Otkritie launches Russian trading platform for international investors

Roman Lokhov, Head of Global Markets & Investment Banking, OTKRITIE: "We believe we have dealt effectively with the age-old problems surrounding execution and custody in Russian equity markets."

OTKRITIE, the FSA regulated brokerage that provides Direct Market Access (DMA) to Russian equity markets, has announced a new trading platform that aims to provide greater transparency and cost efficiencies for international investors trading directly into Russia.

The new platform, which is backed by a major international custodian, allows the straight through processing of electronic orders onto MICEX and settle into a third party custody account. The platform eliminates the requirement for investors to pre-deposit their assets with the executing broker or pay for financing, while enabling them to use one of the largest and internationally recognized custodian banks in Russian equities markets. It aims to afford investors increased transparency, allowing them FSA-regulated direct interaction with the Russian equity market.

Until now, the most transparent route for investors into the Russian market has been through the process of DMA, as it offers direct access to exchange liquidity. However, issues have remained as the MICEX is a T+0 market, meaning that stock/cash must be pre-delivered before the execution of trades can occur. Therefore, market participants have been required to make free-of-payment deliveries of stocks/cash pre execution and accept the associated risks, or pay for broker financing.

OTKRITIE's new platform intends to eliminate the problems associated with electronic trading in Russia, resulting in greater transparency and cost efficiencies for investors. It also aims to provide FSA-regulated direct interaction with MICEX and offer insulation from much of the credit and operational risks associated with existing DMA models.

Roman Lokhov, Head of Global Markets & Investment Banking at OTKRITIE, commented: "This is a hugely significant development as, for the first time it presents international investors with the opportunity to trade in Russian equity markets in an all-encompassing clean, transparent, cost effective and direct manner - while buttressed by a tightly regulated environment. We believe we have dealt effectively with the age-old problems surrounding execution and custody in Russian equity markets, and that this solution will allow our clients to meet their best execution requirements. This is the final logical step in bringing Russia as close as possible to international best practice trading standards."

In 2007, OTKRITIE acquired an FSA-regulated broker in the UK, and proceeded to put in place industry standard DMA technology for algorithmic, low latency & high frequency trading with the centralisation of its equity and derivative execution facilities in London. This was followed by the firm offering an MICEX "execution only" solution for hedge funds, investment banks and broker dealers. This new development widens the "execution only" brokerage concept to the Russian on-exchange equity market within the MICEX T+0 settlement environment, allowing OTKRITIE to offer a European style equity trading solution to international investors.