OREANDA-NEWS. February 03, 2009. As informed earlier, beginning December 29, 2008 participants of foreign currency trade on Kazakhstan Stock Exchange (KASE) were afforded an opportunity to carry out currency swap transactions, reported the press-centre of KASE.

According to results of the first month (December 29, 2008 through January 30, 2009) eight KASE category "B" members participated in the trade. During the period 79 orders were submitted to the KASE trading system resulting in 22 transactions for a total of USD90.1 m. Average volume of a transaction reached USD4.1 m., and exchange (calculated) turnover of this segment of KASE market reached KZT21,891.0 m. (USD180.2 m.).

A currency swap transaction represents a complex of the two simultaneously concluded deals between the same two KASE category "B" members and counter-directed to each other with the same amount of the same currency, different in terms of settlement on the deals. In this respect currency swap transactions are similar to repo transactions with the difference that a subject of transactions is not securities, but foreign currencies.

Contracted designation (trade code) of a currency swap transaction looks like (example) "USD_TOD_TOM" (code of currency swap transaction, comprised of USD purchase and sale deal with execution of this deal on the trading day and simultaneously with this concluded and counter-directed USD purchase and sale deal in the same amount with execution of the second deal on the following business day after trading).

Currency swap transactions shall be executed in regard of US dollar as a subject of the transaction and the following types of deals in US dollar as those comprising such transactions:

- deals in USD_TOD or USD_TOM as opening deals of currency swap transactions (deals in USD_TOM may be used for beginning (opening) of such transaction provided on the day of such beginning (opening) USD_TOM is trading in the morning trading session);

- deals in USD_TOM or USD_SPT as deals ending (closing) currency swap transactions.

The difference between prices of currency according to purchase and sale deals comprising the transaction shall be used as a currency swap transaction price; at that:

- US dollar price according to the deal beginning (opening) the transaction (currency swap transaction opening price) is a weighted average price of all deals in USD_TOD or USD_TOM, concluded in the morning trading session;

- US dollar price according to the deal ending (closing) the transaction (currency swap transaction closing price) is a sum of the opening price of the transaction and the price of the transaction.

Currency swap transaction price is measured in Kazakhstan tenge within the second decimal place accuracy, which is the same accuracy as that used for US dollar trading on KASE.

The size of a lot at carrying out currency swap transactions is USD50,000.

At carrying out currency swap transaction the main trading method is continuous counter-directed auction.

Currency swap transactions shall be available in the KASE trading system for exchange category "B" members within the frames of a day currency trading session from 11:30 through 15:30 ALT.

Currency swap transactions may be used as a hedge instrument, for speculation on differential of interest rates and to manage a position in currency. As noted above, a currency swap transaction represents a complex of the two simultaneously concluded, between the same two counteragents, counter-directed to each other deals with the same amount of the same currency, different in terms of settlement on the deals. Whereas a counteragent of transaction buys and sells the same amount of currency on set rates, there is no manifest currency risk.