The 7th all-Russia conference of professional participants in the securities market, organized by the Institute for Stock Market and Management, began its work on October 19, 2006, in Moscow. Eddie Astanin, Deputy CEO of not-for-profit partnership The National Depository Center (NDC), took part in the work of the Section “Central Securities Depository: the Reduction of Risks or Fight for the Redistribution of the Market 15 Years of Discussions”, where he made the report “The NDC: Moving towards a Central Securities Depository”, devoted to the main points of the plan to create a central securities depository on the basis of The National Depository Center. Eddie Astanin said that “the NDC’s medium-term strategy is aimed at obtaining the central depository license, while its more challenging long-term goals include maintaining and strengthening the positions of a central securities depository in the Russian securities market and integrating into the global stock markets infrastructure. We regard competitiveness in the context of market globalization as the main goal of the NDC’s development program. This is why we support, on the whole, the state Strategy of development of the financial market and the creation of a central securities depository as one of key components of this strategy.”
In 2005 the analysis of the NDC’s business model, conducted by Accenture Company, showed that “the current range of the NDC’s services meets the requirements of the Russian market, given the existing practice of settlements and legal norms. The study of the work of largest international infrastructure organizations enables us to say that, on the whole, the existing model of the NDC meets the standards of depositories providing centralized settlements on a national scale.”
The NDC has developed an effective model of corporate governance, which enables to secure the participation of large users in the settling of key issues. For example, the rates policy is within the scope of the NDC’s Board of Directors, where founders have 4 votes out of 10. The NDC intends to continue to improve corporate governance in cooperation with well-known consulting companies.
During the first 9 months of 2006 the NDC cut its rates four times. As a result, the costs incurred by the NDC’s depositors were reduced by 19%. In 2007 we intend to continue this policy. In 2006 the reduction of rates and the improved quality of services brought about the quick overall growth of assets, mainly shares, deposited in the NDC. The growth of the volume of shares was especially noteworthy, as in this segment the NDC competes with other settlement depositories. The new service “Long-Term Safekeeping Divisions”, which was launched in April 2006 and is offered to strategic investors, is in demand. Today almost 3% of shares are deposited in long-term safekeeping divisions of depo accounts.
The NDC’s strategy includes the increase of its equity capital. In accordance with the decisions made by the Board of Directors and the General Meeting of Members in the Partnership, the NDC must raise its equity capital to 1.5 billion rubles by 2010. It is important that growth of the NDC’s capitalization and reliability is accompanied by the reduction of rates for the NDC’s services.
To develop the functions of central securities depository, the NDC is going to focus on the development of settlement services, in particular:
settlements for transactions on the basis of “deal-after-deal” principle (simple clearing). This project is being prepared by the MICEX Group and will conceivably be implemented by December 2006.
settlements on “delivery Vs. payment” terms in rubles for transactions in corporate Eurobonds deposited on the NDC’s account with Clearstream and securities of Kazakhstan issuers deposited on the NDC’s account with the Central Depository of Kazakhstan.
the servicing of ruble-denominated Eurobonds and settlements on “delivery Vs. payment” terms.
To improve the system of risk management and reliability, and following Thomas Murrey’s recommendations, The National Depository Center intends to prioritize the development of the system of evaluation of prospective clients’ risks and the organization of operational audit for the evaluation of the effectiveness and reliability of operational processes and the correspondence of the NDC’s regulations to world standards.
Brief information: Not-for-Profit Partnership The National Depository Center (NDC) is the MICEX Group’s settlement depository. The NDC is Russia’s largest settlement and safekeeping provider in terms of assets held and the nation’s only securities settlement system handling all kinds of Russian issue-grade securities. The NDC is an authorized depository for most issues of government, corporate, municipal and regional bonds. It settles 100% of trades in OFZ and over 90% of exchange-based trades in stocks and corporate, regional and municipal bonds.
The NDC’s founders are the Bank of Russia and the MICEX. Members of the National Depository Center are the Bank of Russia, the MICEX, Bank of Moscow, Sberbank, MMB Closed Joint-Stock Company, J.P.Morgan Bank International, Vneshtorgbank, Russian credit Bank, EUROFINANCE MOSNARBANK, Rosbank, Gazprombank, ING Bank (Eurasia) and Deutsche Bank.
You can receive the additional information in Press-service NDC by phone (495) 232-09-10 or e-mail: .