Currency trading. Currency trading on the MICEX

Foreign currency is a banknote, which is a 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 exclusively in non-cash form.

OTC market

Currency trading can be conducted in two areas: on the organized and over-the-counter market.

OTC transactions are concluded directly between 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 trades in the over-the-counter market is that both sides assume 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 assume the presence of a third party, namely the organizer of trades - 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 an indication of the terms of the transaction, which they are satisfied with. 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 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 a second party. A transaction can be concluded only if each of its participants has the necessary amount of the relevant currency.

Another option is also possible for conducting such operations, 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 Exchange is 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 sections for trading stocks, bonds, commodity and derivative instruments were organized later.

At the end of 2011, there was a merger of two sites of the 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 conducted within the single exchange space.

The technical evolution of the conclusion of currency transactions

Initially, trading on the MICEX took place in the form of auctions. 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, currency trades on the MICEX have been held in the 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 electronic trading system. Its meaning is that each participant submits an electronic application specifying the amount of currency 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 auctions in real time. The placement, modification and cancellation of orders, as well as the conclusion of transactions at the current exchange rate are reduced to a simple push of a button. For the convenience of the participants, already placed orders are displayed on the computer screen. This allows you 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 performed on 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 has grown to the level specified in the application.

Trading schedule

Currency trading is conducted in accordance with the approved schedule. 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 held only one hour, from 10 to 11 hours Moscow time.

The MICEX also offers its participants the opportunity 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 take part in the pricing process. This 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 stock exchange. In this case, he will already represent the interests of his client.

Secondly, the Central Bank, as a state body that regulates monetary policy, has an impact on the current exchange rate of the national currency, intervening precisely within the MICEX platform. 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 main platform of the Russian exchange market. Currency trading MICEX today is one of the tools of public monetary policy. It is this site that 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.