MOSCOW (Scrap Register): Russia will soon begin trading gold and silver on its Moscow stock exchange. The country has so far only been dealing with futures on gold and silver but traders will now be able to buy and sell gold, silver and eventually platinum and palladium at spot prices.
On June 26 the project "Precious metals market at the Moscow Exchange" was presented to the credit organizations, members of the Moscow Exchange's FX market, that have licenses to trade precious metals.
It is expected that the Exchange will launch trading in gold and silver with prices in rubles per gram and TOM settlement as well as swaps with maturity of TODTOM, TOMSPOT, 1w, 1M and 6M by the end of 2013.
“We are a gold-exporting country. We produce a large number of precious metals. However, the trade volume is still significantly lagging behind our peers. Our commodity market is not transparent," Gazeta.ru quotes the director of the commodity market of the Moscow exchange, Mikhail Orlenko.
Trades will be settled in Russian rubles. Trading hours will be from 10:00 through 23:50 MSK. Trading participants will utilize the risk management system of the FX market. Trading positions will be consolidated with the FX instruments for clearing purpose and existing settlement accounts may be used. NCC, the clearing arm of the Moscow Exchange Group, will ensure settlement of trades.
Credit organizations and brokerage firms will be the market trading members providing the access to the market to their clients, private investors, as well as precious metals producers and consumers.
With this new marketplace private investors will enjoy a new instrument serving as an alternative to OTC trading with impersonal metal accounts and offering minimum spreads and short selling opportunities. Banks will reduce costs associated with joining the precious market and be able to use the exchange infrastructure to make proprietary and client operations.
In addition, credit organizations will obtain an additional way to refinance with the Bank of Russia and on the interbank market. Brokerage firms will be admitted to the market which was previously unavailable for them thus getting an opportunity to create products for clients using new instruments. Metals producers and consumers will be able to hedge against price risk through the exchange-traded instruments.
Russia accounts for 43% of global palladium production and is the second largest producer of platinum.