MICEX Board Approves New President

MTKorishchenko speaking at a news conference Monday. He is leaving the Central Bank to head the MICEX exchange.
Konstantin Korishchenko will leave his post of Central Bank deputy chairman to become acting president of the country's largest stock exchange, MICEX Group announced Monday.

The company's board confirmed Korishchenko's nomination to replace outgoing president Alexander Potyomkin, who will take a position as an adviser at the Central Bank. A MICEX extraordinary shareholders meeting is to vote on Korishchenko's candidacy Oct. 24.

"The main focus today in the financial market and on the MICEX is to draw conclusions from the problems that have recently arisen and to take appropriate steps to ensure that the market functions steadily," Korishchenko said at a news conference.

He said the U.S. financial crisis was the "primary cause" of Russian stocks' recent fall. The MICEX Index has fallen almost 48 percent since mid-May.

One of the recent problems Korishchenko addressed was MICEX's repo market. Repurchase agreements, or repos, are short-term borrowing contacts in which a dealer agrees to sell securities to investors or banks and repurchase them at some point in the future.

Participants in the exchange's repo market failed to realize that it was not an exchange-regulated market, he said, but a de facto over-the-counter market, where risks are settled by its participants. The MICEX should develop a "centralized risk management system," he said.

"If the exchange aspires to be an organized market, it needs to leave participants in no doubt that it is the exchange that controls the risks," he added.

Maxim Osadchy, a banking analyst at Antanta Capital, put the repo market at the center of Russia's recent meltdown.

"Stress analysis wasn't done. Some analysts expected the crisis, but they thought it would have been in mortgages or retail credit," he said.