Russian Trading System Stock Exchange Opportunities of Derivatives market for foreign investors

Russian Derivatives market Derivatives market – the fastest growing, the most profitable segment of the Russian financial market – until now this year has been the most profitable year in the history of derivatives market: Rapid growth of trading volume Steep growth of number of trading participants Legislation improvements Infrastructure changes The facts above create a solid base for the future market development

FORTS (Futures and Options on RTS) 1.Legal defence of futures contracts (the law was adopted by the governmental authorities and signed by RF President on January 26, 2007) 2.Cancellation of limitations for capital transactions with currency 3.Macroeconomic policy helps further economics and financial market development 4.The process of overflow of the main share of the derivatives on Russian assets to Russia Positive factors that promote development of derivatives market

FORTS (Futures and Options on RTS) is a derivatives division of the Russian Trading System Stock Exchange FORTS has 13 years experience in futures and options trading FORTS is a leader of the Russian market in: Monthly Trading volume – 27 bln US dollars Number of traded contracts - 53 Number of active market participants - 90 Number of accounts Last Records: Daily open interest exceeded $9,5 billion. Daily trading volume grew to $1,8 billion. FORTS – is a reliable and technologically advanced market Russian derivatives market

Market Dynamics FORTS is in the international exchanges top-20 by trading volume the world leader in the single stock derivatives segment the fastest growing segment of the Russian financial market Russian derivatives market

Volume examples Monthly trading volume of futures and options contracts on IOB Index on LSE 45 mln USD Monthly trading volume on futures and contracts on RTS Index 15 bln USD Monthly trading volume on futures contracts on Rebco oil on NYMEX 0 Monthly trading volume on futures contracts on Urals on RTS 32 mln USD Conclusion: financial instruments on Russian assets have better liquidity in Russia Why Russian Derivatives market?

Wide range of instruments FORTS (Futures and Options on RTS) FORTS offers a wide range of derivative instruments: Equity derivatives: -Futures on 15 most liquid shares -Options on 15 most liquid shares Index derivatives: -Futures on RTS Index and RTS Sectoral Indices -Options on RTS Index Bond futures: -Futures on 12 most liquid bonds Short terms Interest Rate futures -MosIBOR Futures -MosPrime Futures Currency derivatives: -Futures on UDS -Option on USD Commodity derivatives: -Physical Delivery Gas oil futures -Futures on Gold and on Silver -Futures on Oil (Urals) -Options on Gold

FORTS (Futures and Options on RTS) Highly liquid market Aggregation of demand of local and global market participants A large number of market participants (more than 14 thousand of clients’ accounts) A wide range of instruments An opportunity of arbitrage with western financial markets FORTS advantages

FORTS – maximum opportunities for international investors Hedging of positions in Russian assets (both portfolios and separate securities) Hedging of positions in rubles and USD An opportunity to make money on volatile and bear market Making arbitrage deals An opportunity to trade with Russian counterparties Offering clients trading on the Russian market (DMA, Structured Products)

RTS Index Derivatives Futures on the RTS Index was launched in August 2005 Option on RTS Index future was launched in September 2005 Within 6 months RTS Index has become the most popular Russian derivative Open interest is over 2,4 bln dollars RTS Index is the benchmark of the Russian stock market Calculated since 1995 Capitalization-weighted, with free-float coefficients Consist of 50 preferred and common shares Calculated real-time RTS Index is included in the Standard&Poor’s Index Global Portfolio Current market capitalization of companies included the RTS Index as of Sept 25 is $935 bln. Russian derivatives market

Money market derivatives Russian derivatives market Effective instrument for hedging of risks in domestic Russian assets -Futures contract on exchange RUR\US dollar rate -Option on futures contract on exchange RUR\US dollar rate -Futures contract on short-term interest rate

Commodity Derivatives - February 20 th, 2007 Started of physical delivery futures contracts on Gas oil -Sugar futures launched 19 September, Weather derivatives will be launched in November, Futures contracts on oil Cash-settled futures contracts on export oil Urals. Settlement based on pricing information supplied by Platts (Urals-ex-Baltic Sea CIF R'dam) -Futures and options on gold -Futures contracts on silver Russian market instruments

Main Russian banks (Sberbank, Gazprombank, VTB, Alfa-bank, NRB, etc.) Global investment banks ( CSFB, Deutsche Bank, Raiffeisenbank Austria, UBS ) Leading Russian investment banks (Troika Dialog, Renaissance Capital, CIT-Finance, Aton etc.) Leading Russian investment companies FORTS General Clearing Members

FORTS Participants -Leading investment companies -Investment banks including global investment banks -Commercial banks -Institutional investors -Non-residents -Private investors -Industry participants In total more than participants who are served by up to 180 professional market participants

Settlement guarantees The funds’ amount on Sept, 2007 mln $ 1. Initial margin (deposited by FORTS members and their clients) Guarantee Funds: Contingency Fund (made of equal contributions of FORTS members) Reserve Fund (formed from RTS Clearing House own balance sheet) 18 A separate specialized clearing company – RTS Clearing House:  acts as a central counterparty to the futures and options transactions  runs the settlement of all the contracts Three-level guarantee system: Initial margin (guarantee payment) Reserve Fund Contingency Fund

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