- NSD launched collateral management services for repo transactions with the Russian Federal Treasury
- The value of securities on deposit grew to RUB 28.2 trillion
- 79 issuers, including major ones (such as Gazprom, Sberbank, Moscow Integrated Power Company (MOEK) and Mosenergo), held shareholder meetings using the e-proxy voting technology in accordance with the ISO 20022 standard.
Central Securities Depository's Services
In Q2 2015, the value of securities on deposit reached RUB 28.2 trillion; this is 20% more than in Q2 2014 (RUB 23.4 trillion). The number of securities issues serviced by NSD increased from 7,616 to 7,982 (including 805 issues of foreign issuers’ and funds’ securities and depository receipts with the RUB 0.12 trillion total value, and 906 Eurobond issues with the RUB 3.5 trillion total value).
The number of book-entry transactions at the CSD in Q2 2015 reached 600 thousand. This is 3.8% more than in Q2 2014.
In Q2 2015, the number of stock exchange transactions amounted to 476.5 thousand against 438.4 thousand transactions in Q2 2014 (+8.7%); while the number of OTC transactions amounted to 120.8 thousand 12% less than in the same period of the previous year (136.9 thousand operations). In Q2 2015, the value of OTC DVP transactions (as part of NSD’s clearing services: DVP-1, DVP-2, DVP-3) slightly increased and reached RUB 561.9 billion; this is 5.4% more than in Q2 2014. However, the number of these transactions decreased by 17% to 21.9 thousand compared with the previous year (26.4 thousand).
The Collateral Management System
The launch of NSD’s collateral management system for repo transactions with the Russian Federal Treasury marked an important milestone in Q2. Market participants were offered the opportunity to enter into tri-party repo transactions with the Russian Federal Treasury using all the advantages of NSD’s collateral management services: selection of optimal collateral, services associated with corporate actions on securities used as collateral, replacement of securities with other securities acceptable by the lender, margin calculation, and daily marking-to-market of securities. Transactions are settled on a DVP basis.
By the end of Q2 2015, the number of NSD’s clients using collateral management services increased by more than 15% (against the same period in 2014) and reached 214. Also, in Q2 2015, the number of transactions with the use of collateral management services rose by a third to 2.6 thousand. However, the total value of the transactions fell slightly – from RUB 13 trillion in 2014 to RUB 11.7 trillion in 2015 (-10.2%).
In Q2 2015, the deadline for submission of quarterly reports pursuant to Bank of Russia’s amended Directive No. 3253-U passed. This has resulted in the increase in the number and value of transactions reported to the repository. In Q2 2015, the number of market participants who signed up for the repository services reached 1,177 (a 21% increase against Q2 2014), including 232 corporate clients.
The increase in the number and value of reported transactions was even more significant:
- In Q2 2015, the value of registered transactions more than doubled YoY (RUB 128.7 trillion compared with RUB 57.27 trillion in the same period of 2014);
- The number of registered transactions was 125.5 thousand compared with 60.1 thousand in Q2 2014.
In addition, market participants continue to voluntarily submit reports on transactions that are not yet to be reported. The most intensive growth was observed in the segment of reports on currency forwards: in Q2 2015, more than 58 thousand transactions were registered, while in Q1 2015, there were over 38 thousand registered transactions, and in Q2 2014, just under 23 thousand transactions). Market participants also submit reports on currency and commodity options, commodity forwards, etc.
H1 2015 results include:
- The value of registered transactions amounted to 88% of the entire 2014 value (RUB 221.73 trillion compared with RUB 250.69 trillion in 2014);
- In turn, the number of registered transactions exceeded 211 thousand; this is only 15% less than in 2014 (248.6 thousand).
The Corporate Actions Center
A milestone event in the field of corporate actions took place in Q2 2015: e-proxy voting in accordance with the ISO 20022 standard became available in the Russian market. In 2015 so far, 79 issuers, including Gazprom, Sberbank, MOEK, and Mosenergo, offered their shareholders the opportunity to receive information and vote at annual general meetings using the new electronic technology.
In the second quarter, the Russian President signed the Federal Law amending certain Russian laws. According to such amendments effective from 1 July 2016, the procedure for processing of certain corporate actions will be changed: corporate actions will be conducted in a centralized way via depositories and registrars, new methods of participating in general meetings will be introduced (e-proxy voting/e-voting), information about corporate actions provided by the CSD will take priority over any other information disclosed by other persons/entities.
NSD’s Information Services
Within the information services field, there were a number of major events during the second quarter. First, RU DATA, a reference database for Russian securities and issuers (created by NSD together with the international information group Interfax), was launched. For the first time in the Russian market, the RU DATA service will bring together all available information on Russian issuers and their financial instruments. Information available through the RU DATA database has official status, is updated in real time and is verified.
In May 2015, NSD completed the main stage of work aimed at creating a flexible customized product based on the GoldenSource 360° EDM technological platform. Users of the customized product can receive information on all securities serviced by the NSD, or on a certain list of issuers being of interest to the client, or on the client’s own securities portfolio on deposit with NSD, in a flexible way.
One more important area in information services was the development of a system designed to assess the fair value of financial instruments. NSD, together with the National Securities Market Association (NSMA), continued working on enhancing settlement technologies and data distribution by the NSMA Valuation Center. During May-June 2015, NSD reached an agreement to create a wide network for distribution of the Valuation Center’s data through the distribution channels of Thomson Reuters, Cbonds, Interfax and RU DATA services, in addition to NSD’s and the Moscow Exchange’s own resources.
Payment System and Cash Settlements
In Q2 2015, the value of money transfers made upon instructions of NSD’s clients increased 18% YoY and reached RUB 79.8 trillion (compared with RUB 67.2 trillion in Q2 2014). The number of cash transfers in Q2 2015 exceeded 254 thousand; this was 8% more than during the same period in 2014.
As of March 30, 2015, NSD started providing credit organizations with the DVP-1 settlement services for securities transactions using correspondent accounts opened with the Bank of Russia. The new service expanded the opportunity to make settlements for NSD clients, as it combines the advantages of reliable DVP settlements with flexible cash management.
National Numbering Agency and Local Operating Unit (LOU)
NSD acts as Russia’s Numbering Agency and the substitute numbering agency for the CIS, assigning ISINs and CFIs. NSD also functions as a pre-Local Operating Unit (pre-LOU). Legal Entity Identifiers (LEIs) assigned by NSD are recognized by regulators, market participants and pre-LOUs of other countries.
Russian market participants continue to receive pre-LEIs. In Q2 2015, NSD assigned 230 pre-LEIs; this was almost 15 times more than in Q2 2014 and almost twice as many as in Q1 2015. The high level of market participants’ activity can be explained by the Bank of Russia’s plans to add LEIs to the list of mandatory identifiers to be used in reports submitted to the repository. From 2013, when the pre-LOU status had been granted to NSD, to date, 536 pre-LEIs were assigned, and 8 pre-LEIs were accepted for servicing from other countries’ pre-LOUs (USA and Germany).
In Q2 2015, NSD assigned 278 ISINs and CFIs to Russian financial instruments. This was 40% more than in Q2 2014. As a substitute numbering agency, NSD assigned 22 ISINs and CFIs in Q2 2015.