By Jacob Bunge
Russia's main exchange operator aims to harness the country's
resource riches as the company bids for a position among the global
exchange elite, according to its chief executive.
Moscow Exchange plans to develop markets in gold and grains and
will utilize its ownership in smaller local exchanges as the
company seeks to become a regional trading power, according to CEO
Alexander Afanasiev.
"Many of the customers of Moscow Exchange, particularly
international clients, might see us as a hub for entering other
[former Soviet Union] countries for international investing," Mr.
Afanasiev said following a visit to the U.S. last week, in his
first interview since the exchange's February flotation. The
commodities push places the company alongside foreign-based
exchange rivals such as Canada's TMX Group Inc. (X.T) and ASX Ltd.
(ASX.AU) in Australia, both working to parlay those nations'
commodity strengths into trading business. Moscow's largest
financial markets operate under one roof following the December
2011 merger of the country's two main exchange operators. The
enlarged Moscow Exchange has been revamping its stock markets in
recent months, upgrading infrastructure for the settlement of
trades and pushing for an overhaul of pension-plan rules that could
drive more investment in Russian securities.
To hasten expansion efforts, Moscow Exchange is discussing
possible alliances with international peers, including Germany's
Deutsche Boerse AG (DB1.XE, DBOEF) and U.S.-based operators CME
Group Inc. (CME) and NYSE Euronext (NYX), Mr. Afanasiev said.
Moscow Exchange's stock, futures and currency platforms cover a
broader range of asset classes than many of its foreign-based
competitors, but Russia has struggled against the perception that
its financial markets are clubby and tough for outsiders to
navigate. Domestic restrictions around securities investing have
prompted some Russian companies to list shares in London and
elsewhere, while prices for the region's wheat harvests generally
remain set in Chicago and Paris.
Moscow Exchange already runs the number-nine derivatives market
globally in terms of trading activity, according to data from the
Futures Industry Association. Its strength has been in financial
futures, such as contracts linked to the RTS Russian stock index,
with more than 320 million contracts traded in 2012.
Mr. Afanasiev, a former Russian banker who joined the exchange
in 2005 and was named CEO last June, aims to expand Moscow's
commodities franchise into bullion trading by the end of the year,
planning a new market in physical metals like gold. Russia ranked
fourth last year in terms of global gold production with 205 tons
yielded, according to a February report from the U.S. Geological
Survey. The effort will tap existing gold-storage facilities in
Moscow, Mr. Afanasiev said.
The country's first exchange-traded funds linked to precious
metals like gold and platinum are set to launch in the coming
weeks, he said.
Moscow Exchange's ruble-denominated grain markets have potential
to be more widely used across the Black Sea region, among the
world's biggest growers of wheat, according to Mr. Afanasiev.
To extend grain efforts Moscow could build on its relationship
with Kazakhstan's commodity exchange, where Moscow Exchange owns a
61% stake, he said. The Kazakhstan market runs trading in wheat,
barley, rye and sunflower seeds.
As it revamps its derivatives and securities markets Moscow
Exchange is weighing alliances with CME and NYSE around
risk-management services, order routing and pricing data, Mr.
Afanasiev said.
Moscow Exchange is also discussing the cross-listing of some
futures contracts with Deutsche Boerse, he said, and may offer a
version of the German exchange group's money-market trading
service. The two exchange companies last November sealed an
agreement to explore partnerships.
Representatives for Deutsche Boerse, CME and NYSE declined
comment.
Shares in Moscow Exchange have fallen 21% since its initial
public offering Feb. 15, touted as a milestone in the Vladimir
Putin government's longer-range ambition to elevate Moscow as an
international hub for finance. Russia's Micex stock index has
declined 12% over that time.
-Lukas Alpert in Moscow contributed to this article.
Write to Jacob Bunge at jacob.bunge@wsj.com