The National Bank of Ukraine has established a list of banks eligible to participate in the FX intervention conducted in the form of a request for best quotation envisaged by the NBU Foreign Exchange Market Intervention Strategy for 2016-2020.
According to the updated criteria for the selection of banks, which came into effect from 6 January 2017, based on the previous quarter results in terms of the volume of transactions in the interbank market 20 top-ranked banks have been designated as eligible to participate in the FX intervention conducted in the form of a request for best quotation. An overall composite rating is calculated based on the individual rating scores assigned to the bank based on the three transparent criteria:
the volumes of transactions performed by the bank involving the purchase/sale of foreign currency with other market participants and the NBU (the weight of position in the ranking included in the calculation of the overall rating stands at 50%),
the volume of transactions performed involving the purchase/sale of cashless foreign currency with bank’s customers (the weight of position in this ranking - 30%); and
the size of the bank's assets (the weight of position in this ranking - 20%).
This criterion has been applied to select banks eligible to participate in the FX intervention to be conducted in Q1 2017. These banks include:
- ALFA-BANK PJSC
- BANK FOR INVESTMENTS AND SAVINGS PJSC
- VTB Bank PJSC
- DIAMANTBANK PJSC
- ING BANK UKRAINE PJSC
- CREDIT AGRICOLE BANK PJSC
- OTP BANK JSC
- Oshchadbank JSC
- CB PRIVATBANK PJSC
- Pivdennyi JSB
- PROCREDIT BANK JSC
- PROMINVESTBANK PJSC
- FUIB PJSC
- RAIFFEISEN BANK AVAL JSC
- SBERBANK PJSC
- CITIBANK PJSC
- UКRGАZBАNК JSB
- Ukreksimbank JSC
- UKRSIBBANK JSС
- UКRSОTSBАNК PJSC
As a side note, the intervention in the form of a request for best quotation shall be performed as follows. First, the NBU requests banks to quote buying and selling prices for foreign currency through Bloomberg and Reuters trading information systems. After receiving bids from banks, the NBU enters into an agreement with the bank that has quoted the best price.
An advantage of this new type of currency intervention is that it enables the regulator to respond promptly to changes in the FX market situation, thus making it an efficient tool to smooth out interbank FX volatility. With the launch of FX interventions in the form of a request for best quotation, the NBU will continue to conduct FX interventions in the form of FX auctions that have proved instrumental in building up international reserves. As before, FX auctions are open to all interbank market participants.