Currency trading. Currency trading on the MICEX
Foreign currency is a monetarysigns that are legal tender of the respective state. Their exchange on each other is carried out within the framework of the foreign exchange market, namely the system of economic relations between banks, their clients, professional participants and state institutions. Transactions of purchase and sale are concluded only in non-cash form.
Currency trading can be conducted in two areas: on the organized and over-the-counter market.
OTC transactions are concluded directlybetween the buyer and the seller of the currency. Typically, this role is carried out by commercial banks. And they can both conclude deals on their own behalf and for their own needs, and represent the interests of clients. Buyer and seller in the negotiation process determine the conditions for the purchase and sale of foreign currency, which include the amount, exchange rate, timing and procedure for settlements. The peculiarity of the trades in the over-the-counter market is that both sides take on certain risks (after all, any of them can at any time give up their obligations), therefore such operations are conducted between partners who fully trust each other.
Organized foreign exchange market
Exchange trades in the foreign exchange market assumethe presence of a third party, namely the organizer of trading - the currency exchange. In this case, as such, there is no negotiation process between the buyer and the seller. Each of them submits to the exchange applications with the indication of the terms of the transaction, which they are satisfied. If, at some point in time, the interests of the buyer and the seller coincide, the operation is carried out automatically. The exchange not only greatly simplifies the very process of concluding transactions, it is also a kind of guarantor. Therefore, neither for the buyer, nor for the seller, it does not matter who exactly acts as the second party. A transaction can be concluded only if each of its participants has the necessary amount of the relevant currency.
A further option for suchtransactions, when negotiations between counterparties go directly, and all settlements pass through the exchange. This is done in order to exclude the risk of failure of one of the parties to fulfill their obligations under the transaction.
MICEX: history of occurrence
Moscow Interbank Currency Exchangeis the main trading platform of Russia. The MICEX Group includes the stock and commodity exchanges, MICEX, the clearing center, the national depository, and regional settlement centers.
MICEX was founded in 1992. Operations with the currency from the outset were the main direction of its activities. The trading of stocks, bonds, commodity and derivative instruments was organized later.
At the end of 2011 there was a merger of two sitesthe Russian stock market - the MICEX and RTS. This merged structure was called the Moscow Stock Exchange. Since then, the currency trades on the MICEX are held within a single exchange space.
Technical evolution of the conclusion of currency transactions
Initially, trading on the MICEX took place in the form ofauctions. The so-called "broker" collected bids from buyers and sellers, indicating the amount of foreign exchange and the exchange rate. Then a contest was held, following which the winner was determined.
Since June 2, 1997, the currency trades on the MICEX steelto be held in electronic trading system (SELT). It was SELT that became the first such system of the Russian exchange market. This was a truly revolutionary breakthrough in the field of organized trade. With its help, buyers and sellers were able to conclude an unlimited number of transactions during the entire trading session in real time.
Conclusion of transactions on the MICEX
Operations on the MICEX are conducted through the systemelectronic trading. Its meaning lies in the fact that each participant submits an electronic application specifying the volume of the currency being bought or sold and the price at which he is willing to conclude a deal. All of them come in a single system. When two bids for purchase and sale coincide with prices, they are executed in automatic mode. The volume of the concluded transaction will be equal to the smaller volume of two executed orders.
Unfulfilled applications that have been queued can be withdrawn at any time if the exhibitor wants to change their terms.
It is SELT that allows you to conduct currency trading inreal time. Setting, changing and canceling orders, as well as making deals at the current exchange rate, is reduced to simply pressing one button. For the convenience of the participants, already placed orders are displayed on the computer screen. This allows us to assess the current state of the market and predict its possible direction of movement.
The order of execution of electronic orders
If the bid price does not correspond to the current level, then one of the following options occurs with it:
- For an application for the purchase of foreign currency. If its price is below the current market rate, it is placed in the queue and will be executed if the quotation drops to a certain level. If higher - it is executed by the market.
- For applications for the sale of foreign currency. If its price is below the market rate, it will be satisfied at the current quotation. If higher - will be put in the queue until the moment the value of the currency grows to the level specified in the application.
Currency trading is conducted in accordance withapproved timetable. Transactions with the calculations of "today" for the dollar-ruble pair are concluded between 10:00 and 17:15 hours Moscow time, for a pair of euro-ruble - from 10:00 to 15:00 Moscow time. Trades in other instruments (Belarusian ruble, Kazakh tenge, Ukrainian hryvnia and Chinese yuan) are only one hour, from 10 to 11 hours Moscow time.
The MICEX also offers its participantsthe ability to conclude deals in the so-called mode of off-system transactions. They combine elements of the exchange and over-the-counter markets. The parties to the transaction directly agree on all of its terms. But the operation of purchase and sale is conducted within the electronic space of the exchange. The buyer and the seller put out the address requests. Become a second party on it can only a specific participant, for which it is exhibited. The conclusion of such transactions for all currency pairs is possible up to 23-50 Moscow time.
The importance of an organized foreign exchange market
Organized currency trading within the MICEX platform performs several very important functions.
First, with their help, everyone can takeparticipation in the pricing process. It can be done both as a professional participant, having immediate access to exchange trades, and absolutely everyone who does not have any relation to the world of finance. To do this, he needs to enter into an appropriate contract with a broker who has direct access to the MICEX exchange. In this case, he will represent the interests of his client.
Secondly, the Central Bank as a statethe body that regulates monetary policy influences the current exchange rate of the national currency by intervening precisely within the framework of the MICEX site. In addition, the results of currency trading are taken into account when the Bank of Russia establishes official exchange rates against the ruble.
The MICEX is, without exaggeration, the maina platform of the exchange market of Russia. Currency trading MICEX today is one of the tools of public monetary policy. This platform gives its participants the opportunity to conclude deals in real time. The volume of currency trading is constantly growing. In 2002, they amounted to 65 billion dollars, in 2008 - 2.7 trillion dollars, in 2014 only in January this figure was more than 13 trillion rubles.