The National Bank of Ukraine has identified a list of banks eligible to participate in the FX intervention conducted in the form of a request for best quotation put in place by the NBU Foreign Exchange Market Intervention Strategy for 2016-2020.
The NBU has conducted interventions in the form of a request for best quotation since early 2017. In Q1 2017, the NBU has purchased a total of 419.7 million from the interbank FX market, including USD 135 million bought through interventions in the form of a request for best quotation. Over this period, the NBU sold USD 288.5 million in the interbank FX market, including уUSD 13 million sold through interventions in the form of a request for best quotation.
According to the criteria for the selection of banks, which came into effect from 6 January 2017, 20 top-ranked banks have been designated as eligible to participate in the FX intervention conducted in the form of a request for best quotationbased on the previous quarter’s results . 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 Q2 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
- PROMINVESTBANK PJSC
- FUIB PJSC
- RAIFFEISEN BANK AVAL JSC
- SBERBANK PJSC
- CITIBANK PJSC
- TASCOMBANK JSC
- 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 for smoothing out interbank FX volatility. In the meantime, the NBU will continue to conduct FX interventions in the form of FX auctions.