FX volume at Moscow Exchange takes a step back in July

abdelaziz Fathi

Currency trading at Moscow Exchange (MOEX) halted its upward route in July as volatility calmed relative to June when coronavirus fears sparked a wave of speculation and hedging activity.

MOEX’s total FX market turnover fell to RUB 25.8 trillion last month, down 2.6 percent month-over-month from the RUB 26.5 trillion exchanged hands in June 2021. Compared with volumes from the same month a year earlier, this figure was down 6.2 percent when weighed against RUB 27.5 trillion in June 2020.

Average daily volumes reached RUB 1.17 trillion in the last month, down 2.5 percent against RUB 1.204 billion in June, Moex said in a statement. Year-over-year, the ADV figure was down 6.4 percent from RUB 1.250 trillion  in 2020.

Delving further into the details, July turnover included spot trades of RUB 7.7 trillion, up 9 percent from July 202, and ‎swap trades coming in at RUB 18.1 trillion compared with RUB 18.9 trillion the previous month.

The metrics show that spot volumes, in particular, continue to surge, and the momentum seen throughout June had continued into July. On the other side, the drop in MOEX’s FX turnover is primarily caused by the fall in FX swaps, used mostly for liquidity management and hedging of foreign currency portfolios. In 2020, the foreign exchange swaps accounted for nearly 50 percent of the total FX market turnover, according to the BIS triennial survey.

Russia’s largest bourse attributed the growth to its new products and upcoming regulatory changes, which helped increase the share of interest swaps in total market turnover to 40 percent. Moscow Exchange’s derivatives are offering lines up swaps, FX swaps, cross-currency swaps, FX forwards and options with maturities from 3 days to 5 years.

Amid concerns over the economic impact from the coronavirus outbreak, there was a brighter side for FX platforms, which attracted a rush of business as investors scrambled to protect portfolios.

MOEX, in particular, continues to develop its infrastructure as part of a state-backed drive to make Russia’s largest institutional trading venue one of the world’s leading financial hubs. Most recently, the exchange acquired a minority stake in BierbaumPro, which owns proprietary OTC FX platform NTPro.

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