Russia’s two leading stock exchanges the Micex and the RTS may be set for a historical, but drawn out, merger.

Two exchanges, two different sets of investors. The Moscow Interbank Currency Exchange, or Micex, dominates trading in Russian equities, accounting for an estimated 75% of all transactions. It trades, quotes, and settles onshore in Roubles, and is 30% owned by the Central bank. Its counterpart, the Russian Trading System, or RTS, is better known globally, and is the exchange of choice for most foreign investors. It quotes its prices in dollars, and settles most trades offshore.

The different exchanges can make life confusing for investors, with exchange rate movements sometimes meaning that shares in one company can move in opposite directions, or in the same direction by significantly varying amounts. The Micex is open for a further 45 minutes each day, until 18:45 Moscow time, meaning movements in it can sometimes reflect events occurring in early morning U.S. trade. More exasperatingly for investors, during the slump in Russian equities in late 2008, the two were often open or closed at different times.

These circumstances mean that there has long been some sentiment that the two would be better as one, and Vladimir Milovidov, Chief of the Federal Financial Markets Service, thinks it is time to put those thoughts into effect.

“I think that in order to consolidate liquidity on the Russian market. It would be best to move towards a united trading floor that would concentrate on liquidity through Russian financial instruments.”

Those in support of a merger say it would enable synergies to create better trading infrastructure, where a more efficient exchange attracted foreign investors, and more domestic IPO’s in the current, difficult economic climate. But Renaissance Capital’s Tom Mundy fears it may only serve to monopolize the market.

"There would therefore only be one central Russian exchange, and that suggests a monopolization of the market by the one exchange, and that could affect the cost of doing business here."

Key issues which need address in any merger proposal include the differing ownership structures, and the role of the Central Bank of Russia as both a shareholder of the Micex and the regulator of the system.