Amendments to Russian federal law underpinning the country's corporate actions have entered into force, the country's largest settlements depository has announced.
The National Settlement Depository (NSD) has undertaken much of the reform initiative, which aims to automate largely manual corporate actions processes, increase efficiency and decrease risk, real and perceived, to make Russia more attractive to investment. The amendments to the law came into force on July 1.
"There were a number of different objectives of the reform," says Maria Krasnova, deputy chairwoman at the NSD. "We wanted to eliminate paper document circulation as much as possible. We wanted to create a single source of reliable corporate actions information so that the information would be more reliable and provided on a timely basis. And we wanted to implement a unified approach to corporate actions processing so we could use straight-through processing and automation as much as possible. We also wanted to empower custodians to act on behalf of their clients without any power of attorney or additional documents."
Crucial changes include cementing the NSD's status as the single source of verified information on corporate actions, in order to solve the problem of data inconsistency and reduce costs for market participants who have to screen and check information received from multiple sources.
The reforms also automate general meeting participation, with security holders able to participate through their custodians via e-proxy voting. Next year, the NSD plans to launch its e-voting platform, says Krasnova.
The customers of custodians are now only able to participate in certain corporate actions via their custodians, rather than directly with issuers as was the case before.
"This is an immensely important project, not only for the NSD but also for the entire infrastructure. NSD initiated this in 2013 and we have put so many efforts and resources into making all these things work. We are very proud that things we have defined as beneficial for the entire infrastructure have become a reality, have become part of Russian securities markets.
"But it's too early to say how the practicalities will work out. We have been testing these systems for over 20 weeks and the vast majority of participants have been involved. The Russian Central Bank has issued a lot of supporting regulation to make processes more transparent and universally understood by the market. So the scale of change is really immense. We hope that our belief in the positive impact of these changes comes true and that it will be obvious that the Russian securities market has changed for good."