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Corporate demand among Russian companies wishing to do business overseas has led to Sperbank CIS’s imminent launch of corporate FX marketplace via open platform
Russian financial market participants are portraying an increasing will to provide institutional trading facilities overseas via connectivity of Moscow’s executing venues to global liquidity pools, as well as the national government’s drive toward elevating the status of the ruble.
In order to achieve sufficient credibility worldwide, the progress must come from within, exemplified by today’s announcement that one of the country’s large banks, Sberbank CIB, is preparing to launch a marketplace where corporate clients can trade currencies without intermediaries via banking institutions for overseas commercial business.
According to Russian news source RBC Daily, the service is intended for use by institutional investors and banks such as Raiffeisenbank, and is an open platform. An additional application will be the use of the platform by credit organizations, who have dislayed a demand for such a development due to an increase in demand for currency conversion on the part of exporters.
According to RBC, Sberbank CIB plans to develop and implement a trading platform during the summer of this year for the foreign currency transactions of large corporate clients. In fact, the bank will provide them with a platform for e-commerce on the internet enabling such clients to conduct FX transactions on the live market in real time.
“In terms of functionality, corporate customers of the State Bank which plan to buy or sell currencies, should contact the bank to request a rate, coordinate it and only then make a deal” a source explained to RBC. According to this particular source, in the case of allowing direct access to a company itself, tracking trades on an Exchange in online mode, able to directly bargain purchase / sale of foreign currency. “Since Sberbank provides such a platform, all transactions will take place through the accounts of the Savings Bank. This will increase the turnover of the Savings Bank on currency transactions, “- said the source.
On the Russian institutional market, there are current participants operating in this particular segment, including VTB Capital, PSB (trading online platform PSB-Rates) and Raiffeisenbank (R-Dealer).
Raiffeisen Bank plans to launch a similar platform for institutional investors and banks. “Demand for corporate conversion operations is quite high and is increasing every year in proportion to the growth rate of foreign trade activities,” – said PSB Vice President Andrew Leush. RBC reported that the first quarter of 2014, demand dynamics were similar to those of 2008, but now the situation has stabilized and the turnover of transactions has fallen to last year’s level.
Prior to the establishment of this platform, companies had to operate in a less transparent fashion, often being required to contact the bank itself. According to Sperbank, large companies no longer wish to utilize this model and consider it obsolete. “When the foreign exchange market was opaque, it brought more income to banks. Banks earned on the difference in quotations, sometimes providing the customer with a price which was two or three pennies different from the market, charged various commissions, such as for the transaction passport on completing the application for purchase or sale.
“Customers of banks, mainly exporting companies that have large foreign exchange earnings, have become very demanding. These customers easier themselves admit to the exchange, providing trading terminal, and is already taking a commission from some common speed ” stated Selim Agarzaev,head of the Treasury at Metallinvestbank yesterday.