On August 17th, the Moscow Exchange will launch trading of the 20 most liquid shares listed on the S&P 500, allowing Russian investors to purchase US equity in their national currency – Ruble. The second tranche, launching in November will include stocks of other well-known companies such as Nike, Cisco Systems and PayPal. After November, the Moscow Exchange plans to add 70 more stocks at three month intervals, to give the exchange adequate time to find market-makers(traders) who will provide liquidity.
The increased number of stocks will help MOEX expand their business and lower their trading fees which works to entice more investors, especially those with larger accounts. When you think about it stock exchanges work in a similar way to an Ebay or Amazon. Stock exchanges generate revenue by charging companies a listing fee, investors pay a transaction fee and the market data which represents real-time market data is sold to end-users. The more users these platforms have, the lower they can make their fees which ultimately makes them more competitive with other exchanges.
The forthcoming increase in US equity listings on MOEX will also enable investors outside Russia to benefit from currency exposure, when purchasing American stocks in Ruble. Another advantage is that futures and option contracts on USD/RUB can be hedged more easily. By using stock purchased in rubles for example, which can also be a profitable addition to your EM portfolio.