Russian Stock Market - Investing Opportunity, but with High Political Risk
Russian stock market has recently posted outstanding returns. It provides investors with marginal trade and uncovered shares sale options, futures and options.
Russian stock market includes MICEX and RTS.
MICEX
Interbank currency exchange or called MICEX is one of the biggest global Moscow stock exchanges in Russia and Eastern Europe. MICEX started trading in 1992 and is one of the largest Russian stock markets today. With 239 Russian companies enrolled on it and there is a securities capitalization of U.S. $ 721.5 billion in August 2010. MICEX has the almost 550 participating organizations and associates who trade for their customers. The volume of trades on the MICEX was 20.38 trillion rubles (equal to 754.9 billion USD) in 2006, bigger than 90% of the total sales in the leading Russian stock market.
MICEX exchange auctions started in November 1989 as an beginning of foreign trade and investment bank in the USSR. It is the first time the market exchange rate of ruble versus dollar has been created. It turned into the major trading platform for foreign exchange transactions of banks and companies in January 1992. The interest rate on the Moscow Interbank securities exchange is employed by the central bank for official rate of the ruble in foreign currency since July 1992. An arrangement for trading securities and the future began in the mid 90’s. Despite the crisis in August 1998 the Russian stock market still had a robust position as the largest trading platform in Russia. MICEX securities section includes the capital stock and corporate bonds with main advantages: the declaration of the MICEX clearing chamber includes restrictions to secure money deposited into the trading system (room with the Bank of Russia must not be able to cover all of the cash on hand and the participants of these funds invest in an asset) . Traders can trade without the amount of available funds by the lot trade is equal to R 300, the opening of trades are anonymous, all traders will have the same rights, execution of transactions through the mechanism of delivery versus payment guaranteed. Investors can use these financial instruments such as margin trading and sale of stock options in the open. MICEX is making assessment against market manipulation, fraud in the protection of investors, especially possible in the Securities section. (PP21, 22 rules for securities trading on the MICEX)
Russian Stock Exchange (RTS)
The Russian trading system stock exchange or called RTS is calculated on the first September 1995 like the original indicator of exchange. This index is relied on the 50 floating securities on the market. It is calculated from the prices in real time every 30 minutes. Exchange real-time strategy is also responsible for calculating and publishing the index of RTS Standard Index (called RTSSTD), RTS-2 index (called RTS2) and sector indexes, including Oil & Gas (called RTSog), Telecom (called RTStl) Metals and Mining (called RTSmm) Industrial (called RTSin), consumer and retail trade (called RTScr), electricity (called RTSeu) and finance (called RTSfn). The product range includes standard RTS, RTS Classica, RTS T+0, RTS board & FORTS (RTS futures and options). In connection with the operation of the RTS Group is a key element in the fight against the international currencies, ruble and clearance, settlement and custody. Today, RTS commodities means are:
- Standard RTS, a number of new shares in the market for the most floating securities in Russia. T + 4 payments in rubles, using CPC technology reinforced effective standard RTS Forts, RTS derivatives part and portfolios come close to margin point of style and the positions of the derivatives markets.
- RTS Classica trading platform in the Russian stock market rule that allows trading with two currencies of rubles and foreign. The standard deal cycles to T+4, no requirement of stocks and cash are made before trades. About 500 titles of securities are listed on the Russian stock market.
- T+0 RTS market, the trading securities for private investors with a full deposit of assets and ruble deal.
- RTS Board, the market index for unlisted securities and bonds.
- FORT, futures and options market are traded in ruble since 2001. Nowaday, they offered 47 contracts (34 futures and 13 options) on securities of Russian corporations, bonds, interest rates in the short term, currency, RTS Indices, oil, petroleum products, sugar and metals. Futures are the most floating contract on RTS index.
The Russian stock market is open from 10.30 to 18.00 Moscow time (GMT +3). It includes international members like Deutsche bank, CSFB, UBS, Morgan Stanley, etc. Both Russian stock market and FORTS market are trading in strong international electronic standard platforms, which offers direct market access, and algorithmic trading. The purpose of the RTS Group is Open Joint Stock Company RTS, which facilitates trades. The main shareholders are the global investment banks such as UBS, Credit Suisse, and Deutsche bank. RTS is devoted to making a robust financial market, pushing Russia to play an important position in the worldwide economy and a key component of the global financial system.
Conclusion
If you consider about investing in the Russian stock market, you had better consult your broker if he is regulated with a license to invest in the Russian stock market. As stated in law that every broker taking action in the RTS must have either a Federal Financial Markets Service of Russia broker license or a Federal Financial Markets Service of Russia dealer license. If your broker has not got a valid license, then find out who does by contacting representatives of financial services in the communities in the larger cities of Russia. Before investing in Russia, it is important to consider the risks. Investors must weigh the political risks in Russia, strong tendency for oil and gas reserves, and continuing concerns about the transparency and corporate governance. To begin to invest in securities in Russia you should only invest what you can afford to lose. Another way is to reduce the risk is that you should invest in long-term goals. Russian investment such as in any new market means trader would expect it in vast fluctuations. A long-term investing reduces the risk of this volatility.
Written by: Goran Dolenc
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