Growth outlook for 2021
In accordance with MOEX’s new corporate strategy through 2024, the Exchange will introduce new instruments and improve availability of products and services for market participants and customers, as well as introduce new technologies and attract new categories of customers. Particular attention will be paid to working with investors and issuers, including small and medium-sized enterprises, with the goal of developing the equity and debt capital markets.
ATTRACTING PRIVATE INVESTORS
Retail investors are one of the most important customer groups for Moscow Exchange. It will continue to expand its product range for retail investors, develop new services and promote financial literacy.
The inflow of new private investors to Moscow Exchange once again emphasises the importance of setting the right expectations for non-professional investors, as some of them are entering the market for the first time. Moscow Exchange will continue to make significant efforts to meet these expectations and create the necessary conditions for informed investment decisions and transparent operation of the markets.
In particular, it will continue to implement previously launched financial literacy projects, such as the Moscow Exchange School, create educational podcasts and videos, and develop information resources, including the Exchange website and Telegram channels. Moscow Exchange makes extensive use of modern technology, converting most of its activities to a digital format.
In addition, Moscow Exchange plans to launch a new training course to provide basic knowledge with easy access for investors. The course will cover the main investment instruments and their characteristics, investment risks and costs of investing. There are plans to develop new courses for more experienced investors as well.
In 2021, the Exchange will increase the number of international stocks admitted to trading, improving retail investors’ access to a variety of instruments and portfolio diversification opportunities. The list of securities is being expanded to reflect demand from banks, brokerage and asset management companies and their clients.
New USD/RUB and EUR/RUB instruments with a one cent lot will be launched in the first quarter, allowing clients to make conversion transactions of up to 1,000 US dollars or 1,000 euro. The service is needed to expand the opportunities of individuals to make foreign currency transactions, develop conversion within the framework of individual investment accounts and transactions in foreign securities, i.e. receipt of coupon payments and dividends.
The personal finance platform Finuslugi will continue to be developed, which in the long term should become a personal finance management centre for Russian residents. In 2020, basic financial products were launched and new features will gradually be added. In the future, government bonds for households (OFZ-n), loans and other products from banks, asset managers and insurance companies will become available.
EXPANDING TRADING HOURS ON THE FX AND DERIVATIVES MARKETS
Moscow Exchange plans to open the FX, Derivatives and Precious Metals Markets at 7 am (Moscow time) from March 2021. Thus, trading hours on these markets will increase from 14 to 17 hours per day.
The extended trading period will provide all groups of investors with new opportunities for trading on Moscow Exchange markets:
- Clients in the Asia-Pacific region as well as eastern regions of Russia will benefit from expanded access to on-exchange trading;
- Investors will be able to respond more quickly to changes in global markets and take advantage of additional trading and arbitrage opportunities in the morning hours.;
- The extended trading day also opens up additional possibilities for MOEX to cooperate with trading venues and investors across Asia.
DEVELOPMENT OF THE MOEX TREASURY PLATFORM
The Exchange will continue streamlining a platform for corporate customers (MOEX Treasury) that have direct access to the Exchange. It is planned to expand the MOEX Treasury platform’s functionality, including the access of corporate clients to the Precious Metals Market, the possibility of using algorithmic mechanisms and Request for Stream (RFS) services in accordance with the wishes and requests of participants. It is also planned to connect new participants to the platform; 32 companies were connected in December 2020.
PROMOTING SUSTAINABLE DEVELOPMENT PRACTICES
The trend towards increasing the relevance of sustainability is reflected in Moscow Exchange’s future projects. Moscow Exchange will continue to integrate sustainability into strategic planning, as well as into corporate governance and risk management, and improve reporting on sustainability progress. The pandemic environment has intensified the focus on improving cybersecurity and accelerating digitalisation. Work will continue on the implementation of the UN Sustainable Development Goals (SDGs), with seven SDGs selected by the Exchange in 2020 and targets set within these goals.
The Exchange has an important role and responsibility in supporting companies and issuers in the transition to a sustainable and low-carbon economy. The Exchange will engage financial market participants and raise their awareness of opportunities related to ESG finance and new ESG products. Like other global exchanges, Moscow Exchange will continue to develop a range of ESG products and services, including a special sector for small and medium-sized companies called Growth Sector, Sustainable Development Sector, ESG indices and ETFs on ESG indices as well as ESG derivatives. To engage and educate market participants, Moscow Exchange plans to develop financial literacy in ESG, including through the release of the ESG Best Practices Guide for Russian companies.
