vlad.tribnet.com / Issue #164 / Business / Reading article...

Rumors about the imminent merger of Vladivostok’s currency exchange with the stock exchange have been greatly exaggerated, but are not entirely false, according to a recent announcement by representatives of the two exchanges.

“You can’t say that the information published in the press over the past two or three weeks is completely untrue,” admitted Asia-Pacific Interbank Currency Exchange representative Igor Kholodkevich.

A working group, comprised of exchange representatives, representatives of the krai administration, the Federal Securities Commission and investors is to be formed to determine whether a merger should take place, a statement by the Vladivostok Stock Exchange and APICE confirmed.

“It’s necessary to study every angle here, then we can preserve a structure in which nothing is lost,” said VSE president Andrei Malyutin.

Part of the confusion over a possible merger has been caused by several concurrent events surrounding the APICE and its legal status. According to a statement released on March 30 by the Moscow Interbank Currency Exchange, as of April 1, APICE is one of five regional exchanges to lose its Federal Securities Commission license to operate as an independent securities-trading entity. Instead, the exchange will become a branch of MICEX, providing local securities traders with access to the MICEX trading system, instead of conducting independent operations.

Furthermore, APICE reportedly stands to lose its currency-trading license, issued by the Central Bank. According to one Russian business reporter who asked to remain anonymous, the reason for the loss of license is outstanding debts owed by APICE to the Central Bank.

Meeting on March 24, APICE’s board of directors lamented the exchange’s 1997 losses of more than 200 million rubles ($33,000), but voted against considering a merger with the VSE. The board also elected to the position of general director, Alexei Koldin, former president of the bankrupt VostokInvestBank and current director of the committee overseeing liquidation of the bank’s assets.

Koldin refused to comment on the possible loss of the currency-trading license, saying the relationship with the Central Bank was “an internal, commercial matter for shareholders in this closed stock society.” He was, however, more forthcoming about a possible merger with the VSE.

“Some sort of rapprochement, or technological interconnection between the two exchanges, naturally should take place,” said Koldin. “I personally haven’t discussed this problem with my specialists on the [APICE] exchange board, but never mind whether you want it or not, the two systems should become closer.”

VSE president Malyutin commented that, while Primorye and the entire Far East would benefit from having a single location where securities and currency can be traded, such a merger would not entirely benefit the VSE.

He also asserted that the loss of a significant financial entity from Primorye, would only further the flow of capital towards Moscow, away from the regions.

“I hope that, in addition to Koldin, there are others who will also support a merger, like, for example, the Primorsky branch of the Central Bank,” said Malyutin. “I won’t stop the conversation about merging, as long as support or interest exists from the both sides. I am prepared to discuss initial details for a compromise, if this interests them.”