1. London, 14Apr10National Foreign Exchange Association, Russia 1 Overview of RUB markets in 2010 Dmitry Piskulov, Ph.D. (Econ.) Member of NFEA Management Board, Chairman of the Committee for Professionalism; ICAP, Senior Adviser

2. What’s new in RUB markets Stability is achieved: RUB appreciates against Basket; CBR reserves up to $436 bln. Spot/cash RUB markets: interbank limits almost back to normal. Rise in direct OTC interbank New enhanced derivatives legislation: changes in Tax, Securities and Banking laws – aimed at development of domestic derivatives market Law on close-out netting (CON) is being reviewed by Parliament, expected by end of 2010 Russian ISDA (Standard documentation) with FX, IR, Equities and FI annexes is in place New market indices: NFEA FX SWAP rate, RUONIA London, 14Apr10National Foreign Exchange Association, Russia 2

3. Where RUB markets? ON SHORE: only domestic (residents) OFF-SHORE: only non-residents ON-SHORE deals with OFF-SHORE: cross-border RUB transactions London, 14Apr10National Foreign Exchange Association, Russia 3

4. What RUB products FX spot FX forwards and FX swaps Cash MM deposits RUB bonds (government + corporate) REPOs Interest rate derivatives Equity cash London, 14Apr10National Foreign Exchange Association, Russia 4

5. Russian on-shore FX mkt 2007 RankCountry2007 ADT, $ bln.Share of global % 1United 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 % London, 14Apr10 National Foreign Exchange Association, Russia 5

6. Domestic RUB interbank market smaller than FX market: average daily turnover (ADT), bln.$ London, 14Apr10National Foreign Exchange Association, Russia 6 Interbank depositsREPOs O/N DomesticCross- border DomesticCross- border Jan10$4.0 bln$1.5 bln$1.6 bln0 Feb 10$7.6 bln$2.6 bln$2.0 bln0 Source: CBR, April 2010 RUB money market 2010

7. London, 14Apr10National Foreign Exchange Association, Russia 7 Domestic FX market in Feb 10 Domestic OTC market average daily turnover (ADT) in bln. US$ by BIS methodology (Bank of Russia) Total ADT, US$ bln. of them: CCY /RUB Cross-border of CCY/RUB FX spot$26.8$ 18.5$11.6 Outright forwards $0.48$ 0.36$0.28 FX swaps$21.1$ 13.4$5.3 Total:$48.4$31.6$13.0

8. London, 14Apr10National Foreign Exchange Association, Russia 8 Crisis on FX interbank markets Russian FX average daily turnovers dropped in 2008 but stabilized in 2009-2010 MonthOverall FX market volume MICEX Volume Jul 2008$ 119.2 bln.$ 10.5 bln. Apr 2009$ 46.2 bln.$ 9.8 bln Oct 2009$ 54.2 bln.$10.6 bln Feb 2010$ 53.4 bln$10.0 bln.

9. London, 14Apr10National Foreign Exchange Association, Russia 9 RUB markets outside Russia Turnover: $11-12 bln. daily (FX, MM, IRD) Link Moscow-London (transactions done in Moscow in the name of London HO) Number of banks (dealing codes) ( according to ICAP EBS: banks that entered RUB SSI) in March 2010 Active: 60 (already dealt in EBS) Potential: 181 (entered RUB SSI in EBS) Increase in participants and thus global volumes subject to settlements solution!

10. RUB instruments outside Russia More RUB derivatives than cash products FX spot Cash deposits FX swaps NDFs Outright forwards FX options Interest rate swaps (IRS) Currency swaps (incl. CCS) Forward rate agreement (FRA) London, 14Apr10National Foreign Exchange Association, Russia 10

11. Geography of RUB FX Overseas counterparties of Russian banks (CBR): London, 14Apr10National Foreign Exchange Association, Russia 11 RegionFX spotFX swaps Western Europe64.0%89.9% Northern Europe18.7%3.1% C I S countries10.0%1.6% South America4.2%2.6% Cyprus2.3%- North America0.3%

12. RUB FX in London Source: UK FXJSC semi-annual survey, January 2010 London, 14Apr10National Foreign Exchange Association, Russia 12 Oct 08Apr 09Oct 09 Percentage of RUB in total UK FX 0.7% USD/RUB turnover$10.9 bln.$8.6 bln.$10.8 bln. Rank of RUB151716 Total ADT of UK market, $bln. $1699 bln.$1356 bln.$1549 bln

13. Volumes of RUB FX instruments in London InstrumentsApr 2009Oct 2009 FX swaps$4.0 bln$6.1 bln FX spot:$1.8 bln NDF$1.2 bln.$1.3 bln. FX options$0.5 bln$1.2 bln Outright forward$0.9 bln$0.3 bln Ccy swaps$0.14 bln$0.1 bln Total:$8.6 bln$10.8 bln London, 14Apr10National Foreign Exchange Association, Russia 13 UK FXJSC: Average daily volumes in 2009

14. Global banks RUB trading Global banks – main promoters of RUB instruments RUB FX pricing and execution hub location: struggle between Moscow and Head office:  in London: 30%  in Moscow: 60%  other (Helsinki, NY,Tokyo, Vienna, Hong Kong): 10% London, 14Apr10National Foreign Exchange Association, Russia 14

15. London, 14Apr10National Foreign Exchange Association, Russia 15 Challenges for authorities 1.Monitoring of round-the clock RUB quotes (also at night time in Moscow) 2.Support of RUB instruments in global electronic trading platforms (such as EBS, Reuters, Bloomberg etc.) – possibility to establish the band 3.Access to RUB FOREX in MICEX for foreigners 4.Removal of obstacles in RUB clearing and settlements – - RTGS (BESP of CBR) - CLS Bank clearing currency (next ZAR, MXN): CBR Chairman S.Ignatiev approved beginning Of cooperation with CLS Bank International

16. London, 14Apr10 National Foreign Exchange Association, Russia 16 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: MosPrime Rate (2005, RUB money market reference rate), NFEA FX SWAP RATE – new index for USD/RUB and EUR/RUB forwards -Standard Documentation on Russian OTC derivatives transactions (Russian analogue of ISDA Agreement) – completed in 2009 Projects in progress: -RUONIA – Russian analogue of EONIA International cooperation and working contacts: -ACI-The Financial Markets Association -ISDA (inclusion of MosPrime rate into ISDA definitions 2006)

17. London, 14Apr10National Foreign Exchange Association, Russia 17 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.