Moscow Exchange Net Rises as Money Markets Offset Securities

The Moscow Exchange posted a 22 percent profit gain last year as rising income from money-market and currency fees outweighed a drop in revenue from securities.

Net income climbed to 8.2 billion rubles ($263 million) in 2012, the exchange said in a statement today. Revenue advanced 27 percent to 21.55 billion rubles as total trading volume across all markets increased 24 percent to 369.72 trillion rubles.

Fee and commission income from the securities market dropped 26 percent to 3.08 billion rubles as trading fell in the year, according to the statement. Income from foreign exchange and money markets gained 28 percent and 108 percent, respectively, while fees from the derivatives market were boosted 56 percent to 1.3 billion rubles.

“We see that our clients don’t have the risk appetite for equities, we see that the growth in trading volumes is happening in fixed-income instruments,” Andrey Shemetov, deputy chief executive officer, said at a press conference yesterday. “Investors don’t want to take risks. At the moment investors’ interest in the Russian market is very low.”

Total trading volume in the securities market in 2012 dropped 21 percent to 24.1 trillion rubles from a year earlier, according to the statement. Equity volumes declined 41 percent, while bond trading rose 19 percent.

Securities market trading decreased 7.3 percent to 5.9 trillion rubles in the first quarter from the same period a year earlier, according to the bourse’s presentation.

The exchange plans to pay no less than 30 percent of net income under international financial reporting standards as dividends for 2012 and no less than 40 percent for 2013, the bourse said in a Feb. 4 statement.

Modernizing Drive

The Moscow Exchange, which is modernizing to lure more foreign investors, debuted two-day, or T+2, settlement for sovereign debt and 15 of the more than 1,000 equities on March 25. OFZs and fifteen stocks will use T+0 and T+2 settlement systems simultaneously until July 1, when the 50 most-liquid Russian stocks and OFZs will switch to T+2, Shemetov said. The entire exchange will move to T+2 settlement by the end of 2013.

“Almost all the big market players have set up access to T+2,” Shemetov said. “Many market participants come to us asking to completely switch off T+0 from July 1 for all equities.”

The exchange raised 15 billion rubles on Feb. 15 in the biggest initial public offering on Russia’s bourse since 2007, pricing at 55 rubles a share, the bottom of its target range. The shares fell 2.7 percent to 48.44 rubles by the close in Moscow today, a 12 percent drop from the IPO price.

“The management’s goal is to make sure the bourse’s stock price rises,” Shemetov said. “We have the capacity to achieve a 50 percent-higher stock price than the IPO price in three years.”

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