Blue Chips Open MICEX Equities

The Moscow Interbank Currency Exchange, or MICEX, entered the Russian equities market Tuesday, trading shares in three Russian blue chips in what officials have declared to be a new era for the exchange.

Turnover was light at 1.206 billion rubles ($211,000), with trade limited to Moscow power utility Mosenergo, ferrous-metals giant Norilsk Nickel and national telecommunications company Rostelecom.

MICEX has long been a bastion in the financial markets, occupying a niche as the center of currency trading as well as markets in Russian government treasury bills.

Tuesday's advent of equity trade has been billed as the first step in a program to revamp the exchange to be more competitive in other markets, but traders said it could take some time for it to rival the electronic Russian Trading System, or RTS, which currently dominates the market.

"I don't expect to see more than these three issuers at MICEX, at least for the next three weeks," said Vladimir Tchkikivadze, a trader with investment bank Renaissance Capital. "And it will take a lot longer for MICEX share trade to challenge the electronic RTS."

The RTS consists mainly of the RTS-1, which deals in the most liquid Russian stocks. It had a turnover Tuesday of $22.65 million.

By launching shares at MICEX in the first quarter of 1997, MICEX President Alexander Zakharov has met a deadline set for himself in January. But traders said the rapid implementation could cause problems.

"There are some problems with clearing and guarantees that need sorting out," said Alexei Genkin, share specialist with the investment house Alfa-Capital. "But MICEX is a promising system that just needs time."

Russian financial giant Uneximbank, considered the most advanced in the country for share depository activities, has taken a special role in the MICEX share venture by providing its depository as part of the exchange's infrastructure.

Uneximbank brings to MICEX the internationally recognized delivery-versus-payment, or DVP, settlement and clearance system for which the Russian share market has been crying out.

The arrangement calls for sellers to deposit their shares in Uneximbank's depository before trading starts, while buyers deposit money in the MICEX system prior to opening. MICEX, in conjunction with the depository, mediates between seller and buyer to arrange simultaneous payment and delivery.