Specific terms and conditions of NSD's securities services

Securities with duplicate ISINs

For some Russian securities issues which have the same parameters and duplicate ISINs, their state registration numbers have not yet been changed to bring them in line with Bank of Russia's Directive No. 3417-U dated 13 October 2014 "On the Procedure for Assignment and Cancellation of State Registration Numbers or Identification Numbers to Equity or Debt Securities Issues (Additional Issues)" and with the requirements of the Procedure for Consolidation of Additional Issues of Equity or Debt Securities, as approved by the Russian Federal Commission for the Securities Market (Resolution No. 03-18/ps dated 1 April 2003). The Bank of Russia consolidates such issues into a single issue and discloses the relevant information on its official web site. NSD will be making changes in its depository recordkeeping system upon receipt of such information.

List of securities with duplicate ISINs

Fractional securities

If fractional securities come into existence in accordance with the Russian laws, NSD keeps records of such fractional securities separately. Whole and fractional shares are recorded separately with different depository codes.

Upon crediting securities to a securities account, fractional securities are summed up.

It is possible to debit a fractional security without the integer number of securities from a securities account or another account only if there is no integer number of securities (the exception is made for nominee securities accounts and foreign nominee securities accounts).

NSD keeps records of fractional shares in Clients' securities accounts held with NSD without rounding, by using simple fractions.

Securities depositories keep records of fractional UIT units by using decimal fractions, with the number of decimal places provided for by the UIT management rules, but no less than 5 decimal places.

List of fractional shares serviced by NSD

Receiving payments on VTB Bank bonds

To streamline the process of receiving payments on bonds issued by VTB Bank, clients are proposed to open a separate bank account with NSD. However, opening a separate bank account is not a pre-condition for receiving such payments, and to receive them clients may use bank accounts they already hold with NSD.

A client may receive payments on VTB Bank bonds separately from payments on other securities. For this purpose, the client shall give an Instruction (Form AF005) to NSD for a transaction "Registration of bank account details" (transaction code – 07, purpose of bank account details – 06), along with a Notice of Bank Account Details (Form GF088), in which, in the data field "Group of securities for paying distributions", the following must be indicated: "2 - Bonds. Payment currency - RUB», and the data field "Issuer" must be completed as follows: "VTB Bank". In this case, all payments (both coupon income and redemption proceeds) on all VTB Bank bonds, including one-day bonds, will be transferred to the bank account detailed in the said documents.

Please note that, if the above Instruction is given, all other bank account details registered earlier will be de-registered. Therefore, with respect to securities of other issuers, which are held in the same securities account in which VTB Bank bonds are held, the client should, along with the said Instruction, give an Instruction for registration of the details of a bank account the client needs; otherwise, income on such other securities will be transferred to the bank account the details of which are specified in the client's Legal Entity's Details Form. Cash funds received by the client to a bank account held with NSD may, if necessary, be quickly transferred by the client to a trading bank account either via the Bank-Client System, or via SWIFT. Also, for any such transfer, the client may use the recurring cash transfer (standing instruction) service.

U.S. Securities: depositories and taxation specifics

Stocks, units, and bonds of U.S. issuers, which fall under Chapters 3 and 4 of the U.S. Internal Revenue Code, are serviced through Euroclear Bank, save for these issues held in NSD's account with Clearstream Banking.

Tax rate reduction services are provided by NSD when paying out income in a 'Withholding Tax Relief Certification' (WTRC) Corporate Action for U.S. securities which fall under Chapters 3 and 4 of the U.S. Internal Revenue Code, provided that such securities are held in NSD's accounts with Euroclear Bank.
NSD does not provide the tax rate reduction services when paying out income on securities which, under Euroclear Bank's rules, cannot be held with Euroclear Bank, and which instead are held in NSD's accounts with Clearstream Banking.

The procedure in accordance with which NSD keeps records of U.S. securities which fall under Chapters 3 and 4 of the U.S. Internal Revenue Code and are held in NSD's accounts with Euroclear Bank, and the procedure in accordance with which beneficial owners of income are to be disclosed in compliance with the requirements of the U.S. Internal Revenue Code, are described here.

UK securities: depositories and specifics of services

Securities issued by UK issuers and held in NSD's accounts with Euroclear Bank, the name of which includes SDRT 0.5 (meaning that Stamp Duty Reserve Tax is to be paid when transferring title to the securities), cannot be transferred between securities accounts held with NSD.

Non-Russian securities with a single ISIN and several NSD codes

Due to taxation and other services specifics, these securities issues have been assigned with several NSD codes.

Depositary receipts: depositories

In addition to Clearstream Banking and Euroclear Bank, depositary receipts on Russian shares may also be held in The Bank of New York Mellon.

Non-Russian securities issued under RegS and Rule 144A

If a non-Russian securities issue has two different ISINs allocated under RegS and Rule 144A, NSD keeps records of different parts of such issues separately with different depository codes.

Units (shares) of investment funds

Due to the existing restrictions on settling transactions in non-Russian units (shares) of investment funds (other than ETFs) through ICSDs, such securities cannot be accepted by NSD for servicing.

Units (shares) of ETFs can be accepted in accordance with the standard procedure.

Please note that, in accordance with the ISO 10962:2015 standard and the applicable Russian laws, non-Russian financial instruments are qualified:

• as units or shares of an investment fund, if the relevant non-Russian financial instrument has a CFI code:
• with the first character being E, provided that the second character is U, save for the cases where the sixth character is Z or A; or
• with the first character being C, provided that the sixth character is X;

• as units of an investment fund, if the first character in the CFI code is C, provided that the sixth character is U or Y;
• as shares of an investment fund, if the first character in the CFI code is C, provided that the sixth character is S or Q.

For its own recordkeeping purposes, NSD records all of the above types of collective investment instruments in a general details form intended for their description and indicates the applicable subtype of the financial instrument in the relevant field of the details form.

Restrictions on depository transactions in non-Russian securities accepted by NSD for servicing

Upon receipt by NSD of confirmed information from foreign depositories (EUROCLEAR BANK SA/NV or Clearstream Banking S.A.), according to which an event of default has occurred with respect to a non-Russian issuer's securities, NSD will reflect the 'Default' status for such securities in their Details Form posted on this web site. Please note that the 'Default' status implies that NSD may impose restrictions on depository transactions in the defaulted securities. You, therefore, need to enquire NSD about whether certain depository transactions in such securities are possible before instructing to make any such transaction.