FINANCE

Russia’s cryptocurrency index

Russia’s Connectivity Solutions is set to launch a cryptoassets index, CSIndex. CSIndex is the first cryptocurrencies market index in the world developed by stock market professionals. The index will open the digital currencies market to broad public, CSIndex designers claim.

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CSIndex. What is it?

CSIndex is a portfolio index and its components are the most capitalized cryptocurrencies. The index is calculated in real time based on the information flow from marketplaces and cryptoexchanges, which permits assessing maximum liquidity of each particular cryptocurrency at any given moment. Currently, these are Bitfinex, Bitstamp, Bittrex, GDAX and Poloniex.

Cryptocurrencies’ values are denominated in US dollars. The values are cleared from pricing and other factors which do not represent general market price volatility. CSIndex is fixed on a daily basis at 19:00 (Moscow time). The index fixing allows investors and funds investing in cryptoassets follow the cryptoindustry status with no need to analyze each digital currency separately.

The requirements to CSIndex components are set by an expert Index Council and the index components are to be reviewed monthly. CSIndex represents 75% of the overall market capitalization. The number of coins is flexible. In May, eight cryptocurrencies were selected: Bitcoin, Ethereum, Ripple, Bitcoin Cash, EOS, Litecoin, Miota and Stellar (XLM). CSIndex’s composition was therefore expanded with Stellar (XLM), while it no longer included Monero (XMR), Dash (DASH), Bitcoin Gold (BTG).

CSIndex was launched on April 12 and started at 100 points. It now has 123 points which means a 23% growth over two months. The index is renewed every 5 seconds on a 24/7 basis.

Currently, there are about 40 cryptocurrency indexes worldwide. Yet CSIndex is the only one created by stock market specialists and representing 75% of the aggregate market capitalization.

CSIndex. How is it administered?

CSIndex’ Index Council does not include cryptocurrency investors or brokers, but rather representatives of Russian Trading System (RTS) stock exchange and major fiat money brokers. The Chairman of the Council is Anatoly Gavrilenko, Chairman of Supervisory Board at Alor group of companies. Other members of the Index Council are Vladimir Tvardovsky, Managing Director at Finam Management, Sergei Zamolotskikh, Technology Development Director at RTS group, Andrei Dronin, former structured products department director at Olma investment broker and current department director at BANKEX. As Anatoly Gavrilenko recalls, when RTS index was launched in 1995, it started at 100 points. Moscow Interbank Currency Exchange index was launched two years later. Nowadays, those and many other industry-specific indexes are traded at Moscow Exchange.

CSIndex is administrated by Connectivity Solutions which, according to Kontur.Focus service, is fully owned by Pavel Churko, its CEO. Some time ago Churko headed risk management department at Moscow Exchange and risk management and clearing department at RTS. He was also among the creators of RTS index.

CSIndex. What for?

Present day investments of the Russians into digital currencies reach about $14 bln. At its peak, capitalization of the cryptocurrencies market was $800 bln or 1% of the global stock market. Cryptocurrencies market capitalization is now down to $382 bln, yet the entire Russian stock market (including Gazprom, Savings Bank, Rosneft and others) is now $652 bln, merely twice the volume of the cryptomarket.

Crypocurrencies market can no longer be ignored”, Churko says.

Currently, there are some 1,600 cryptocurrencies and 200 cryptoexchanges. The market is extremely volatile and it’s hard to realize what is happening there. Even large exchanges can stop operating for a couple of hours a day and it is often hardly possible to understand what is actually happening. When entering the market, an ordinary individuals risks confronting various challenges. Protection for the ordinary investors’ rights is virtually non-existent. Pavel Churko compares a private investor’s situation to surfing among sharks. Creating cryptoindexes can help solving some of the problems, Connectivity Solutions’ CEO claims. CSIndex can be employed by analytical and financial products. The former allow monitoring the overall market situation by using a single factor only. The latter assist in generating profits and make the process much simpler.

Indexes help attracting professional and private investors”, Andrei Dronin says.

Vladimir Tvardovsky of Finam Management advised Invest Foresight that he is jointly with other Russian investment brokers and financers structuring a hedge fund which will specialize in investing in the new CSIndex derivatives. The fund’s named Quantum Parity and it’s not part of Finam group. It was registered at Cayman Islands, will be managed by a Dutch company and will have advisors from Switzerland. Once the fund raises $5 mio, it will start full scale operation.

Funds like that are now functioning to meet the needs of qualified investors. They are all legal and can be launched at any moment. An investor will pay fiat money to buy a hedge fund shares, its further revenues are also denominated in fiat currency. That is both convenient and makes it difficult for an investor to be accused of money laundering.

By Natalia Kuznetsova

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