1. 5-th IRSF, London, 28Apr09National Foreign Exchange Association, Russia 1 RUSSIAN ROUBLE INTERBANK MARKETS TODAY Dmitry Piskulov, Ph.D. (Econ.) Chairman of the Committee for Professionalism; ICAP, Senior Adviser

2. 5-th IRSF, London, 28Apr09 National Foreign Exchange Association, Russia 2 Russian fin.markets: plans Plans and dreams of Russian political and economic authorities: Concept of Moscow as International Financial Center (adopted) to compete with Dubai, Shanghai, Mumbai; Strategy of development of Russian financial market till 2020 – focus on securities, forwards and derivatives instruments, clearing infrastructure RUB to become international (regional) reserve currency Shortcomings of above programs: Focus on the securities markets Negligence of RUB settlements

3. Russian FX market 2007: BIS RankCountry2007 ADT, $ bln.Share of global % 1 United Kingdom1,35934.1 % 2USA66416.6 % 3Switzerland2426.1 % 4Japan2386.0 % 5Singapore2315.8 % 6Hong Kong SAR1754.4 % 7Australia1704.2 % 8France1203.0 % 9Germany992.5 % 10Denmark862.2 % 11Canada601.5 % 12Russia501.3 % 13Belgium481.2 % 5-th IRSF, London, 28Apr09 National Foreign Exchange Association, Russia 3

4. 5-th IRSF, London, 28Apr09National Foreign Exchange Association, Russia 4 Crisis effect on Russian market Russian on-shore interbank FX market average daily turnover (ADT) dropped more than Western markets MonthUK marketRussian market Apr 08$ 1,696 bln. Jul 08$119 bln. Oct 08$ 1,554 bln. Dec 08$ 63 bln. Drop in %8%47%

5. 5-th IRSF, London, 28Apr09National Foreign Exchange Association, Russia 5 Crisis effect (cont’d) Share of MICEX in FX market turnover rose from 20% to 40-45% Russian FX ADT dropped because: a.Physical reduction in Russian exports (lower oil and metal prices) b.Interbank credit limits cut in Sep-Oct 2008 in size and numbers (also from revaluation of FX forwards) c.Lower risk appetite to Russian assets from global institutional investors Interbank unsecured cash deposits turnover also dropped ~2 times to US$12-13 bln.

6. 5-th IRSF, London, 28Apr09National Foreign Exchange Association, Russia 6 Domestic FX market in Mar 09 Domestic OTC market average daily turnover (ADT) in March 2009 by BIS methodology (166 Russian reporting banks), bln. US$ (source: Bank of Russia) Total ADT, US$ bln. of them: CCY /RUB Cross-border of CCY/RUB FX spot$26.5$ 20.2$9.6 Outright forwards $0.68$ 0.48$0.19 FX swaps$18.1$ 10.9$3.2 Total:$45.2$31.6$13.0

7. 5-th IRSF, London, 28Apr09National Foreign Exchange Association, Russia 7 Non-residents in Russian FX Share of non-resident (global) participants in Russian FX market stable at 37-41% Periodnon-residents in USD/RUB Non-residents EUR/RUB Q4 200737.0%31.7% Q1 200838.9%33.1% Q2 200838.9%25.3% Q3 200837.3%25.0% Q4 200841.5%20.7%

8. 5-th IRSF, London, 28Apr09National Foreign Exchange Association, Russia 8 RUB markets outside Russia No available data on off-shore turnover with Rouble denominated instruments (Central Bank of Russia does not know) ICAP voice brokerage data on RUB instruments in London in 2008: FX swaps Interest rate swaps NDF FRA FX spot

9. 5-th IRSF, London, 28Apr09National Foreign Exchange Association, Russia 9 Prospects of RUB as international currency Infrastructural prerequisites for wider global RUB trading (tasks for Russian Central Bank - CBR): 1.Change CBR concept of internal FX market to recognize global RUB FX market; 2.Promotion of RUB instruments in global electronic trading platforms (such as EBS or Reuters) 3.To remove obstacles in RUB clearing and settlements for international participants: 1.RTGS (BESP of CBR) 2.CLS Bank clearing currency (in addition to ZAR, MXN) 4. Monitor RUB trading volumes outside Russia

10. 5-th IRSF, London, 28Apr09 National Foreign Exchange Association, Russia 10 About NFEA Established: October 1999 in Moscow as non-commercial organization; Membership: legal entities (local and global banks and brokers) working on/related to Russian spot/forward foreign exchange and money markets. 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: MosIBOR (2001, RUR interbank % rates), RIBER (2004, USD/RUB), MosPrime Rate (2005, RUB money market reference rate) Projects in progress: -Standard Documentation on Russian OTC derivatives transactions (Russian analogue of ISDA Agreement) – completed in 2009 -Legal documentation on syndicated loans; International cooperation and working contacts: -ACI-The Financial Markets Association -ISDA (inclusion of MosPrime rate into ISDA definitions 2006)

11. 5-th IRSF, London, 28Apr09 National Foreign Exchange Association, Russia 11 Contact Details 13 Bolshoy Kislovskiy Per., Moscow, 125009, Russia, Tel.+7 (495) 705-9693, Fax: +7(495) 705-9675. www.nva.ruwww.nva.ru, www.nfea.ruwww.nfea.ru @ The Copyright National Foreign Exchange Association, 2008. All rights reserved. Any reproduction is only permitted with prior consent of NFEA.