Russia and China Exchanges to Unify Liquidity Pools for RMB/RUB

Ricardo Esteves

Ricardo Esteves has seen business and economics through many lenses. He joined the Financial Services Industry in 2009, and has been a financial journalist since 2011. He holds a degree in Business Administration and has experience producing real-time news, from both buy-side and sell-side, as well as for retail traders, brokers and service providers. Esteves' work has appeared in a variety of online publications including FX Street and FinanceFeeds.

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Russia and China Exchanges to Unify Liquidity Pools for RMB/RUB

November 22, 2019

MOEX - liquidity poolsMoscow Exchange (MOEX) and the China Foreign Exchange Trade System (CFETS) have agreed to facilitate collaboration and unify the liquidity pools for trading in the RMB/RUB currency pair on the two platforms.

The Memorandum of Understanding (MoU) follows a joint working group to conduct research, with an agreement to collaborate and continue to explore feasible mechanisms to unify RMB/RUB trading and matching. This group will determine the optimal unification model, including the roles of the relevant counterparties for credit, trading and net settlement intermediation, plus the adoption of important controls and reporting for compliance with Russian and Chinese regulation.

Igor Marich, Moscow Exchange (MOEX), commented: “MOEX has steadily expanded its cooperation with leading Chinese exchanges and financial institutions. Collaboration between MOEX and the CFETS, the leading FX platforms in Russia and China, respectively, is intended to improve pricing in RMB/RUB instruments and stimulate settlement in RMB and RUB. Better links between the countries’ financial institutions should help to facilitate more cross-border investments.”

Zhang Cuiwei, China Foreign Exchange Trade System (CFETS), added: “Amid China-Russia relations upgraded to a comprehensive strategic partnership of coordination, CFETS and MOEX signed the MoU to enhance mutual understanding and drive coordinated development. As part of the MoU, the two sides will also jointly explore business projects including the feasibility of a unified liquidity pool for CNY/RUB. Such efforts will further expand the opening-up of China-Russia financial markets, improve trade and investment liberalization and deepen China’s financial cooperation with countries participating in the Belt and Road Initiative.”

China’s CFETS is the major global trading platform and pricing center for RMB and related products, covering issuance, trade, post-trade processing, information, benchmark and training services for the interbank FX market, money market and bond market. CFETS releases market benchmarks, including RMB Central Parity Rate, Shanghai Interbank Offered Rate (Shibor), CFETS RMB Index, Loan Prime Rate (LPR), RMB Reference Rate, Bond Indices, yield curves, etc., offering reference prices for the market.

MOEX is Russia’s main trading platform for currencies, money market instruments, equities, bonds, derivative instruments and commodities. Its parent company holds the central securities depository (National Settlement Depository) and a clearing center (National Clearing Centre). Moscow Exchange held an initial public offering of its shares on 15 February 2013.

In October 2019, MOEX’s National Clearing Centre (NCC) obtained clearing membership on the Shanghai Gold Exchange (SGE) which will establish a trading and clearing link with the SGE and support increased liquidity and trading volumes on the Russian regulated precious metals market, diversify end markets and make operations with gold more efficient for participants.

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