Vladimir Sotskov, Head of the Derivatives Department at URALSIB Capital took part in the third annual international conference “Derivatives World 2009”
On 17 September 2009, the Russia session of the international conference “Derivatives World 2009” was organized and held by Futures and Options World magazine in Moscow.
The conference hosted more than 200 participants from various companies working in the derivatives market, as well as representatives from stock exchanges and government bodies. Participants discussed the effects of the crisis on the derivatives market over the past year and gave their opinions on the problems facing the market and its outlook.
A panel discussion was held on derivative securities and index derivatives, in which participated Vladimir Sotskov, Head of the Derivatives Department at URALSIB Capital. Participants discussed how the unstable spot market is affecting the derivatives market. They also discussed the convergence between over-the-counter and exchanging markets for derivatives as well as effective hedging strategies and the investment potential of stock futures.
During the discussion, Mr Sotskov noted that in the current volatile environment investors should be very attentive to the higher risks. A cautious strategy is very important today and the continual analysis of risks and positions is key to success. He stressed that this is relevant for all markets but for Russia in particular, as liquidity can disappear from the Russian market very quickly. While using different trading schemes, investors should account for the human factor and not solely rely on models. Answering a question on the current market situation, Sotskov noted that the world liquidity center has shifted from the OTÑ to an exchange including international trade with Russian ADRs. The number of international investors has not changed significantly, but the range of Russian companies has narrowed.
Overall, the conference participants concluded that despite the crisis the past year has turned out to be rather positive for the derivatives market and the current outlook is optimistic.
At the same time the infrastructure of the Russian derivatives market still needs to be improved. The OTÑ market is small and needs to be developed. According to Dmitry Piskulov, a member of The National Currency Association, this is due to underdeveloped interest instruments in Russia, which account for approximately 70% of the global derivatives market and only 5% of the Russian market. The post-crisis environment has set new requirements for such infrastructure. “As a result of the crisis the world market has set new requirements for infrastructure. Developed markets have decided to make derivatives more standardized and organize a mandatory centralized clearing system,” said Igor Marich, vice-president of MICEX.
The lack of specialized legislation also hinders the development of the derivatives market. Currently, amendments to the Law on the Securities Market and changes to Russian tax law are the top priorities. It is also necessary to pass a law on netting liquidation before the end of the year, according to Oleg Ivanov, vice-president of the Association of Russian Regional Banks.
The conference was the Russian session of the “Derivatives World 2009”, a series of conferences arranged by FOW magazine (Futures & Options World), a publication devoted to the derivatives market and published by Euromoney Institutional Investor PLC. The conference is a major annual event in the Russian derivatives market, hosting more than 200 top managers and representatives from different government bodies, exchanges, brokerages, trading firms and investment banks.
