The National Bank of Ukraine has approved the list of banks eligible to participate in the FX intervention to be conducted in the form of a request for best quotation in Q3 2017.
The NBU has conducted interventions in the form of requests for best quotations, which was introduced in accordance since early 2017 in accordance with the NBU’s Foreign Exchange Market Intervention Strategy for 2016-2020.
In H1 2017, the NBU has purchased a total of USD 1,666.5 million from the interbank FX market, including USD 708 million bought through interventions in the form of a request for best quotation. Over this period, the NBU sold USD 329 million in the interbank FX market, including USD 17 million sold through interventions in the form of a request for best quotation.
20 top-ranked banks selected based on the previous quarter results in terms of the volume of transactions in the interbank market are eligible to participate in the FX intervention. 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 in the rating 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 in the rating - 30%); and
the size of the bank's assets (the weight in the rating - 20%).
Based on the above criteria, the following banks were selected to participate in the FX intervention conducted in the form of requests for best quotation in Q3 2017:
- ALFA-BANK PJSC
- BANK FOR INVESTMENTS AND SAVINGS PJSC
- BANK CREDIT DNIPRO PJSC
- ING BANK UKRAINE PJSC
- CB GLOBUS BANK PJSC
- CREDIT AGRICOLE BANK PJSC
- OTP BANK JSC
- Oshchadbank JSC
- Pivdennyi JSB
- CB PRIVATBANK PJSC
- PROMINVESTBANK PJSC
- FUIB PJSC
- RAIFFEISEN BANK AVAL JSC
- SBERBANK PJSC
- CITIBANK PJSC
- TASCOMBANK JSC
- UКRGАZBАNК JSB
- Ukreksimbank JSC
- UKRSIBBANK JSС
- UКRSОTSBАNК PJSC
The foreign exchange intervention in the form of a request for best quotation is conducted in the following way. 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 for smoothing out interbank FX volatility. In the meantime, the NBU will continue to conduct FX interventions both in the form of FX auctions and single-rate interventions.
Banks eligible to participate in single-rate interventions are selected at the beginning of each quarter based on the criteria set out in NBU Board Resolution No 59, dated 4 July 2017 On Amendments to the Regulation On Procedure and Conditions of Foreign Exchange Trading, which came into force from 5 July 2017.