How can local and offshore traders maximise access to a broad range of FX liquidity providers in Russia?
- As electronic trading becomes more prevalent in the FX market, traders want technology that provides them with transparency, access to a range of liquidity providers and enhanced execution efficiency.
- In Russia, buy-side traders and banks are focussed on greater automation and streaming electronic prices, while algo trading is also on the rise.
- Refinitiv offers a number of products and solutions to enable traders in Russian FX markets to access fragmented liquidity.
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As the requirements of FX traders in Russia evolve, there is a definite industry trend towards increased electronic trading. In today’s global market, traders are demanding technology that offers transparency, provides access to a wide range of liquidity providers and incorporates tools which improve the efficiency and effectiveness of execution.
FX liquidity for firms in Russia
Firms trading in Russia are increasingly demanding access to many different liquidity pools, such as relationship-based platforms like Refinitiv FXall, Central Limit Order Book venues such as Refinitiv FX Matching, and liquidity provided by some of the larger Russia banks.
Specific to Russia, they also require access to Moscow Exchange (MOEX), which has over 400 participants from Russia and CIS accessing its FX market.
Within the technologically progressive Russian market, even local solutions can provide significant competition to the bigger international players. For this reason, buy-side firms as well as banks are looking towards greater automation and streaming electronic prices.
Algo trading continues to gain traction in Russia as traders look for access to increasingly sophisticated execution strategies.
Market evolution in Russia
MOEX holds a central position in Russia, being the main source of liquidity and price discovery for Russian financial instruments, across FX and other asset classes.
Once the dominant venue for RUB liquidity, in recent years the market has evolved with more liquidity offered by other electronic venues and liquidity providers (LPs). Traders in RUB now estimate that only around 30 percent of liquidity comes from MOEX, yet it is still seen as the ultimate source of price in Russia.
As well as spot FX, MOEX provides trading in FX swaps, forwards and outrights.
In response to client demand and changing market conditions, MOEX has extended its trading hours from 7.00am to 11.50pm local time. This means that firms in the Russian far east and in the Asia-Pacific region, particularly those trading in KZT and CNH, have better access to the exchange.
The extended hours have improved both spreads and liquidity, providing customers with more ways to manage their positions across OTC and exchange markets.
The number of retail traders on MOEX grew by more than 600,000 additional users in April 2021 alone, bringing the total number to over 11 million retail traders.
As MOEX responds to the evolving Russian financial markets, it is capturing market share.
Access to fragmented liquidity
With its dominant position in RUB it is clearly important for traders to have access to MOEX’s large pool of liquidity. However, traders should not rely solely on MOEX.
The liquidity available from MOEX is of high quality, but small lot sizes can make it difficult for banks and large buy-side traders to understand true market depth and to execute large trades efficiently while minimising market impact.
The solution is Refinitiv FX Trading, which provides clients with an electronic platform to access deep liquidity across multiple LPs and venues.
Refinitiv FXall is a flexible trading platform which provides access to more than 20 high-quality liquidity providers in Russia, enabling an efficient and automated end-to-end trading workflow.
The platform offers a range of sophisticated features, like streamed liquidity and order splitting, which allows large orders to be netted down and executed using different methods.
This benefits firms wishing to access MOEX liquidity for part of an FX order, or those looking to reduce the market impact of larger orders. Order splitting functionality is part of Refinitiv FXall’s suite of features designed to create a seamless workflow experience.
Refinitiv’s FX Aggregator, available as part of Refinitiv FX Trading, allows clients to access deep FX liquidity from leading venues including FXall and MOEX.
There is a growing offshore community of firms with interest in trading RUB. In addition to the many financial institutions trading on MOEX, 50-70 buy-side organisations now have direct access.
Refinitiv’s FX Aggregator bridges the local and wider market, providing access to MOEX and giving all clients the ability to trade on par, leading to business and market growth.
Refinitiv plans to extend its FX Aggregator offering to NDFs in 2021, also supporting FX Swaps and Forwards on MOEX, which will further enhance available liquidity in Russia.
Looking east to new markets
Refinitiv continues to provide trading firms with connectivity to markets that have traditionally been difficult to trade, thereby increasing transparency and enabling access to new pools of liquidity from local providers. This is particularly valuable in times of market stress.
As interest in China grows, in Russia and elsewhere in the world, Refinitiv FXall has recently onboarded six banks to stream liquidity in renminbi, and MOEX has extended its trading hours.
Recognising that FX markets will continue to emerge and evolve, Refinitiv is committed to responding to client needs and to developing best-in-class technology tailored to the requirements of each region.