1. Moscow, 20 November 2014Moscow Conference1 Russian RUB FX spot & derivatives markets in 2014 Dmitry Piskulov, Ph.D. (econ.) Chairman of NFEA Board; Member of Monetary Policy Council of Association of regional banks ”Russia”

2. Current trends in RUB markets 1.Continued RUB depreciation against USD 2.CBR monetary policy: inflation targeting is fully in force by 2015. BKT-RUB corridor abandoned 3.CBR increased Key rate from 5.5 to 9.5% - higher RUB % 4.High capital outflow in the country: $120 bln. est. in 2014 5.RUB FX market volumes generally in decline 6.Declining RUB liquidity and volumes in domestic MM 7.Looming Banking crisis (capital adequacy down) 8.New refinancing from the CB: ccy repo,reverse FX swap 9. RUB increased use in CIS (prospects in BRICS) Moscow, 20 November 2014Moscow Conference2

3. Positive trends Improved current trade& C/A balance (reduction of import) Government budget fulfilled because of increased energy export revenues in Ruble terms Sanctions bad = sanctions good : create incentives for replacing import with local productions Facing eastwards: stronger ties with Asian partners (China, Vietnam, Hong Kong, North Korea) – may use Ruble as foreign trade payment currency Moscow, 20 November 2014Moscow Conference3

4. RUB FX trading volumes Key features: On-shore: Declining volumes of RUB on-shore FX due to lower interbank trading, lower energy prices Off-shore (London) RUB volumes fluctuate: –Increased in April 2014 –But may go down again in Oct 2014 Increased volatility looming after 2015 Draft Federal Law on regulation of retail Forex dealers (brokers) should pass second reading at State Duma – may potentially result in increased client FX flows to banks, require banks to create FX dealer subs Moscow, 20 November 2014Moscow Conference4

5. Average Daily Turnover of global FX market in 1986-2013 U$ Bln.198619921998200420102013 Net turnover $355$820$1,527$1,934$3,971$3,971$5,345 FX spot2123945686311,4882,046 Forwards 143 58128209475680 FX swaps3247349541,7592,228 FX options CCY swaps n.a. 87 10 119 21 207 43 337 54 Moscow, 20 November 2014 Moscow Conference5

6. CCYshares in global FX 2007-2013 RankCurrencyShare % 2007Share % 2010Share % 2013 1USD (US Dollar)86.384.987.0 2EUR (Euro)37.039.133.4 3JPY (Japanese yen)16.519.023.0 4GBP (Pound sterling)15.012.911.8 5AUD (Australian dollar)6.77.68.6 6CHF (Swiss frank)6.86.45.2 7CAD (Canadian dollar)4.25.34.6 8MXN (Mexican peso)1.3 2.5 9CNY, CNH0.5 (22-th)0.9 (17-th)2.2 ………………………… 12RUB (Russian Ruble)0.8 (17-th)0.9 (16-th)1.6 19BRL (Braz. real)0.50.71.1 20INR (Indian rupee)0.70.91.0 6 Moscow, 20 November 2014 Moscow Conference

7. Largest on-shore FX mkt 2007,2013 Ra nk Country2007 ADT, $ bln. 2007 Share global % 2013 ADT, $ bln. 2013 Share global % 1UK1,35934.1 %2,72640.9% 2USA66416.6 %1,26318.2% 3Singapore2315.8 %3835.7% 4Japan2386.0 %3745.6% 5Hong Kong1754.4 %2744.1% 6Switzerland2426.1 %2163.2% 7France1203.0 %1902.8% 8Australia1704.2 %1822.7% 9Netherlands!250.6 %1121.7% 10Germany992.5 %1111.7% 11Denmark862.2 %1031.5% 12Canada601.5 %651.0% 13Russia501.3 %610.9% 7

8. Largest USD/CCY pairs in global FX 20102013 EUR/USD28%24.1% USD/JPY14%18.3% GBP/USD9%8.8% USD/AUD6%6.8% USD/others11.2%4.0% USD/CAD5%3.7% USD/CHF4%3.4% USD/RUB…1.5% (11-th) Moscow Conference8Moscow, 20 November 2014

9. Global derivatives amounts Notional principal amounts outstanding, trln.US$ By underlying assetJune 2012 OTC Exchanges* June 2014 OTC Exchanges* Foreign exchange66.70.3374.8 +0.38 + Interest rate contracts496.248.5563.2 +65.6 + Equity linked contracts5.35.26.9+7.5 + Commodity contracts3.02.2 -n.a Credit default swap26.926.9n.a.19.5 -n.a Other42.242.2n.a.24.824.8n.a Total contracts641.3691.5+ * Data for Exchange traded derivatives (futures&options) on Dec 2012 and Jun 2014 respectively Moscow, 20 Nov 20149

10. Russian domestic cash & derivatives markets 2014 In 2013 CBR stopped provision of monthly statistics of volumes of FX and IR instruments, resumed in 2014 on short-tailed basis US$ bln. (ADT)Cash (underlying)Derivatives OTC Exchange FX instruments$50-68 bln.$2-3$2-3 bln. Interest Rate instruments $10-11 bln.(IBL) $10.5 (Repo) $0.3-0.6$0.06 Equity$15-18 bln.$0.1-0.2$3-4 bln. Commodityn.a. $0.2-0.5 bln Credit derivativesn.a.0.01- Moscow, 20 Nov 201410

11. Domestic FX market volumes 2003-2014 (all ccy vs USD/RUB) Moscow, 20 November 2014Moscow Conference11

12. Moscow, 20 November 2014Moscow Conference12 Russian domestic FX spot market volumes (ADT) 2008-2014 Source: CBR, Moscow Exchange, NFEA MonthFX market ADT(hi,low), all currencies MOEX Jul 2008$ 104.2 bln.$10.5 bln. Oct 2009$ 54.2 bln.$10.6 bln Oct 2010$ 66.7 bln.$11.3 bln Oct 2011$ 74.8 bln $13.9 bln. Jan-Dec 2012$ 56-74 bln $16.6 bln. Jan-Dec 2013$ 57-72 bln. $17.8 bln. Jan-Oct 2014$ 49-68 bln.$25.7 bn !

