ANATOLY GOLOMOLZIN ABOUT EXCHANGE TRADE DEVELOPMENT
“This is because efficient large-scale transformation in the economy can be achieved only through joint efforts”, said Deputy Head of FAS at a Round Table in Moscow
On 5 February 2020, the 5th meeting of the Energy Working Group of the Joint Commission on Economic Cooperation between the Russian Federation and the Kingdom of the Netherlands took place in the Moscow Office of St Petersburg International Mercantile Exchange (SPIMEX). Deputy Head of FAS Anatoly Golomolzin talked about international cooperation in the field of antimonopoly regulation and the role of the exchange as a centre for establishing objective price indices.
“FAS is actively involved in building up domestic energy markets and also actively works under the frame of international cooperation. We are interested in not only competition protection but also in its development, shaping competitive markets, objective market pricing, developing additional flexibility for our markets. Our work is directly included in the international agenda”, started his speech Deputy Head of FAS.
The speaker informed that competition authorities from different countries of the world unite their efforts under the frame of the International Working Group on Oil Products (the co-chairs – Russia and Austria), which drafted recommendations on enhancing pricing objectivity. These guidelines are universal and cover other fuel-and-energy markets as well as other raw materials markets.
“National energy markets have the oligopolistic structure in all countries with rare exceptions; and special measures are necessary to enhance pricing objectivity. The OECD Competition Committee and UNCTAD supported the recommendations given by antimonopoly bodies from different countries of the world on increasing transparency, constructing objective price indices on the markets of physical goods and derivatives, reflecting these requirements and specifics in the law”, explained Anatoly Golomolzin.
Similar conclusions are reached by IOSCO1, which unites financial regulators of different countries, in a survey commissioned by the “Big 20” on the need to improve objectivity of pricing in the work of world price agencies. The Russian macro-regulator of the financial market – the Bank of Russia is a member of the IOSCO Committee on commodity derivatives, pointed out Anatoly Golomolzin.
Deputy Head of FAS also informed that the Russian law and practice are some of the best in the world, while development of exchange trade and structural reforms is one of the priorities of Russian national policy, formalized in an Order issued by the President of the Russian Federation2.
“The National Competition Development Plan, approved by the Order of the President of the Russian Federation, provides for drafting and executing a number of Road Maps on competition development in several sectors of the economy, including the markets of oil and oil products, natural gas, liquefied hydrocarbon gases, and coal. All these markets should move towards developing competition and increasing objectivity of pricing”, emphasized Anatoly Golomolzin. “Fulfillment the Plan not only gives an effect for business and sustainable development of the economy, but also enhances efficiency of operations of different regulators. It concerns antimonopoly control, tariff regulation, control over financial markets, taxation, as well as increasing efficiency of the budgetary sector”.
Anatoly Golomolzin reported that FAS is a multi-functional and multi-sector regulator in the economy, in particular, similarly to the antimonopoly body of the Netherlands, which allows the agency to facilitate competition development:
“Development of exchange trade is a complex process. Constructing markets, their development is a task that requires coordination of both the authorities and economic entities, because efficient large-scale transformation in the economy can be achieved only through joint efforts”.
Deputy Head of FAS said that to achieve these goals, the Exchange Committee is formed in accord with the decision of the President of the Russian Federation.
“It is established by three bodies that are the main regulators in the economic field: FAS, the Bank of Russia and the Federal Tax Service. All of us are interested in making pricing objective, developing markets and all this created the basis for sustainable economic development”, continued the speaker. “We interact with all market participants, sellers and buyers of energy sources, interested bodies, exchanges, the main of which are SPIMEX and Moscow Exchange. The Exchange Committee holds around 200 meetings annually on resolving strategic and practical tasks”.
According to Deputy Head of FAS, the way price indices are formed on the market of physical goods are of principal importance, and the same applies to how the off-exchange segment is involved in the general system of exchange trade development.
He said that “in the past ten years the scope of exchange trade has been increasing in all segments of the fuel-and-energy market. It concerns oil products and natural gas, oil liquefied hydrocarbon gases and coals. Here it is essential for us to ensure the conditions of inter-fuel competition through universal price indicators”.
The speaker also emphasized the importance of the efforts on registering off-exchange transaction at the exchange:
“The scope of the registered contracts is hundreds of millions tons for each product, which creates preconditions for the maximum reliable price indices. Off-exchange price indices help increase efficiency of trading on the physical goods markets, and exchange trade with commodities derivatives is also developing on the basis of off-exchange price indices”.
Regarding international cooperation in EAEU, Anatoly Golomolzin underlined that “five countries united under the frame of establishing common markets of goods, works, services and capital. In particular, it is expected that common markets of natural gas, oil and oil products, the energy sector will be developed by 2025. The key issue of international treaties is to enable market pricing through exchange trade, objective indices of exchange and off-exchange trade and comparable prices on foreign markets. It creates the basis for economic cooperation under the fair pricing conditions and removing barriers within the boundaries of the Eurasian Economic Union”.
“We believe that we have a huge potential for interaction within the Netherlands – Russia Energy Working Group, and experience exchanges will help deepen and expand cooperation between our countries”, summed up Anatoly Golomolzin.
SPIMEX President Alexei Rybnikov pointed out that “the main objective of the Exchange is to establish Russian own price indices for commodities based on information about actual transactions. We work under instructions and with active support of the state. Oil products, natural gas, colas and in the long-run electric power are on the list of the markets, where SPIMEX organizes trading. SPIMEX actively develops international efforts: deliverable futures for oil and oil products are launched, export timber trade started, and we plan to reach new exchange commodities markets. SPIMEX participates in the leading international exchange associations, where directions for developing commodity trade are discussed. The meeting of the Netherlands – Russia Working Group, that takes place today at SPIMEX, is another important element of the dialogue about the trends in the energy sector”.
The event was also attended by Chairperson of the Russian part of the Working Group, Deputy Minister of Energy of the Russian Federation, Anastasia Bondarenko; Chairperson of the Netherlands part of the Working Group, the gas market coordinator of the Netherlands Ministry of the Economy and Climate, Vim van 't Hoff; Schell Russia’s chairman, Cederic Cremers, etc.
References:
1 International Organization of Securities Commissions.
2 № 618 Order of the President of the Russian Federation “On the main directions of the state policy for developing competition” of 21.12.2017.