Russia Gets Physical

Moscow Exchange Plans Gold to Silver Trading to Broaden Appeal
OAO Moscow Exchange will introduce trading of gold and silver as early as this month as part of plans to make metals more accessible to smaller banks by reducing transaction costs.

The exchange will quote gold and silver in Russian rubles per gram, with minimum trades starting at 10 grams of gold and 100 grams of silver, the bourse’s Deputy Chief Executive Officer Andrey Shemetov said in an e-mailed response to questions yesterday. Platinum and palladium contracts will start trading in the first half of 2014, he said. Russia is the world’s largest developing-nation producer of gold after China.
This sounds like a normal business development, but it isn't.

It’s an “unusual move” for the stock and currency exchange to list physical metals, and has the potential to affect the gold market as trading volume grows, Marcus Grubb, managing director of investment research at the World Gold Council, said in an e-mailed response to questions on Oct. 9.

The exchange will quote prices and enable traders to settle contracts via delivery to and from unallocated metals accounts at its National Clearing Center. Banks can deposit or withdraw precious metals in the form of physical bullion bars, and delivery and collection will occur at a nominated Moscow vault, the bourse said. The contracts are also likely to appeal to brokers, producers, jewelers and private investors in the long run, it said.
Russian is aiming to create a physical trading market attractive to even the average investor.

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