13. On-shore OTC FX volumes 2014 ADT bln.US$ FX spot*FX derivatives 2014 Q1$66.2 bln.$2.8 bn. 2014 Q2$57.4 bln$2.4 bln. 2014 Q3$53.8 bln$2.3 bln. 2014 Q4 (October) $51.2 bln.$3.9 bln. Moscow, 20 Nov 2014 13

14. On-shore vs Off shore FX market 2008-13 Moscow, 20 November 2014Moscow Conference14

15. RUB markets outside Russia Trading volumes(ADT) reported off-shore: FX instruments: $ 28-30 bln. Money market instruments: $ 1.0-2.0 bln. Interest rate derivatives: $ 0.3-0.5 bln. RUB bonds trading: $ 1-2 bln. Total (FX,MM,Derivat.): $30 - 35 bln. daily Moscow, 20 Nov 201415

16. Volumes of USD/RUB FX in London InstrumentOct 2009Apr 13Oct 13Apr 14 FX spot$1.9 bln$14.3$10.7$13.9 NDF$1.2 bln$4.2$2.3$2.1 Outrights$0.3 bln.$5.1$1.3$2.4 FX swaps$4.3 bln$8.7$7.9$8.0 Ccy swaps$0.1 bln$0.4$0.2 FX options$1.2 bln$1.7$0.9$1.9 Total:$9.0 bln$34.4 bln.$23.3 bln.$28.5 bln. Moscow, 20 November 2014Moscow Conference16 Bank of England UK FXJSC: ADT in 2009-14

17. Russian initiatives to promote Ruble settlements for export 24 April: meeting at First Vice-premier I.Shuvalov: MinFin and MinEconomy were tasked to elaborate measures to increase Ruble payments avoid use of USD in export May: V.Putin adopted legislation enabling Russian exporters receive Rubles as export proceeds. August: Gazpromneft pioneer contract in Rub September: I.Shuvalov “We need to reduce USD payments with Asia. New export contracts should be in Rubles” THIS MAY INCREASE FX MARKET TURNOVER in long-run Moscow, 20 November 2014Moscow Conference17

18. RUB prospects as reserve CCY Rank by share Currency Share % 2013 Global GDP % In 2013 Rank by GDP Share in COFFER (IMF) Q4-13 1USD (US Dollar) 87.0 22,7% (0) 61.2% (1) 2EUR (Euro) 33.4 23,5% (1) 24,5% (2) 3JPY (Japanese yen) 23.0 6.6% (3) 3,9% (4) 4GBP (Pound sterling) 11.8 3.4% (6) 4.0% (3) 5AUD (Australian dollar) 8.6 2,0% (12) 1,6% (6) 6CHF (Swiss frank) 5.2 0.9% (20) 0,2% 7CAD (Canadian dollar) 4.6 2,5% (11) 1,7% (5) 8MXN (Mexican peso) 2.5 1,8% (14) …. 9CNY, CNH 2.2 12,4% (2) ………………………… Others 2.9% 12RUB (Russian Ruble) 1.6 2,9% (8-th) 19BRL 1.1 3.0% 20INR 1.0 2.5% 18

19. Moscow, 20 November 2014 Moscow Conference19 About NFEA Established: October 1999 in Moscow Membership: institutional (local and global banks and brokers) operating in Russian spot/forward foreign exchange, money markets and derivatives; Management: the Board (28 market practitioners), 4 co-chairmen, 3 Committees (on Market Indices; for Professionalism, Ethics & Education; on Legal Affairs) Projects up to date: –1999-2001, 2006: Elaboration of Standards (Code of Conduct and Rules to Conduct Operations (Committee for Professionalism, Ethics & Education), –Market indices: MosPrime Rate (2005, RUB money market reference rate), NFEA FX SWAP RATE – new index for USD/RUB and EUR/RUB forwards -Standard Documentation for Russian OTC derivative transactions (Russian ISDA Agreement) – completed in 2009, new version in 2011 (approved FFMS) -RUONIA – Russian analogue of EONIA, SONIA (since Sept 2010) -ROISFIX – OIS interest rates index (since April 2012) -CLS Bank: inclusion of Rub into CLS clearable currencies (since end 2011) NFEA will merge with NSMA by end of 2015

20. Moscow, 20 November 2014 Moscow Conference20 Contact Details 12 Bolshaya Nikitskaya st, Moscow, 125009, Russia, Tel.+7 (495) 629-9510, 629-9709 www.nva.ruwww.nva.ru, www.nfea.ru; www.ruonia.ruwww.nfea.ruwww.ruonia.ru @ The Copyright National Foreign Exchange Association, 2012 All rights reserved. Any reproduction is only permitted with prior consent of NFEA.