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. Last Updated: 07/27/2016

Currency Market Gets New Tool

The National Clearing Center, owned by the MICEX index, agreed to start clearing the exchange's currency trades, valued at more than $1 trillion a year, the exchange said Thursday in a statement.

The clearing center also plans to handle over-the-counter currency trade between banks, broadening the range of currency deals that generate fees for the exchange.

The center Thursday signed an agreement on the exchange-based currency trades with MICEX, the Central Bank and private banks including Gazprombank, VTB, Citibank and Raiffeisen. Clearing for the currency trades will be switched from the MICEX to the clearing center in the fall, the exchange said in its statement.

"The signing of this agreement signifies the beginning of a new model for clearing in the currency market, with the National Clearing Center as the central counterparty," an intermediary buyer and seller of currencies, said Viktor Utkin, chairman of the National Clearing Center, in an interview. "There hasn't been a central counterparty before on the Russian market." After it starts clearing currency trades in the fall, the National Clearing Center plans to take on stock and corporate-bond trading on the MICEX exchange, he said.

Under current rules, investors wanting to sell stock are required to deposit the full value of the shares on the exchange. Going forward, only a fraction of the stock's value will have to be deposited in advance of a deal, reducing the overall cost of trading, Utkin said.

The clearing center is currently working on an agreement with Clearstream International, the settlement unit of Deutsche B?rse, Utkin said.