Trading volume on Equty Market

Trading volume on Bond Market

Trading volume

Total bond trading volumes in 2015 were RUB 11.2 trillion, up 5.2% year-on-year. Issuance of federal government bonds (OFZs) increased by 359.3% year-on-year, while placements of corporate bonds set a new record of RUB 2.0 trillion (up 5.2% year-on-year). Total equity trading volumes in 2015 were RUB 9.40 trillion, down 8.6% year-on-year. The Equity Market’s total capitalisation was RUB 28.8 trillion (USD 393.2 billion) as of year-end 2015.

Individual investment accounts (IIA)

Since 1 January 2015, individuals have been able to open individual investment accounts (IIAs). Such accounts provide them with tax credits while investing in equities and bonds. Moscow Exchange registered almost 89,000 IIAs in 2015, and the 100,000th investment account was opened in mid-February 2016. Seventy-six brokerages and asset management companies opened individual investment accounts for their clients. About 30% of the total number of IIAs opened belong to new clients who had never traded in the market before. The number of active clients on Moscow Exchange’s Equity & Bond Market grew by 20% in 2015.

Remote account opening

Since 15 October 2015, brokers and asset management companies have been able to identify individuals online in order to conclude remote contracts through the Unified System for Identification and Authentication (USIA) and the Interagency Electronic Interaction System (IEIS). These convenient and simple techniques for the registration of new clients will allow more private investors to open accounts, including individual investment accounts. Two brokers launched a full cycle of remote account opening via the USIA; and two other companies offered this service early in 2016. In addition, Moscow Exchange is assisting approximately 50 other companies in their connection to the USIA. Fully fledged client identification through the use of a data set via the IEIS is to be introduced in 2016.

Transfer of trading in OFZs to single order book Т+1

Since 1 June 2015, settlement for trades in federal government bonds (OFZs) was changed from T0 to T+1 with partial prefunding. The move allows market participants to reduce the cost of funding transactions in the public debt market, increases the volume of transactions and makes the work of market makers more effective. This resulted in the growth of average monthly OFZ trading volumes by 61% in the second half of 2015 compared to the first six months of the year.

Innovation and investment market

In 2015, trading volumes on the Moscow Exchange’s Innovation and Investment Market (IIM) increased 82% YoY to RUB 54.5 billion. The MICEX Innovation Index rose 58.7% during the year. Thirty-six securities (17 stocks, nine bonds, eight mutual funds, one depository receipt and one exchange-traded fund) were being traded on the IIM by the end of the year. Total market capitalisation was RUB 213.86 billion.

The IIM was established in 2009 at the initiative of Moscow Exchange together with RUSNANO to facilitate investments primarily in Russian small and medium-sized innovative enterprises.

In January 2015, Moscow Exchange adopted a road map for the development of the market. It was designed mainly to improve the quality of issuers admitted to trading on the IIM.

During the year, Moscow Exchange initiated several amendments to the tax code that resulted in tax incentives for investors in IIM securities. These tax benefits took effect on 1 January 2016.

A Pre-IPO fund was established by Da Vinci Capital and Russian Venture Company on the basis of the IIM infrastructure.

In September, a market-making programme was launched for promising shares to increase liquidity and incentivise IIM listing agents.

Post-IPO instruments for IIM issuers were also created in partnership with the Foundation for Assistance to Small Innovative Enterprises in Science and Technology.

Opening and closing auctions

The closing auction technology employed by Moscow Exchange is internationally recognised, as it provides representative share prices and prevents artificial over- or under-pricing. Since 13 April 2015, FTSE, the UK-based index provider, has used MOEX’s closing auction prices for listed Russian stocks when calculating end-of-day values for its indices. This has supported liquidity on the Equity Market. In 2015, the share of daily trading accounted for by the closing auctions increased by 30%, even reaching 11% of the total trading volume on particular days.

Since 1 June 2015, an opening auction has been used for OFZs and equities instead of a pre-trading period. The distinguishing feature of such auctions is that participants are able to make market orders. In addition, a closing auction was introduced for OFZs, with its technology fully in line with closing auctions in the Equity Market.

New instruments

In 2015, Moscow Exchange started trading in new types of securities, including inflation-linked OFZs (OFZ-INs), as well as structured bonds from BrokerCreditService Structured Products Plc which are similar to exchange traded notes (ETNs) in the West and pegged to a basket of diverse assets, which enables investors not only to get a yield in various market situations but also to significantly diversify their investments.

Since 1 June, the Equity Market has providing the option of trades in international securities with T+ settlement in USD. In addition, it has become possible to trade in bonds denominated in CNY and GBP, as well as to settle accounts in such currencies.

Moscow Exchange permitted the trading of 18 Eurobonds from Russian borrowers with a reduction in the size of the minimum trading lot to USD 1,000, which made them more accessible to individuals and increased their interest in debt market investments.

