Western trading standards introduced to Moscow bourse

From January 2013 the Moscow bourse will begin implementing the T+N trading system, compliant with Western standards, aiming to raise its value before the bourse’s February 2013 IPO. 

“The new system assumes partial pre-depositing means. Therefore traders will have more capital free for margin lending actively trading clients,” Alexander Luzhbin, CEO of Alor Broker said for Kommersant. “This will increase customer activity and therefore trade turnover.”

The T+N trading regime functions on the Western markets and its introduction on the combined MICEX/RTS bourse will make IPO’s easier for foreign investors. The new regime will be introduced in stages throughout 2013 to allow Russian traders time their business models to the differences.

The T+N allows payments for transactions to take place in two or three tranches, while currently the Moscow bourse uses the T+0 system in which a 100-percent of the preliminary cash deposit must be made on the day of trading, and the complete payment must be made on the day after the transaction conclusion. The new system also introduces a third party, a central counterparty acting as a safeguard for deals.

Following the new year, trading will take place parallel in the two regimes, to allow Russian players a smooth change to T+N.

The bourse is working to upgrade its trading systems prior to its IPO, announced for Feb, 2013. Earlier this year the bourse informed share price would be dependent on the success of the implementation of the system.

Without the new system the bourse was valued at USD 3.5 bln. This is significantly less than the evaluations of the bourse’s first deputy chairman Alexei Ulyukayev, who estimated capitalization of the Exchange at USD 6 bln earlier this year. In December 2011, after MICEX was combined with RTS, the bourse was valued at USD 4.6 bln.