OREANDA-NEWS. February 11, 2013. At the press-conference at the Federal Antimonopoly Service (FAS Russia), Deputy Heads of FAS Russia Andrey Kashevarov and Anatoly Golomolzin discussed the issues of establishing market prices for oil products in the course of exchange trading, approximating approaches of FAS Russia and the Federal Tax Service in tax control over transfer pricing, the state of competition on the market of exchange services, reported the press-centre of FAS Russia.   

Anatoly Golomolzin informed journalists that the Ministry of Energy and FAS Russia signed the joint Order “On Setting the Minimum Value of Sold through Exchange Trading Oil Products Produces and (or) Sold by an Economic Entity that has the Dominant Position on the Relevant Markets and Approving the Requirements for Exchange Trading, in the Course of which Oil Products Transactions are Concluded by an Economic Entity that has the Dominant Position on the Relevant Markets”.

According to Anatoly Golomolzin, “this document completes the regulatory framework establishing the requirements to market prices through exchange trading with oil products”.

Anatoly Golomolzin also pointed out: “Exchange trading started after FAS issued determinations on the cases against the largest oil companies in 2008 – 2010. Since then the situation has been continuously improving on both quantitative and qualitative parameters. The annual volumes of trading exceed 10 million tons, and the number of participants already exceeds a thousand. With adopting the joint Order the situation with exchange trading with oil products will change radically and the exchange market prices will be formed and prices can become one of the price indicators on the market of oil products along with the index formed on non-exchange market on the basis of registration data for off-exchange transactions and estimated prices on comparable foreign markets (NetBack)”.

Andrey Kashevarov, in his turn, drew attention to the fact that market indicators form the basis for stability of market participants, which ensures market stability in general. The Federal Tax Service will need exchange indicators to verify the taxable base in the intra-group transactions. To develop common approaches for determining market prices, FAS and the Federal Tax Service organized an inter-branch Working Group.

“There are no contradictions between FAS Russia and the Federal Tax Service”, Andrey Kashevarov informed the journalists.

Earlier, representatives of oil companies asked to adopt measures towards improving the rules of control over intra-group pricing and proposed to introduce a moratorium for applying penalties and fines on transactions with oil products in order to harmonize the tax and antimonopoly laws.

According to Andrey Kashevarov, “we are in state of stability when the law is enforced”. Andrey Kashevarov also stated that FAS had analyzed the state of competition between exchanges. “The parameters of market development are the same and there is a leading exchange for each instrument”, Mr. Kashevarov summed up the findings. “The market is built-up logically, establishing market prices requires liquidity concentration. Exchanges compete with each other mainly based on service coasts. At the same time there is an embedded mechanism, which restricts monopolism of the leading exchanges, - participation of bidders in exchange management”. Mr. Kashevarov mentioned that for approving a merger of Moscow Interbank Currency Exchange and Russian Stock Exchange a mandatory requirement was to have a users’ committee and to establish the tariffs only upon approval by participants.

Answering questions about organizing exchange trading with ferrous metals, Andrey Kashevarov said that one of the areas of such work must be introducing the requirement to register off-exchange transactions with ferrous metals. FAS has repeatedly sent the relevant proposals to the Ministry of Finance of Russia. Introducing such responsibility will form a representative price indicator for ferrous metals and, in the future will enable launching marketable derivatives.

“Spot-market is the beginning of exchange trade with derivatives. It is necessary to generate demand for Russian Ruble, which exchange trade will facilitate”, summed up Andrey Kashevarov.