Translated material
Repo control
The new MICEX president will create a centralized risk management system
Konstantin Korishchenko was appointed acting president of the MICEX . Yesterday he told reporters what changes in the activities of the exchange should take place so that the crisis situation does not recur, as a result of which market participants have problems with obligations under repo transactions. In his opinion, a centralized risk management system should be created at the MICEX. In addition, in the current conditions of the global financial crisis, “the interaction of the MICEX group, the monetary authorities - the Central Bank and the Ministry of Finance, as well as the regulator - the Federal Financial Markets Service is becoming a key factor in maintaining stability in the Russian financial market in the face of global turmoil.” With these words, Mr. Korishchenko actually confirmed the previously expressed opinion of market participants that the state intends to more strictly control the activities of the largest Russian exchange.Speaking to reporters yesterday, Mr. Korishchenko did not directly answer the question whether everything was done by the former management of the MICEX to prevent the crisis that arose in the market. As he stated, in recent days the MICEX, employees of the Central Bank and large banks have been constantly interacting, trying to carry out the required volume of transactions, as well as remove the “overhang” of outstanding repo obligations. He noted that the problem has now been resolved and work is proceeding as normal. As is known, in mid-September the Federal Financial Markets Service suspended trading on the MICEX and RTS for several days due to a sharp collapse in securities quotations. At the same time, market participants were unable to pay their obligations under repo transactions. According to market participants, it was precisely because of this problem that the former head of the MICEX, Alexander Potemkin, was dismissed, although no official statements were made in this regard.
Mr. Korishchenko nevertheless criticized the activities of the exchange: participants perceived the repo market on the MICEX as organized and centralized, but de facto this market was an over-the-counter market, in which issues of risks, limits and regulation of the situation in the event of default on obligations were decided by its participants. “If an exchange claims to be the center of an organized market, it must clearly and clearly provide market participants with information about how it controls these risks,” he said and cited the MICEX foreign exchange market as an example, where there is a centralized management system risks. This market operates successfully, although the Central Bank has a certain role in its stabilization. “The model itself has successfully proven itself,” says Mr. Korishchenko. “To build an adequate risk management model, you need to collect information not so much about the market, but about its participants.” “The exchange is obliged to carry out adequate monitoring of its participants and build a risk management system based on centralized management of these risks,” believes the acting. President of the MICEX.
He did not speak in more detail about the plans to transform the exchange, noting only that the most important thing now is to draw conclusions from the problems that have arisen in the recent past and take steps to ensure that the MICEX markets operate stably.
The appointment of Mr. Korishchenko will take place on October 24 at an extraordinary meeting of shareholders. It is expected that he will also join the MICEX board of directors, which he himself headed until recently. Deputy Chairman of Vnesheconombank Sergei Lykov will become the new chairman of the board of directors.