EXPANDING THE RANGE OF INSTRUMENTS AND INTERNATIONAL COOPERATION
In 2021, Moscow Exchange will start to calculate two new sectoral indices, for high-tech companies and construction companies, which was made possible after a series of successful offerings in 2020.
Moscow Exchange will also continue to actively expand its derivatives product range. The plans include:
- The launch of the Real Estate Index futures contract. It will allow investment funds and private investors to pursue strategies aimed at gaining profit from changes in real estate prices. Developers will be able to hedge market risk and financial companies will create new products to help retail investors accumulate funds to purchase real estate or a make a down payment;
- The launch of the US Equity Index futures contract;
- development of a range of commodity futures, including the further development of the wheat contract;
- trading in options strategies;
- the launch of a futures contract on the Total Return Index.
Moscow Exchange plans to expand cooperation with CIS infrastructure organisations and to cooperate with exchanges in China and other Asian countries. Among other things, an opportunity to establish trading and clearing links between the markets of our countries as well as share technology and experience is under consideration.
DEVELOPMENT OF OTC SERVICES
The Exchange plans to continue to enhance access for market participants and their customers to global OTC markets and to offer better prices thanks to the exchange infrastructure and to further expand new customized mechanisms for liquidity takers/makers that are recognized globally among OTC FX platforms:
- launching in the Links with Foreign Liquidity Providers: TWAP algorithmic order; swap instruments (TOMSPT swaps with liquidity providers via RFS technology) with synchronised settlement with the OTC market and loco London gold trading, including spot and XAU/USD swap instruments;
- development of clearing with the central counterparty through connection of new platforms;
- implementation of pre-trade checks on OTC trading platforms. FX Market participants will be able to conduct transactions on OTC electronic platforms (which meet the requirements of NCC risk management) with a pre-trade check of the NCC limit. Calculation of NCC limit utilization directly in the trading platform will increase the efficiency of client trading operations, provide additional opportunities for distribution of liquidity to clients and business expansion regardless of counterparty credit quality;
- clearing of OTC transactions with expansion of clearing and settlement services in the OTC market through automation and unification of processes for reporting transactions executed on the OTC FX market;
- interaction with NTPro as a pilot platform in Exchange products.
Setting up a trading and clearing link with Shanghai Gold Exchange will make it possible for Russian market participants to access the largest gold market in the world and execute loco Shanghai gold trades with settlement via NCC.
There are plans to launch spot and swap trades in gold through a trading link with major liquidity providers in London.
DEVELOPMENT OF CLEARING ACTIVITIES
A Single Limit Allocation project is planned for implementation, which aims to create an opportunity for market participants to make OTC trades in foreign currencies on OTC platforms without full collateral required and using the single limit formed on the basis of assets accepted by NCC as collateral.
As part of the project to separate the status of trading and clearing members on Moscow Exchange markets, functionality will be implemented to enable NCC to act as a tax agent.
As part of the implementation of the approved roadmap for the development of NCC’s risk management system until 2025:
- transition to process-oriented risk management through the creation of a single map of business processes and risks of NCC and a single cumulative source of information on key processes of NCC, their inherent risks and appropriate control procedures;
- creation of a new risk management platform MEORiMa in order to develop automation on this platform and migrate to online management of NCC’s key risks;
- improving and further developing risk management methodologies and approaches, including for the most actively developing markets, such as the Standartised OTC Derivatives Market.
The Exchange intends to prepare the Equity & Bond Market system for the use of split clearing cores. This will improve the reliability of the system and smooth out the delay curve. Such a project has previously been implemented in the FX Market.
The Exchange’s use of advanced technology will make it possible to launch an entirely new Derivatives Market data distribution protocol in 2021. In line with global best practice, the new protocol will ensure that public market data takes precedence over private data, eliminate information arbitrage between the Exchange’s existing services and reduce software development costs for clients.
The number of unique information and technology services of Moscow Exchange exceeded 200 in 2020. To simplify the customer experience, package solutions are planned for 2021 that will enable customers to connect to the Exchange’s markets without having to immerse themselves in technical specifics.
Plans for 2021 include expanding the product line of non-classical exchange services for risk management, provision of over-the-counter (OTC) information, creating new analytical reports for brokers and their clients and piloting new RegTech products.