The RUSFAR index, calculated by the Moscow Exchange since April 2019, represents the fair value of collateralized money and has extended its reach to yuan-denominated assets since last September. This year brought the first insurance programs anchored to this index into the Russian market, signaling a broader adoption of RUSFAR in risk management and investment strategies.
Two key benchmarks shape the Russian securities landscape: RUONIA, the Ruble Overnight Index Average, and RUSFAR, the Russian Margined Funding Average Ratio. RUONIA tracks liquidity in the interbank ruble market and serves as a reference rate for unsecured overnight loans. It is an important gauge for policymakers and banks, reflecting the efficiency of the domestic monetary system. RUSFAR, by contrast, sits on a longer horizon, calculating values for up to three months and offering a tool for investors to estimate yields on short-term, low-risk bonds. Its calculation relies on REPO transactions and involves a broad ecosystem, including clearing participation certificates and participation from the top market makers such as major banks, funds, and brokerages, which together shape its reliability and robustness.
GCC is issued in exchange for contributed assets, effectively creating collateral for transactions. Each participation ruble backs one security, enabling a fungible and transparent framework for trading. The market invites participation from a diverse group of about 200 banks, brokerage firms, and financial entities, which helps the indicator mirror the true value of money and aligns with a growing global preference for such transparent, collateral-based measures.
While RUONIA measures monetary policy effectiveness in real time and is primarily used to assess interbank payments, RUSFAR was designed to cater to institutional investors that connect to the Moscow Exchange and interact with other market participants. It draws from the most liquid market segments, offering a practical lens on funding costs across a wider investor base.
Since September 2022, the Moscow Exchange has expanded its scope beyond ruble and dollar benchmarks to include RUSFAR with a CNY component in yuan. In July 2023, a real-time RUSFAR CNY indicator was introduced, updating every 15 minutes from 10:00 to 12:30 Moscow time, broadening visibility into yuan liquidity and funding dynamics in the market.
A range of financial instruments has emerged in connection with RUSFAR. For instance, mutual funds that deposit money via REPO transactions help drive the index, and exchange-traded funds focused on these dynamics have grown in prominence. These instruments pave the way for life insurance products that offer daily profitability with full capital protection, marking a notable shift in how retail and institutional investors can access secure returns tied to systemic liquidity measures.
The new insurance products enable new investors to participate with a relatively low entry threshold, historically around fifty thousand rubles. They are designed to provide daily accruals, reflecting ongoing funding conditions and the current money market rate. These products are calculated on the basis of RUSFAR on RUB, ensuring alignment with the prevailing liquidity landscape and the reserve requirements of the insurance framework.
Funds deposited into these instruments are, in principle, protected under the insurance scheme, with guarantees that the value of the insurance unit will not fall below its level at contract inception. This protection offers a safeguard amid market fluctuations and contributes to investor confidence as funds are placed into the money market with a view to stable, ongoing income.
A primary advantage of these products is their restriction on withdrawals, which means that daily placements on the money market can compound a predictable stream of income over time. The linkage to RUSFAR helps ensure that yields remain anchored to real funding costs rather than speculative swings, delivering a steadier income profile for investors seeking conservatism and reliability in a volatile environment.
The performance of these products benefits from the RUSFAR linkage, and as a result, investors may be exempt from personal income tax on product income if the yield tracks the regulatory rate. The arrangement typically places the rate slightly below the Bank of Russia’s key rate, creating an attractive, tax-advantaged return profile within the permitted framework while maintaining transparency and compliance.
Beyond tax considerations, these products also offer potential advantages in estate planning and succession, with clear beneficiary designations that simplify transfer to heirs. In some cases, it is possible to apply for tax relief on the basis of legitimate investment deductions, subject to the applicable limits and rules for the investment envelope and the tax regime in force at the time of the deduction.