MICEX buy out of RTS mooted

The MICEX will look to buy out the RTS after consolidating its operations, according to the head of the Central Bank's department for financial market operations, Sergei Shvetsov.

Speaking at a MICEX forum on Wednesday Shevtsov said "After the MICEX Group is consolidated, it will make an offer to the RTS Group," when asked if a single clearing centre would be developed in Russia.

Shvetsov noted that legislative changes would be needed to allow the MICEX to purchase the RTS, after the consolidation of the MICEX ownership structure, saying this was essential prior to the MICEX proceeding with any move on the RTS.

"Without the construction of a vertically integrated company from the MICEX itself, MICEX has nothing today to offer to RTS. Its own consolidation precedes the consolidation phase with a competing company."

He added that if regulators and traders on both exchanges saw the creation of a single clearing exchange as reasonable, several corporate procedures would be necessary, including the creation of a single holding company.

"The offer implies a proposal where the shareholders of MICEX will be able to make an additional share issue for CJSC MICEX in favour of the shareholders in the RTS."

Ivan Ivanchenko, Head of Investment Strategy at VTB Capital, believes any move to bring together the two major Russian stock exchanges would be welcomed by investors.

“Every institutional investor I’ve talked to actually would prefer a single exchange a-la pan-European exchange being in Russia or elsewhere. A single clearance system, a single settlement process and procedures are very important because Russian laws are so different from anglo – saxon, for example, where we have the major financial centres, that you have just unique code and settlement rules for all investors. And you also have to consider that creating just one exchange instead of many would mean that you would consolidate liquidity in one big pool.”