Russia Boosts Low-Latency Trading

Terry Flanagan

BCS Prime Brokerage, the international arm of the largest trader of equities and derivatives on the Russian exchange, has launched an ultra-low-latency link between London and the Moscow Exchange.

The development allows BCS Prime clients the opportunity to trade equities, derivatives, FX, and other financial products between the two financial centers in the most time and cost efficient manner. BCS is the largest trader of equities and derivatives on the Moscow exchange by turnover and has 13% market share of equity trading.

“The implementation of this new ultra-low latency connectivity service between London and Moscow establishes once again that BCS is leading the industry by offering our clients the best possible platform to maximize their Russia trading strategies and profits,” said Michael Barmettler, managing director at BCS Financial Group. “This ongoing dedication to the latest technology is why BCS Prime is the first choice when it comes to trading Russian markets successfully.”

The Moscow Exchange is taking steps to make trading faster and easier for international trading participants.

“The Moscow Exchange’s issuance of an IPO has put the exchange on an equal footing with other global exchanges and is a significant move that will help drive the market forward,” said Emmanuel Carjat, managing director at TMX Atrium, in a blog. “The fact that Moscow Exchange chose to list purely on its own market and not list Depository Receipts on alternate markets is a clear indication that the Exchange is trying to bring liquidity and trading volume back to Moscow.”

In addition to this IPO activity, the much-anticipated move to a more international settlement cycle is better aligned with international brokerage firms’ trading and liquidity patterns, which also suits the increasing number of Russian brokerage firms setting up operations outside Russia, Carjat said.

The creation of the National Settlement Depository (NSD), the sole Central Securities Depository (CSD) in Russia, should result in reduced settlement time, lower cost of post trade, and reduced risk. In addition, CSD’s agreements with Euroclear and Clearstream offer non-Russia participants direct settlement of some of Russia’s most liquid traded assets, said Carjat.

“Capital flows are being boosted into and out of Moscow, and we anticipate this will create a further explosion in activity on the Moscow Exchange,” Carjat said. “Similarly, firms such as Sberbank are changing the traditional role and face of the Russian investment bank, bringing it in line with other global entities.”

The BCS connection is the first ultra-low latency data line with a sub-39 millisecond connection between Moscow’s M1 data center and the InterXion data center in London, ensuring the best available line between the two financial centers. There will be additional geographically diverse back up locations via Frankfurt.

Every millisecond of latency can result in up to $100 million per annum in lost revenue. BCS believes this lower latency will now result in higher trading profits for its clients.

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