November 29, 2006
London Stock Exchange and OMX launch Russian derivatives
EDX London, the London Stock Exchanges derivatives business, and OMX will offer futures and options based on Russian securities traded on the London Stock Exchanges International Order Book (IOB) from 1 December 2006.
The Russian IOB Equity Derivatives service will meet demand from banks active in over-the-counter Russian derivatives trading for the lower costs, reduced risk and improved operational efficiency offered by on-exchange trading.
The service will offer trading in index derivatives based on the new FTSE Russia IOB Index, which measures the performance of the ten biggest and most liquid Global Depositary Receipts (GDRs) issued by Russian companies on the London Stock Exchange. In addition, single stock options and futures will be available on all ten index constituent companies. Key benefits of the service include:
Access for a wider range of market participants
Dedicated Market Makers providing liquidity support on the order book
Central counterparty clearing and multilateral netting of payments between participants
Automatic settlement into DTCC or Euroclear
Efficient processing of corporate actions via the London Stock Exchange
Physical delivery of single stock derivatives
Free broking and trade support through EDX London and OMX Market Place Services
Flexibility to report bilaterally negotiated trades through the Cleared-Only service.
Martin Graham, Director of Markets at the London Stock Exchange, said:
"The provision of the first on-exchange derivatives service is a major step for the growing market in Russian GDR derivatives and a significant development for EDX London. The new derivatives will reduce the cost of trading and provide far greater operational efficiency; improving liquidity, and making it easier for a wider range of participants to gain derivatives access to one of the largest and fastest growing markets in the world. Trading in Russian IOB securities so far this year has reached £183.1 billion, an increase of 188 per cent on the same period last year, demonstrating that the London Stock Exchanges Russian GDRs are fast becoming an established market.
Henrik Paulsson, President of Derivatives Markets at OMX, said:
We are seeing strong interest in the Russian market and the Energy sector. Therefore, we are extremely excited to launch a standardised derivatives service focusing on Russian products. This is a unique opportunity to gain access in a cost-efficient way to the liquidity of the developing market in Russia.
Roger Naylor, Head of Equity Trading, CEEMA at Deutsche Bank, said:
"This is the first on-exchange derivatives service for DRs in one of the world's most important and fast-growing markets. It will bring significant savings for us in terms of cost, efficiency and risk reduction and we are delighted to be involved right at the very start."
Trades reported through the Cleared-Only Service will benefit from on-exchange efficiencies, including the clearing of trades to LCH and OMX and the management of a trade through its lifetime under transparent and neutral rules. Trade data on cleared-only trades will not be published to the market and trades can be reported up to one day after trade execution.
About FTSE Russia IOB Index
The FTSE Russia IOB Index is a market capitalisation weighted index designed and calculated by FTSE Group. It measures the performance of the ten biggest and most liquid Russian Global Depositary Receipts on the London Stock Exchange's International Order book. Calculation of the index started on 23 October. The index constituents at launch were; OAO Gazprom, Lukoil (OAO), Surgutneftegaz, MMC Norilsk Nickel, Unified Energy Systems of Russia, OJSC OC Rosneft, OAO Novatek, Sistema JFSC, OJSC Novolipetsk Steel and Evraz group. Full index details and ground rules are available at www.ftse.com/iob.
About EDX London
Created in 2003, EDX London combines the strength and liquidity of the London Stock Exchange with the advanced equity derivatives technology of OMX AB. EDX London is a jointly owned company, with 76 per cent held by the London Stock Exchange, and 24 per cent held by OMX AB. Members of EDX London trade futures and options through a common order book accessible by all members of the Nordic linked exchange network, making business easier and more cost effective. EDX London is a Recognised Investment Exchange, regulated by the United Kingdoms Financial Services Authority.
About the London Stock Exchange
The London Stock Exchange is the worlds premier international equity exchange and a leading provider of services that facilitate the raising of capital and the trading of shares. The London Stock Exchange is the most international equities exchange by trading in the world and Europe's largest pool of liquidity. By the end of 2005, the market capitalisation of UK and international companies on the London Stock Exchanges markets amounted to £4.1 trillion, with £5.2 trillion of equity business transacted over the year. The London Stock Exchange is a Recognised Investment Exchange (RIE) under the Financial Services and Markets Act 2000 and is supervised by the Financial Services Authority.
OMX is a leading expert in the exchange industry. Through the Nordic Exchange, OMX offers access to approximately 80 percent of the Nordic and Baltic securities market. The Nordic Exchange is a term used for marketing purposes and is not a legal entity. It describes the common offering from the Helsinki Stock Exchange, Copenhagen Stock Exchange, Stockholm Stock Exchange, Tallinn Stock Exchange, Riga Stock Exchange and Vilnius Stock Exchange. OMX integrated technology solutions cross the transaction chain enabling efficient securities transactions for over 60 exchange organizations in more than 50 countries. OMX is a Nordic Large Cap company in the Financial sector on the OMX Nordic Exchange. For more information, please visit www.omxgroup.com.
For further information
Ulrika Areskog, OMX Nordic Exchange +46 (0)8 405 63 76
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