Russia's MOEX to Suspend the Use of US Dollar as Collateral

Moscow Exchange (MOEX), the largest exchange in Russia, will cease using the US dollar as collateral for underwriting transactions. Announced on Monday, the new rules will become effective from August 29.

The decision has been taken by the National Clearing Center, which is the clearing Clearing Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Read this Term organization and a CCP in all exchange markets of the MOEX group.

The latest move followed the Russian exchange’s decision to limit the use of the US dollar as collateral to 25 percent earlier this month from the previous levels of 50 percent.

The exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term did not furnish any details behind the abrupt move on banning the USD as collateral. But, the new rules are anticipated to have been brought as Russia wants to cut its dependencies on the currencies of the countries which imposed sanctions on it.

Impacts of the Ongoing War

The United States, European Union and other allied countries imposed heavy sanctions on Russia after President Vladimir Putin’s order of an invasion of the neighboring country, Ukraine. President Putin, along with other highly-ranked government officials and several Russian oligarchs are facing harsh financial and traveling sanctions from western countries. In addition, there are heavy sanctions on the country’s financial industry, leading to Russia defaulting on international debt.

Meanwhile, the MOEX indefinitely suspended trading in Japanese yen on the currency markets citing potential risks and difficulties in JPY settlements. Moreover, the Russian exchange stopped accepting Japanese yen as collateral for transactions on the offered markets.

The impact of the ongoing war can be seen in the recent performance of MOEX. It reported an overall decline of 18.8 percent in fees and commission income in the second quarter of 2022, whereas figures from the FX market jumped 13 percent. However, the FX trading volumes shrank by around 36 percent in the quarter.