Moscow Exchange Releases Annual Results For 2013

FX trading volume for 2013 increased  33% as Moscow Exchange aspires to perform well on the world stage

2013 was an interesting year for those with a vested interest in Russia’s financial markets, particularly when considering electronic trading of the nation’s sovereign currency, the ruble.

Russia has high aspirations for the ruble, with some market participants in the region citing it as a future major, and the ever increasing endeavors of Moscow Exchange  (MOEX), which during the course of last year continued to provide low-latency access to global participants via direct connections provided by Canada’s TMX Atrium.

Today, the rapidly emerging venue has published its full operating metrics for 2013, depicting a sterling performance across the board, with total FX trading volumes having increased by 33% to 156 trillion ruble, compared to those achieved in 2012.

Spot trading volumes actually took a dive compared to those transacted on the exchange one year previous, culminating in a 6.9% decrement which Moscow Exchange considers to have been as a result of low exchange rate volatility, while swap trading volumes increased significantly, growing by 78.1% YoY on the back of high demand for liquidity-management products.

Total trading volume across all markets increased at Moscow Exchange made an increase of 22% YoY to RUB 449.4 trillion compared to that of 2012, with total revenues having increased 14% to 24.61 billion rubles during 2013.

EBITDA increased 20% YoY to 16.40 billion rubles and the EBITDA margin was 66.6% vs. 63.7% in 2012.

Net income increased 41% from the income received during 2012, standing at 11.58 billion rubles and earnings per share increased to 5.23 rubles from 3.86 rubles.

This is congruent with the worldwide demand for ruble liquidity that has manifested itself during the last few months.

According to Moscow Exchange, improved services and new products were among key drivers of the growth demonstrated during last year, combined with a further increase in trading activity by Russian and international clients.

There has been a considerable leaning toward the wish to become a public entity among many electronic trading venues and providers recently, and Moscow Exchange is certainly no exception, having completed an initial public offering on its own trading platform during last year, which raised 15 billion rubles.

Another matter of interest is that the venue set its central counterparty (CCP) into operation. Whilst this is not a regulatory requirement in Russia, it is among institutional FX firms and venues in North America, thus displaying Russia’s prominent venue as being willing to compete on a global level, in addition to the firm’s commencement of the clearing of OTC derivatives.

Regarding the overall results for 2013, Alexander Afanasiev, Chief Executive Officer of the Moscow Exchange, commented:

“The past year was a remarkable one for Moscow Exchange and for the development of the Russian financial market. We completed our IPO in the beginning of 2013, showcasing the fact that high quality Russian issuers can raise significant capital in local shares on Moscow Exchange.

“We have delivered on our commitments made during the IPO last year to build a high-growth and cycle-resilient business. As promised, we implemented a number of major reforms that have had a significantly positive impact on the Russian market: the central securities depositary and central counterparty became fully functional, we moved to T+2 settlement on our equity market, and we opened the market for international central securities depositories. Trading on Moscow Exchange is now at least as convenient as on the world”s most established exchanges. These market infrastructure reforms yielded very positive results for Moscow Exchange: we grew volumes and delivered very strong financial results in 2013.”

“Looking beyond the end of the reporting period at the start of 2014 we have seen high volatility on the Russian market, with stock indexes declining. At the same time, our trading volumes across most of our markets – equities, FX, money market, and derivatives – have posted significant growth during the first months of the new year.

“In 2014 we will continue to focus on attracting more flows by making our platform even more convenient to trade on, and by attracting new issuers. We also continue to promote high corporate governance standards, and aim to set the benchmark for all Russian companies in this area” stated Mr. Afanasiev.

Mr. Evgeny Fetisov, Chief Financial Officer of the Moscow Exchange, said:”I am pleased to report that in 2013 we delivered exceptional financial results in addition to the successful implementation of infrastructure reforms and other important initiatives.”

“Earnings per share grew 36% YoY to 5.23 ruble supported by strict cost controls and solid operating income growth. We saw double-digit growth in fees and commissions on the Money Market (+26% YoY), FX Market (+20% YoY), Derivatives Market (+25% YoY), as well as depositary and settlement services (+21% YoY). We also continued to manage expenses effectively: operating expenses grew by just 5% YoY, mainly driven by higher spending on market makers and professional services” he continued.

“Although new services and projects that Moscow Exchange launched in 2013 required some new senior hires, personnel expenses remained flat for the year” commented Mr. Fetisov, with his conclusion being that “A strong performance in the fourth quarter also contributed to the outstanding results for 2013. In Q4, the EBITDA margin remained strong at 61.4%, thanks to healthy interest income growth of 25% YoY combined with fee and commission income rising 12% YoY, while operating expenses increased just 3.4% YoY. This drove net profit up by 60% YoY.”

With 2014 having started healthily for Moscow Exchange, the future of FX trading at the venue will be an interesting dynamic to monitor.

MOEX

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