Caderus Capital latest investment webinar with participation of Sergei Klinkov, head of the International Relations Department of the Central Bank of Russia and Maria Kharlashkina, deputy head of strategy of the Moscow Exchange.

Chinese New year greetings accompanied by an overview of the latest and forthcoming reforms of the financial market infrastructure in Russia.

Andrei Akopian: Hello, dear friends!

Russian financial markets enter the new Lunar calendar year on quite an optimistic note.

The Russian equity market has gained over 6% this year to mid-February.

The Russian rouble has appreciated about 2% to the US dollar.

The inflation was 2.5% in 2017, a drop of more than 50% versus 2016.

The Russian Central bank cut the key interest rate to 7.5% in mid-February and the market is expecting further cuts throughout 2018, which will surely provide support for the rouble bond market and the equity market.

And now Mr Sergei Klinkov, head of the International Relations Department of the Central Bank of Russia, is going to give his Chinese New Year speech.

Sergei Klinkov: Dear friends, we just entered year 2018 not long ago and today on behalf of the Bank of Russia please allow me to wish you a very happy year 4716, according to the ancient Chinese calendar Huangdi.

Our calendars may differ but the quality of the dynamics of the cooperation between Russian and China proves that we are moving in the same direction.

Last year was a truly significant year for the development of our financial cooperation as the Central Bank of the Russian Federation opened its first foreign representative office in Beijing.

We have made some remarkable progress in the project that is very important for both sides: the Renminbi denominated Russian government bonds issue on the Moscow Exchange.

Recently the Bank of Russia decided to issue a professional securities market participant license to the second market participant with Chinese capital which of course will make the Russian financial market closer to Chinese investors.

I am very happy to announce that the national currencies share in cross-border payments has been growing constantly and steadily.

In September 2017, we arranged the 18th session of the Russian-Chinese financial and banking cooperation sub-commission which was attended by more than 160 representatives of regulators, banks, insurance companies and stock exchanges. We organized a very productive high-level event.

Our cooperation is not limited to a bilateral agenda. Russia and China have much in common in multilateral formats. First of all, I refer to the BRICS format. Moreover, we have much in common in such an integration project as the SCO, and, of course, we are cooperating along the lines of the Eurasian Economic Union representing Russia and the Chinese “One Belt, One Road” Initiative.

We are very grateful to our Chinese partners, and to our long-term partner – the People’s Bank of China, for their professionalism, great ability to listen and to hear, ability to find non-standard solutions for complex issues and of course for their dedication to our common cause.

I do hope that next year will be equally eventful and fruitful for us. I am confident that the results of our joint efforts to strengthen the cooperation between our countries will allow us to bring our relations to an even higher level.

I would like to take this opportunity to wish each of you energy, wisdom, prosperity and success in all of your endeavours!

新年好! (translation from Chinese – Happy New Year!)

Andrei Akopian: Thank you very much, Sergei.

Now let us welcome our next webinar participant Maria Kharlashkina, Moscow Exchange.

Maria Kharlashkina: Greetings, dear friends! Today I would like to share with you the plans and strategy for 2018 of the Moscow Exchange.

This year started well for the Moscow Exchange. We saw an increase in trading volumes for almost all of the products. There are new products coming out and we also see new investors joining the Exchange.

Speaking about the main tasks for us this year, it is first of all the involvement of new categories of investors to the market. Here I am talking primarily of foreign and Russian retail investors.

The projects that we hope will attract more foreign investors include primarily new clearing participants at the foreign exchange, derivatives and equity markets of the Moscow Exchange. These are companies and investors that enter our market via new modern admission and market access systems, including primarily the DMA (Direct Market Access) and SMA (Sponsored Market Access). We already see growth of the number of these participants and the pickup of their trading volume in all of the products.

Speaking about Russian investors, we see a great potential for retail investors. So far, retail investors make up less than 1% of the total population of Russia, which is much lower than in China. The Exchange is planning to launch a number of marketing and technological products, including a marketplace, for the development of private investors’ segment. We are developing a special website together with market participants, brokers and banks which will allow retail investors to trade on the Moscow Exchange in the most convenient and efficient way. So far 6 market participants have joined the program and thanks to this we can see growth of the retail investors segment in the equities section of the Moscow Exchange.

Speaking about Russian institutional investors, there was a breakthrough in 2017 when the Exchange allowed corporate clients to trade directly in the currency and money markets of the Moscow Exchange. Now there are about 30 companies that trade directly in the foreign exchange market and the same amount in the money market, i.e. they do not need the services of either banks or brokers, since they became direct trading participants. This year we expect to increase this number by another 30 in both markets. Thus, about 60 companies will trade directly on the Moscow Exchange.

Speaking about new products, first of all, I would like to mention the expansion of our derivatives market product line. We see a great potential in commodity futures, our new product groups. This is gold and various metals. We are also cooperating with international platforms and we hope that over time, we could do cross-listing of futures contracts with our Chinese partners – derivatives platforms.

Speaking about new Russian domestic products, I would like to mention equity ETFs under the Russian law which we plan to launch this year as well. There is also some potential for cooperation with our Chinese partners, stock exchanges, in terms of cross-listing of such ETFs. We believe that Russian investors will be very interested in ETFs for Chinese equity indices and Chinese investors for Russian equity indices as well. Speaking about the foreign exchange market, we are actively cooperating with international platforms and Thomson Reuters, with which we established a currency trading link at the end of 2017.

We also pay great attention to the development of the primary market. A number of new placements of new companies’ securities are due to happen this year, about 15 companies for equities, and a substantially greater number for the bond market.

Now is a very good time for the Russian public debt market, because interest rates are falling and it is getting more attractive for corporates to raise new debt capital on the stock exchange.

One of such global projects, which the Exchange has been developing for more than a year, is the unified clearing. We plan to complete the project this year, execution of its last stage.

In addition to the single combined account, which has already been offered to the participants, a cross-margining on all of the products and markets of the Exchange will be implemented, which will allow the participants to use their funds much more effectively and save on collateral.

Speaking about new areas, first of all, it is innovation. Last year, the Moscow Exchange established the “Moscow Exchange Innovation” investment fund, which will consider various investment options in companies related to innovations in the financial market.

I would also like to mention our new market data products. The first pilot product has already been launched and it has found its first customers. We plan to launch a range of other new products in 2018 and beyond.

This year we have been actively working on cooperation with China. We hosted a delegation from the Shanghai Stock Exchange. We look forward to holding the Russia-China forum in Moscow together with the Shanghai Stock Exchange this year, as well as a number of events in China, which we have been organizing since 2015 and which have already become annual events, and which are attended by representatives from not only the Exchange, but also Russian state bodies and the Central Bank.

In terms of further development, we plan to sign memorandums of understanding with the Shenzhen Stock Exchange, Shanghai Gold Exchange as well as two derivatives exchanges.

Finally, please allow me to congratulate everyone on the coming Chinese New Year, the year of the dog, and wish all of you prosperity, great health and fulfillment of all your plans!

Thank you very much for your attention. I will look forward to seeing you again.

Andrei Akopian: Thank you, Maria.

Finally, on behalf of Caderus Capital, I would like to join the Russian Central bank and the Moscow Exchange in wishing all our friends and partners a very happy Chinese New Year!

Thank you very much and see you soon!