The Russian government has approved the procedure of registering off-market deals with exchange commodities at exchanges, keeping a register of such deals, and producing information from the register.

The procedure for registering off-market deals with exchange commodities will be primarily applied to oil and oil products.

The government resolution “On the approval of the statute of the registration of off-market deals with exchange commodities at a commodity exchange, including long-term delivery contracts, and also keeping the register of the said deals and producing information from the register” was posted on the government’s website on February 21.

Earlier it was reported that the government also approved a list of exchange commodities, the off-market deals involving which, including long-term delivery contracts, require mandatory registration at a commodity exchange.

The list includes oil and oil products sold by the manufacturer included in the register of economic entities as controlling over 35 percent of a certain commodity market or holding a dominating position on a certain commodity market.

Pursuant to the statute, off-market deals with an exchange commodity from the government-approved list shall be registered in the course of trading for the commodity in question at commodity exchanges that meet the requirements of Russian legislation on commodity exchanges.

A single off-market deal cannot be registered at more than one commodity exchange.

The party concluding the deal shall be responsible for reporting full and reliable information about the off-market deal required for its registration and also information about additional agreements, supplements and amendments to it.

Commodity exchanges shall submit the register to the federal regulator in the sphere of operations, to which the production of the relevant commodity belongs, in a procedure established by that particular authority.

The data required for the registration of an off-market deal shall be supplied to the commodity exchange in electronic form, according to a pattern and in keeping with the requirements established by internal regulations of the commodity exchange in question for each off-market deal within three working days of its execution.

A commodity exchange shall register an off-market deal within one working day of the receipt of all the required data. The registration of an off-market deal shall be confirmed by an electronic notification containing the unique code assigned to the deal that shall be sent by the commodity exchange to the party making the deal within one working day of the registration of the deal.

Should a registered off-market deal be cancelled, the party executing the deal shall have the duly notify the commodity exchange within one working day of cancelling the deal.

An exchange has the right to refuse to register an off-market deal, if the party signing the deal fails to submit the required information in full. In this case it shall send a notification stating the reasons for the refusal to the person executing the deal within one working day of the refusal.

The party executing the deal within three working days of receiving the notification of the refusal of registration is bound to remove the irregularity and produce the information required for registration to the commodity exchange.

The exchange shall guarantee free access to summarized data from its register that can contain information about the volume and price of a commodity on a certain delivery term for a certain period of time on its official website. However, such data should not contain information about the parties executing deals, and the parties selling or purchasing exchange commodities.

The terms for reporting the summarized data, information, and excerpts from the register shall be determined by the internal regulations of the commodity exchange under an agreement with the federal authority in the sphere of financial markets.

The exchange shall guarantee the confidentiality of the data supplied by the party executing the deal for the registration of an off-market deal.

The exchange shall report information from its register to the federal authorities not regulating the sphere of operations to which the production of the relevant commodity belongs upon a written inquiry as to the volume and within the period of time stated in the inquiry.

The information reported by the commodity exchange to the federal authorities is confidential. A federal authority receiving information from the register shall have no right to share it with third parties with the exception of the summarized data, if Russian legislation does not provide otherwise.

In 2010, 7.6 million tons of oil products were sold at exchanges. Exchange trading in oil products in Russia is conducted at the Interregional Exchange of the Oil and Gas Complex, the St. Petersburg International Commodity Exchange, and the St. Petersburg Exchange.

In an interview with Interfax, the head of the Federal Financial Markets Service Vladimir Milovidov said that the approved procedure “creates conditions, in which prices, including off-exchange prices, could be monitored.”

In his opinion, this procedure will permit “to take a better and closer look at and see deviations and negative trends when they appear, as well as to promote more objective pricing at exchanges.”

Milovidov added that the steps taken conform with international practices and make exchange prices more transparent and understandable to the oversight bodies among others.

Prime Minister Vladimir Putin had instructed the Energy Ministry and the Federal Antimonopoly Service to consider the establishment of an exchange committee on the oil product market that would engage in systematic monitoring of the price situation on the domestic oil product market and report an impartial picture of market trends.

Recording off-market deals is expected to guarantee even greater promptness in monitoring prices on the oil products market.