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MOEX Grapples Again with Lower FX Volumes in August

FX trading volumes continue to decline at major institutional platforms as industry figures show the interest faded somewhat in the third quarter of the year following the pandemic investing boom.

The meltdown in financial markets over the virus has sparked a jump in MOEX’s FX trading volumes since early 2020 as people traded more. Still, the Russian bourse has just reported a 11 percent drop in its monthly volumes, which came in at RUB 23.0 trillion ($315 billion) in August 2021. That compares to RUB 25.8 trillion in July.

Compared with volumes from the same month a year earlier, August’s reading was lower 15 percent in Ruble terms when weighed against RUB 27.0 trillion in August 2020.

Average daily volumes reached RUB 1.04 trillion ($14.2 billion) in the last month, down 11 percent against RUB 1.17 trillion in July, Moex said in a statement. Year-over-year, the ADV figure was down 19 percent from RUB 1.28 trillion ($17.4 billion) in 2020.

Delving further into the details, August turnover featured spot trades of RUB 6.5 trillion, down from RUB 7.7 trillion in July, and ‎swap trades coming in at RUB 16.5 trillion compared with RUB 18.1 trillion the previous month.

The metrics show that spot volumes, in particular, continue to drop, and the momentum seen throughout July had continued into August. 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.

Moscow Exchange (MOEX) and the broader sector profited from high turnover as fears over the economic impact of the health crisis spurred volatility. Later on, however, activity has slowed as vaccinations mitigated concerns about a prolonged economic slowdown.

The slowdown is coming off booming levels. But client numbers remain up compared to pre-pandemic levels, as retail investors who flocked to MOEX in 2021 opened twice as many accounts as the monthly average in 2020.

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.