“If you want strategic outlook, there is no need to sell (the integrated exchange to foreign investors – Ed.). We can cooperate, share in each other’s capital, but selling off is pointless. This is not a solution per se”, he said.

Voloshin pointed out that even if such plans exist at all, they are made by stock exchange shareholders. The RTS/MICEX integration is currently underway and the exchanges already have foreign shareholders.

“To make the exchange effective, we need a strong tech foundation, clear and transparent rules and an effective and transparent regulation above all this”, said Voloshin.

He said that Russia is building an International Financial Centre in closely cooperation with foreign colleagues including London, Frankfurt and New York. “We also plan to involve the Head of NYSE and CEO of Deutsche Boerse in the International Advisory Board”, he said.

“Long-term cooperation is rather extensive. There may be joint efforts in exchange technology development, possibly joint mutual ownership in the longer term. I don’t see the opportunity and the will, and also the sense in selling off the stock exchange“, he said.

News on the possible alliance between MICEX/RTS and Deutsche Boerse emerged in late 2010, when the negotiations for the purchase of its main competitor RTS by MICEX were stalled. At that point, market participants viewed this as part of the pressure put on RTS shareholders. In the summer of 2011, MICEX and RTS shareholders reached an integration agreement, due to be legally finalized on 19 December.

ADVISORY BOARD

The first MIFC International Advisory Board meeting took place in Moscow on Friday.

According to Alexander Voloshin, the Advisory Board was formed to apply international practices in the Russian IFC. The Board features representatives from major investment banks, auditors, exchanges – both foreign and Russian.

“We expect to hear what the situation is in various segments of the financial industry and what should be done in Russia“, said Voloshin, adding that speakers will address the state of the securities market, fixed income and derivatives.

At the same time, he noted that “no final decisions are expected” from the meeting, as the Board is a consultative body.

Voloshin expects Board meetings to happen regularly, once or twice a year.

IFC CREATION PROCESS

Alexander Voloshin, Head of MIFC Taskforce, stated that the group had been active for over a year. The Taskforce is divided into seven Project Groups, each focused on a particular area, particularly on financial markets regulation and the development of Moscow.

Alexander Voloshin subdivided the work of the Taskforce into three parts, according to expertise. The first part is financial regulation, including infrastructure development and quality of the financial market, the second part is Moscow development. He pointed out that there are half as much roads as necessary for the International Financial Centre in Moscow, as well as for the comfort of the citizens. ‘Creating a quality investment climate is an even tougher task’, he said.

Alexander Voloshin said that due to the Taskforce effort the Centralized Depository Act is almost ready. ‘There are good chances that we will pass the Act this year, or at least, early next year’, he noted. Besides, the law on close-out netting (in cases of bankruptcy)has already been adopted.

According to Alexander Voloshin, the draft laws on financial transactions taxation are ready and passed to the government authorities for discussion.

RUSSIA NOT LOOKING FOR EASY WAYS

The easiest way to attract investors is off-shore advantages. But Russia doesn’t consider this option.

‘Off-shore creation would technologically be much easier. But it’s not in our plans, our task is more complicated ’, Alexander Voloshin said.

‘We don’t think that given the free flow of finance it is possible to separate zones within the country’, he added. According to him, creating an off-shore zone wouldn’t boost financial development and could be a potential loophole for tax optimization.

‘Our model is an open financial centre’, he said, citing London, New York and Frankfurt.