Moscow Exchange and NSD Provide Federal Treasury with Opportunity to Conduct Mortgage Bond Transactions

04 March 2021
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On 2 March 2021, the first auction of Federal Treasury repos was held via National Settlement Depository’s collateral management system (NSD’s CMS) with a new basket of securities that included 15 DOM.RF mortgage bond issues. RUB 4.7 billion was placed based on a floating 35-day rate.

“Launching transactions in a basket with mortgage-backed securities on NSD’s platform allowed stock market participants to attract additional funds. The Federal Treasury, which is an important Moscow Exchange partner, now has a new instrument to increase the effectiveness of budget fund placement. This is another development stage for the Russian market with the fast growing segment of mortgage-backed securities, which is a significant part of any economy,” said Igor Marich, Member of the Executive Board, Managing Director for Sales and Business Development, Moscow Exchange.

“Including DOM.RF mortgage-backed securities, along with OFZ, on the list of assets against which Federal Treasury temporary surplus funds can be raised through repo trades is a new step towards developing the local debt market and the segment of DOM.RF mortgage bonds. This step will attract new investors and create additional market demand for DOM.RF mortgage bonds, which will eventually lead to an inflow of new resources into the home mortgage lending market,” pointed out Artyom Fedorko, Deputy CEO, DOM.RF.

“Repo trades performed via NSD’s CMS have been a popular instrument for placing temporarily available Federal Treasury funds. Including DOM.RF, a unified housing development institution, as collateral for bonds opens up additional opportunities for borrowing banks. We have seen increased interest by market participants in the new type of collateral in repos and expect an increase in transaction volume,” added Alina Akchurina, Managing Director for Collateral Management Systems Development, NSD.

DOM.RF mortgage bonds are issued in accordance with the Russian Federal Law “On Mortgage-backed Securities,” based on DOM.RF Mortgage Agent’s bond program.

About Federal Treasury Repos

The Federal Treasury has been conducting deposit operations on the Moscow Exchange since 2012, by providing liquidity to money market participants. Also, the Federal Treasury conducts repo trades via NSD’s collateral management system, including based on floating interest rates, as well as forex transactions. Starting in December 2019, the Federal Treasury has conducted deposit auctions via the Central Counterparty which has provided all participants of the Repo with the CCP market with access to federal budget funds on a market basis. Currently, more than 230 banks and brokerage companies operate in the Repo with the CCP market and the Deposits with the CCP market.

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