moscow Exchange plans to continue expanding opportunities for participants of the Grain Market. To provide liquidity, the Exchange intends to be more active in attracting new participants, increase the number of commodity warehouses by accrediting elevators in various regions of Russia, and improve the inventory control system for commodities in accredited elevators.
As part of extending the product line, it is planned to launch trading in swaps to enable the participants to raise short-term financing against the collateral of left-over inventory on commodity accounts and to optimise payment streams. In addition, given demand by participants, Moscow Exchange is willing to add new groups of commodities as underlying assets.
Along with bilateral auctions, it is planned to provide an opportunity for trading in the format of a unilateral auction.