On November 9, the BRICS + session "Development of Exchange Trade in BRICS Countries" was held as part of the VII International Research and Practice Conference "Antimonopoly Policy: Science, Practice, Education" co-organized by the BRICS Competition Law and Policy Centre, FAS Russia and the Skolkovo Foundation.
The participants discussed the role and importance of exchange trading in maintaining the state of competition in commodity markets, its impact on the well‑being of citizens, as well as specifics of international cooperation in this area. The meeting was moderated by Andrey Karabyants, Observer of Oil and Gas Market at Prime Business News Agency.
The development of exchange trade may contribute to the economic growth of the BRICS countries as it reduces barriers to entry into commodity markets, increases the transparency of pricing and is one of the key factors in the promotion and protection of an effective competitive environment, noted Alexey Ivanov, Director of the BRICS Competition Law and Policy Centre. Research on the development of exchange trading potential in the BRICS countries is conducted with the support of the Center. Great opportunities for cooperation within the organization lie in the agricultural sector, Ivanov said, since Russia, Brazil and Argentina, which has applied to join BRICS, are the largest grain producers in the world.
"Making joint exchanges makes sense when we can be market makers, that is, to determine volumes sufficient to load the exchanges,"
- he stressed. It is necessary to identify key commodity items for which the BRICS countries have a good share of markets (metals, grain, sunflower oil), to outline several pilot projects and launch them. A comprehensive approach within the BRICS community with a focus on specific products could have an effect, believes Ivanov.
Russia's commodity turnover with its BRICS partners is steadily growing. For example, last year it amounted to $163 billion, compared to $105 billion in 2013, said Elena Tsyshevskaya, Head of Department for Regulation over Electric Power Industry of FAS Russia. The largest exports from Russia to Brazil, India, China and South Africa are fuel and energy products, such as oil and oil products, gas, coal, as well as timber, pulp, etc. Imports from partners include machinery, vehicles, chemical products such as plastics, and textiles and shoes.
"BRICS is characterized by the absence of economic, political or geographic domination by any of the participating countries, which creates comfortable parity conditions for cooperation,"
Administrative attempts to develop exchange trade of commodities in Russia have been made for many years, but they have brought no breakthrough success. Instead of pushing businesses to exchanges through administrative means, small trading floors should be allowed to actively look for and involve customers in organized trading, and thus ensure competition between the organizers of the trade, says Larisa Selyutina, Director of the Financial Market Infrastructure Department of the Bank of Russia. She is convinced that it is the competition of services for the quality of services that will create the environment for the natural development of the infrastructure.
Electronic trading platform services are in demand among small and medium-sized businesses. In the first half of 2022 only on one of the largest electronic trading platforms, the volume of trading was 1.5 trillion rubles, which is more than twice the volume of the total commodity exchange market in Russia (677 billion rubles) for the same period.
"We want to offer the existing electronic trading platforms to voluntarily become part of the infrastructure of organized trading, without breaking the ties already built with their clients,"
Anton Karpov, Vice President, Saint Petersburg International Mercantile Exchange (SPIMEX), spoke about the work of St. Petersburg International Mercantile Exchange (SPIMEX) and main directions of cooperation: creation of common exchange space with the Republic of Belarus and development of unified rules for exchange trade with partners in Eurasian Economic Community (EurAsEC).
Alexander Osmolovsky, Chairman of the Board of the Belarusian Universal Commodity Exchange (BUCE), shared his experience in organizing the Belarusian Commodity Exchange, introducing a new procedure of exchange deals support and special sessions for Chinese companies. Only single companies from Brazil, India and South Africa are presented at BUCE. That is why it is necessary to bring stock exchange and electronic platforms of BRICS countries into the exchange community of the CIS countries, said Osmolovsky.
Raj Kumar Badde, Joint Director (Financial Analysis), Competition Commission of India, spoke about the antitrust regulation of six commodity exchanges in India. He presented one of the first cases of abuse of dominance in the country's exchange industry. As a result of an investigation initiated by the Multi Commodity Exchange of India (MCX), the Competition Commission concluded that the National Stock Exchange of India (NSE) used its dominant position in the exchange market by resorting to predatory pricing in the foreign exchange derivatives segment. The NSE was fined 555 million rupees.
Increasing digitalization, including on exchange platforms, is a new challenge for antitrust authorities. Big Tech is certainly affecting exchange trading, and programs are emerging to manipulate trading markets, noted Raj Kumar Badde. In his opinion, under these conditions, to work effectively regulators need to cooperate with IT-specialists.