BRICS Centre Director: The Exchange Provides a Balance Between Government Regulation and Market Economy

BRICS Centre Director: The Exchange Provides a Balance Between Government Regulation and Market Economy
Photo: spbu.ru 03.02.2025 133

On January 31, the VIII International Scientific and Practical Conference “Modern Antimonopoly Economy Regulation: Tools for Improving Legislation” was held in St. Petersburg. Alexey Ivanov, Director of the BRICS Competition Centre, delivered a report entitled “Commodity Exchange as an Institution for Competition Development”. The event was attended by Mr. Maxim Shaskolsky, Head of the FAS of Russia, Mr. Sergey Puzyrevsky, State Secretary - Deputy Head of the agency, representatives of the business and academic community, as well as practicing lawyers. capitalist monopolization principal-agent relationships  unilaterally influences the terms of goods circulation on an equal playing field, with their own will and in their own interest

Commodity exchanges are typically viewed as one of the key institutions within financial markets, but they play a much more critical role in fostering competition, said Alexey Ivanov. Initially established as platforms for active economic activity, exchanges spurred a major leap in trade and have since evolved into fully-fledged institutions.

In their new role, exchanges have begun addressing a wide range of challenges specific to different types of goods. When a product is produced in large quantities, it can be standardized for exchange trading. However, Ivanov emphasized that standardization is a secondary concern, with the main focus being on trade volumes and industrialization.

“With industrial-scale production and consumption, the creation of a trading institution and a platform for the exchange of goods becomes a logical solution,” 

noted Director of the BRICS Centre.

The key point is that any market mechanism is only effective within its "therapeutic window," meaning it must be properly calibrated to minimize risks. In an oligopolistic economy, there are risks of both a return to centralized planning and the rise of capitalist monopolization.

On one hand, oligopolists control many sectors of the Russian economy, hindering the development of exchange trading for certain goods, such as frozen fish, timber, and gas, within principal-agent relationship. On the other hand, there are issues of high volatility and excessive liquidity, as seen with grain futures on the Chicago and Paris exchanges, where speculative trading significantly outpaces actual delivery volumes.

For Russia, in terms of the evolution of the exchange institution, the more pressing issue is overcoming the obstacles related to principal-agent relationships, as well as the lack of competition and transparency — factors that impede more active involvement of market participants in exchange trading.

“An exchange, as a tool for increasing market transparency, represents a middle ground, ensuring a balance between state regulation and the market economy,” 

emphasized Ivanov.

While a marketplace unilaterally influences the terms of goods circulation on its platform, on an exchange, section councils develop trading conditions with input from all participants. Thus, the core mechanism of the exchange is self-regulation.

“The fundamental difference between exchanges and marketplaces like Ozon and Wildberries is that the lion's share of their income comes from fines they impose on traders. Marketplaces use their power as trade organizers to unilaterally manage the market. The exchange, however, has a fundamentally different structure. This is what makes it valuable for fostering competition,”

 said Alexey.

Concluding his speech, he noted that the Russian law “On Protection of Competition” interprets competition as a situation in which no player has the right to unilaterally influence the conditions of commodity turnover. However, the organizers of marketplaces actually have such a right and actively use it. The Exchange, on the contrary, is an example of how economic entities can act  on an equal playing field, with their own will and in their own interest, which contributes to the formation of a healthy competitive environment where all market participants win.

The conference was organized by FAS of Russia, Jurist Publishing Group, St. Petersburg State University and A.S. Griboyedov Moscow University.

stock exchange  Russia 

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