NEWS & EVENTS: Breaking News
03.07.2009 10:03
July 3. The Central Bank has accused stock exchanges of last autumn’s repo crisis and proposed changing the status of trading floors, urging them to take responsibility for financial stability, Director of Securities Operations on Financial Markets at CBR Sergey Shvetsov said Thursday. “It seems to me that it is rather dangerous to view a stock exchange as merely a trading venue to register transactions”, Shvetsov said, addressing the Federation Council. ”Admittedly, repos are bilateral transactions. However, this does not at all mean that a stock exchange provides clearing services and has nothing to do with settlements. Last autumn, a repo default broke out and some banks fell afoul of it. “When market participants entered into these transactions, they did not have a general agreement and when a crisis broke out and when settlements were halted, it turned out that market participants do not understand how to close their positions and how to find out who is right and who is wrong”, Shvetsov said. He advised regulators to change the status of stock exchanges. “Perhaps the regulator, FSS, and CBR as the owner of the trading venues need to reconsider their approach to the role of stock exchanges, precisely assigning them the mandatory status of co-executor and an institution responsible for financial stability on the trading floor which the stock exchange services”. “What’s more, if a stock exchange is unable to support financial stability, it should not create an illusion of exchange trading”, Shvetsov stressed.
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