Russia Draws Inspiration From Euroclear With China Market Link

Plan would link countries’ central depositaries, Moiseev says
Yuan-ruble trading jumped fourfold in August on Russia bourse

Russia and China are working on an eastern equivalent to Euroclear Bank SA’s bond, stock and currency settlement services as they seek to boost two-way investment in their markets.

“We see serious progress in establishing a bridge between two central depositories,” which will eventually allow Russian investors to trade directly in Chinese markets and vice versa, Deputy Finance Minister Alexey Moiseev told reporters at an international economic forum in Vladivostok. “Something like a Euroclear analogue between Russia and China,” he said. Euroclear runs the world’s biggest bond settlement system.

The two nations are teaming up in financial markets after U.S. and European Union sanctions over Ukraine crimped Russia’s access to capital markets, spurring it to turn to China for fresh funding sources. Trading in the yuan-ruble currency pair on Russia’s main bourse jumped fourfold in August compared with a year earlier, reaching a record 18.4 billion yuan ($2.89 billion), the bourse said on Wednesday.

Vnesheconombank, the Russian state development bank locked out of Western capital markets by the sanctions, is in talks to sell yuan bonds on the Chinese mainland, the lender’s first deputy chairman said last week. China set new rules in July making it easier for big international investors to access its $5.7 trillion interbank bond market.

Russia “hopes” the depositories’ work will be concluded in the next 12 months, Moiseev said. The country’s central depository didn’t immediately respond to an e-mailed request for comment.

Source: Bloomberg