MOSCOW – Non-banking financial organizations which are clients of National Settlement Depository (NSD), Russia's only settlement depository servicing the full range of debt and equity securities of Russian issuers, can now conduct foreign currency settlement operations in the organized securities market. Previously, these organizations, such asasset management companies, brokerages, investment funds etc., with accounts opened with NSD could only conduct foreign currency operations in the OTC market.
The move is a response to Russian securities market demand. In particular, over the most recent three years, several Russian corporations have issued bonds denominated in dollars. In February 2012, Vnesheconombank for the first time placed USD-denominated Eurobonds on the domestic market. Demand for the bonds with US$500 million nominal value was three times higher, at US$1.5 billion. Some 32 Russian and foreign investors participated.
Vnesheconombank and Moscow Exchange began lifting restrictions on the participation of non-banking financial organizations in foreign currency bond settlements. Suggestions on this issue were sent to NSD and the Bank of Russia. Now any participant in the debt market may conduct operations with bonds denominated in foreign currency.
This change is very important with regard to the forthcoming assignment of central securities depository status to NSD and further steps towards liberalization of access to the Russian market. It opens up new possibilities for implementing investment initiatives in Russia’s securities market for both issuers and investors.
Total value of foreign currency bond issues registered in the Russian market stands at US$4.36 billion.
Andrei Shlyappo, Vice President, Operating Director, NSD, said: “To develop client services we have been focusing on non-banking financial organization's needs in conducting foreign currency operations with external securities in exchange market. Providing this service is a very important step towards improving the organized securities market. Of course, this will have a positive impact on the Moscow Exchange Group’s development and increases its competitiveness.”
Alexander Ivanov, Deputy Chairman of Vnesheconombank, added: “We totally support this decision which is one more step in the development of the Russian securities market. Lifting restrictions on trading this instrument for non-banking financial organizations is clearly a positive fact. Foreign currency bonds, jointly with currency swap instruments developed in the Russian market, represent new opportunities for all types of investors in the Russian securities market.”
Yekaterina Novokreschenykh, Managing Director for Primary Market Formation, Moscow Exchange, emphasized: “Today’s situation requires development of new financing instruments and enhancing existing ones. Moscow Exchange as a core infrastructure organization should meet the market’s requirements and open new opportunities for debt market participants. We think that we will attract Russian investors’ attention to foreign currency bonds and generate a liquid secondary market.”
National Settlement Depository (NSD) is the largest settlement depository in Russia, a part of the Moscow Exchange Group, servicing on-exchange and OTC transactions with all types of debt and equity securities of Russian issuers and providing settlement services to participants in financial markets of the Russian Federation.
NSD provides storage of global certificates and depository accounting for 99% of corporate bond issues, sub-federal and municipal bond issues. It services 100% of transactions conducted in the federal bond and the Bank of Russia bond markets, more than 99% of transactions conducted in the corporate and regional bond markets, the majority of transactions with equities and also services UIT units and securities of foreign issuers.
In accordance with agreements concluded between NSD and the Bank of Russia, NSD acts as a settlement center for the organized securities market.
NSD is Russia's national numbering agency and the substitute numbering agency for the CIS, authorized to assign the international ISIN and CFI codes.
For further information about NSD: www.nsd.ru , or NSD Public Affairs Division: +7 495 232 0910,
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State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” is a key instrument for pursuing government economic policy. Vnesheconombank’s activity is aimed at overcoming economic growth infrastructure restrictions, increasing natural resources utilization efficiency, developing high-technology industries, stimulating innovations, exporting high-technology products, supporting small and medium-sized enterprises, providing support for agricultural and industrial exports and services, among other things, in order to diversify national exports.
Moscow Exchange was founded on 19 December 2011 as a result of integration of two major Russian exchanges – MICEX and RTS. The exchange provides a wide range of opportunities to Russian and foreign investors for equities, bonds, currencies as well as derivatives trading. Moscow Exchange and CJSC MICEX Stock Exchange act as trading organizers within the Group. National Settlement Depository, Depository Clearing Company CJSC and RTS Settlement Chamber provide settlement and depository services. RTS Clearing Center CJSC and National Clearing Center CJSC render clearing services.
Trading on the securities market of the Moscow Exchange is held in the following three sectors: Main market, Standard sector and Classica sector. Trading in derivatives instruments is carried out on the FORTS Derivatives market (for futures on equities, bonds, currency and commodities) and MICEX Derivatives market (for futures on currency and interest rates). The Money market consists of two sections; one is for government securities repo operations and money market instruments and the other is for repo operations in equities and bonds.
The MICES Index and RTS Index, the main benchmarks of the Russian stock market, are calculated on the basis of securities prices formed in the order books of the MICEX-RTS Securities market. The indices are calculated continuously from 10.00am MSK to 11.50pm MSK. The MICEX-RTS sector indices have been transformed into a single product line with unified calculation procedures and securities baskets.