Rival Russian Exchanges Micex, RTS to Merge

The Moscow Interbank Currency Exchange (Micex) and rival Russian Trading System (RTS) Stock Exchange have announced plans to merge into a "single powerful infrastructure and end the competition, which began with the launch of RTS in 1995,” according to officials from both exchanges.

The announcement comes two weeks after Russian president Dmitry Medvedev ordered the Central Bank of Russia to sell its 29.8 percent stake in Micex—the single condition believed to be standing in the way of a merger.

"The business plan for the unification of the two exchanges will be prepared before April 15," says Ekaterina Troshinkina, global business director at RTS. "Unfortunately, I can't tell you more, as the process of consolidation will start after all legal work is done."

In particular, Micex and RTS will have to reach an agreement as to how their trading platforms will be combined. Currently, Micex runs Nasdaq OMX's legacy X-stream system and RTS uses a proprietary platform.

Paul Pickup, director at exchange technology consultancy Trading Technology, says  there is good case for migrating trading onto RTS.

"If I were in charge of the new entity, I would migrate onto the RTS system—partly because it's younger and better, and also because it has been developed largely in-house," says Pickup. "However, they might end up with a configuration where stocks and equities are traded on the RTS platform and the derivatives remain with Micex."

Troshinkina declined to comment, but says the migration of the trading platform would be a "very long process" and would not commence for at least six months.

The Russian government has made no secret of its ambition to transform Moscow into an international financial center, but given the longstanding rivalry between the two exchanges, there may be questions as to whether RTS and Micex were pushed into the merger rather than going willingly.

Pickup does not dismiss this possibility, but says the joining of the two exchanges into one entity is the "sensible” thing to do if the Russian financial sector wants to save time, effort and costs.