Russia close to debuting China market link

Depositaries in China and Russia will open joint accounts in the ‘near term’

Russia and China are close to completing a system for clearing trades that will boost funding options for their companies and governments, according to the head of Russia’s biggest bourse.

Depositaries in China and Russia will open joint accounts in the “near term,” Alexander Afanasiev, the chief executive officer of Moscow Exchange, said in an interview. While Russia’s Finance Ministry is already able to sell its debt to local Chinese investors in Moscow should it choose, the bourse is still working with counterparts in China to turn it into a faster and cheaper process.

“We now see China’s political will in this project and don’t foresee serious obstacles,” said Afanasiev, without specifying when the project would be finished. “I don’t see hurdles that would prevent us from launching bilateral trading in the short term.”

Russian officials announced they were starting work on an eastern equivalent to Euroclear Bank’s settlement system a year ago as US and European Union sanctions over Ukraine curtailed access of the nation’s companies to Western capital markets. Yuanrouble turnover plunged 96 per cent to 7 billion roubles ($110 million, Dh403.7 million) in August from a year earlier as trade declined, while the volume of swap trading has more than doubled to $1.1 billion, according to data from the exchange.

“Chinese legislation rather seriously limits the ability of nonresidents to invest in national, yuan-denominated, products,” said Afanasiev. “Here the Moscow Exchange creates additional opportunities for investments.”

Russia may sell its debut yuan-denominated OFZ debt this year, or in the nearest future, as it seeks to attract domestic Chinese investors to the Russian market, the Finance Ministry’s debt department chief Konstantin Vyshkovsky said in an interview on September 23.