Magazine article Modern Trader

Soviets Blaze Trail toward Futures

Magazine article Modern Trader

Soviets Blaze Trail toward Futures

Article excerpt

Soviets blaze trail toward futures

The USSR took the first step toward creating a futures market Sept. 19 with the opening of the Moscow Commodities Exchange (MCE).

The brainchild of a group of young entrepreneurs, MCE is patterned after commodity exchanges that flourished in Russia before the revolution and during the early days of communist rule. Gennadi M. Poleshuk, the driving force behind MCE, says futures markets in commodities and a Soviet money market would help graft modern international market practices into old Russian roots.

"There were over 100 commodities exchanges in Russia in 1925 at the end of Lenin's New Economic Program," he says. "They were all closed with the introduction of `war and communism.' Our task is to revitalize these traditions, use them as a base."

Poleshuk, who has a doctorate degree in economics, is general director of the Soviet-Italian-Yugoslavian joint-venture "Voltec," one of the founding members of the MCE.

Initial investment

The five MCE founding members invested 3.6 million rubles (at roughly 1.7 rubles per dollar, $2.1 million) and plan to raise another 8.4 million rubles ($4.9 million) by the sale of limited equity participation. They predict turnover in the first year of 3 billion rubles ($1.76 billion).

The MCE is seeking foreign investors and participants. Shareholders can trade on the exchange floor as individual entities or through designated brokers, who receive a percentage (currently 10%) of the transaction price. …

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