2015 saw a number of primary bond issues by specialised financial companies (SFCs) in accordance with the so-called securitisation amendment package:

• SFC Europe 14-1А, Classes А and B, total volume of RUB 14.2 billion;
• SFC Uralsib Leasing 01, total volume of RUB 2.2 billion.

In 2015, Moscow Exchange established a new way to register bond issues that significantly simplifies issuers’ access to the debt market, which is called an exchange-traded bond programme. Moscow Exchange registered 37 programmes for a total of RUB 4,750.5 bln, USD 10.1 bln and EUR 5 bln. 22 issues of exchange-traded bonds were placed under the programmes.

Attracting new issuers

Equity & bond listing

In 2015, Moscow Exchange continued to strengthen its listing requirements for all instrument types in order to increase the depth of analysis and the quality of securities admitted to trading.

For inclusion of equities in listing Level 1:

• From 1 April 2016 the median daily volume should be at least RUB 1 million; otherwise two agreements on the provision of market maker services are required.

For inclusion of bonds in listing Level 1:

• Collateral is required (though some types of issuers are exempt from this requirement);
• The borrower (guarantor) must be assigned a rating for its bonds;
• The list of rating agencies whose ratings are accepted for listing purposes has been reduced.

To include bonds in the Level 2 and Level 3 Lists:

• As from 1 July 2016 a representative of bondholders is required (not apply to certain categories of issuers).

The functions of Moscow Exchange’s user committees were expanded.

• The Exchange has been vested with the right to refuse to include securities in Level 1 on the basis of user committee recommendations.

New on the Innovations and Investment Market:

• A new segment IIM-Prime has been established for securities of innovative companies which meet stronger requirements for market cap and corporate governance,
• Market capitalisation and innovation capability criteria have been raised.

Listing of international securities

• In 2015, 21 international securities were admitted to trading.
• International issuers who have listed on a foreign exchange are not required to translate their material facts into Russian when disclosing information for their Russian listing.
• When international securities are listed upon decision of a Russian exchange, the requirements set by the rules of such an exchange may be applied to the international issuer’s securities prospectus.
• The time frame between the listing and the date of trading in international securities included in the list by an exchange decision has been reduced from three days to one day.
• Exchange traded funds have been added to the list of instruments allowed for the investment of pension accruals through private pension funds.

In 2016, the Exchange is planning to expand its bond product line to include structured bonds issued by banks and linked to various indicators; non-mortgage securitisation of loans, which is one of the techniques used to free up Russian banks’ capital; as well as interest rate linked products issued by corporates that are similar to OFZ-INs.

In 2015, Moscow Exchange registered four issues of exchange-traded bonds denominated in CNY worth a total of CNY 2.85 billion and two issues of exchange-traded bonds denominated in CHF worth CHF 400 million. These registered bonds may be placed on the market in 2016.

USD-denominated Eurobonds were transferred to the T+2 settlement cycle as of 25 January 2016. This move is aimed at reducing funding costs of participants and increasing trading volumes by removing the full collateral requirement.

New exchange-traded funds (ETFs) are expected to be launched. By early 2016, there were 11 ETFs on Moscow Exchange with underlying assets of Eurobonds of Russian corporates, US Treasury bonds, shares of the MSCI index family and gold bullion. At the beginning of March 2016, the first ETF on the RTS Index was admitted to trading.

In 2016, Moscow Exchange plans to continue improving its listing rules by establishing additional requirements for issuers, securities and market participants.

• To include mortgage-backed participation certificates in Level 1, it plans to set additional requirements for self-regulatory organisations (SRO), that include an appraiser or for appraisers who set the market value of mortgaged property.
• To include and maintain investment units on the list, the Moscow Exchange intends to increase requirements for the minimum amount of net asset value (NAV) of mutual funds.
• Corporate governance requirements are planned to be amended, including those for internal audit, functions of the corporate secretary, and committee functions.

There are plans to expand the list of foreign financial instruments in 2016 to include:

• ETFs;
• Structured bonds;
• Eurobonds admitted to trading upon the Exchange’s initiative.

Listing Reform

In 2016, the two-year grace period for issuers of stock to comply with the listing reforms will come to an end. Russian companies will be expected to bring their securities and corporate governance into line with the new listing rules.

Key changes under the listing reform:

• Strengthened corporate governance requirements for Russian issuers in accordance with the Corporate Governance Code;
• Reduced the number of levels in the securities list from six to three;
• Enabled issuers to include securities in any listing level at the stage of their initial public offering;
• Introduced a free-float requirement for inclusion of shares on the list;
• Deeper history of IFRS reporting to be submitted to the Exchange;
• Increased rating requirements for bonds.