National Settlement Depository Sums Up Q1 2017 Results

18 May 2017
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  • The value of assets under custody grew 11% and reached RUB 35.2 trillion;
  • 635 shareholder meetings were initiated via e-proxy voting technology.

Central Securities Depository

The first phase of the centralized system for record-keeping and distributing Unit Investment Trust (UIT) units was put into commercial operation. As part of the first phase, an automated system for purchasing, repaying, and exchanging UIT units owned by broker clients was created using a two-level nominee holding scheme.

In Q1 2017, the value of securities under custody reached RUB 35.2 trillion; this was an 11% increase compared with Q1 2016 (RUB 31.7 trillion). Possible factors which impacted the increase included the growth in the value of securities (MICEX Index +4%) and a rise in the number of new bond issues by Russian issuers (+18%).  

The number of security issues serviced by NSD increased from 9.9 thousand in Q1 2016 to 12.7 thousand in Q1 2017. Of them, the number of foreign security issues increased from 3.2 thousand to 5.8 thousand.

It is noteworthy that the number of Russian corporate and regional bond issues accepted for servicing during the reporting period more than doubled (105 issues) compared with the same period in the previous year (45 issues). The number of foreign bond issues accepted for servicing increased from 502 issues in Q1 2016 to 733 in Q1 2017.

The number of inventory operations in the central securities depository (CSD) increased by 17% – reaching 713.7 thousand operations in Q1 2017 compared with 610.1 thousand in Q1 2016, including 558.9 thousand exchange trade operations (491.9 thousand operations in Q1 2016) and 154.7 thousand OTC trade operations (118.1 thousand operations in Q1 2016).

In Q1 2017, the value of off-exchange DVP transactions with liabilities netting grew substantially and amounted to RUB 1.5 trillion. This was 83.7% more than in Q1 2016 (RUB 0.8 trillion).

In Q1 2017, five new users connected to SWIFT services via NSD’s Service Bureau. The average daily traffic of Service Bureau clients increased by 57% compared with the same period in 2016 and amounted to 6.7 thousand messages per day. In early 2017, NSD applied for an expanded SWIFT Service Bureau (SIP v2) to provide clients with a high level of reliability and security. 

In Q1 2017, NSD began preparing for self-certification in the sphere of new SWIFT information security requirements (the Customer Security Programme). The Company completed its migration from the SWIFT Alliance Workstation software to the SWIFT Alliance Web Platform.

The Collateral Management System (CMS)

The value of repo transactions which the Federal Treasury performed using the NSD collateral management system reached RUB 10.4 trillion in Q1 2017. The number of transactions was 517.

In order to increase the time period for conducting Federal Treasury repos to more than a week, the Company made a decision to receive OFZ with forthcoming corporate actions as collateral.

NSD provided credit organizations which received OFZ PK series as part of the increase in their capitalization with the option of selecting and separate record-keeping for these securities as collateral in accordance with the permission to use these securities for Federal Treasury repos, as issued by the Russian Ministry of Finance.

The Bank of Russia continues to absorb cash in the market and has not conducted weekly ruble repo auctions since 20 September 2016. The value of repo transactions which the Bank of Russia conducted via the NSD collateral management system decreased to RUB 0.33 trillion in Q1 2017 (compared with RUB 2.4 trillion in Q1 2016).

The aggregate value of the Bank of Russia repos and Federal Treasury repos in Q1 2017 reached RUB 10.7 trillion; this was a 17.6% increase from RUB 9.1 trillion in Q1 2016.

In March 2017, NSD completed integrating the CMS platform with the Repository and Bloomberg for servicing settlements on transactions on the inter-dealer repo market. Interactions with clients regarding this type of operation are carried out using the web technologies.

Repository

On 21 March 2017, NSD began publishing consolidated indicators for the Repository on its website. Any interested party may access this data. To date, information about the value of transactions is publicly available. In the future, it is planned to disclose information on the number of registered contracts.  

In Q1 2017, the number of trades registered with NSD’s Repository reached 2,474 thousand; this was 18-times more than in Q1 2016 (135.7 thousand). This growth was attributed to introducing mandatory reports for all OTC repos and derivative transactions, including those that were concluded beyond master agreements. For example, approximately 2 million transactions registered in Q1 2017 were short-term repos reported via a special bulk format. This format is also used by clients to report on short currency swaps (20,000 items).

The value of registered trades grew from RUB 91.2 trillion in Q1 2016 to RUB 103.4 trillion in Q1 2017.

The top 3 instruments in terms of the number of reported transactions in Q1 2017:

  • FX forwards 147,134
  • FX swaps 33,920
  • OTC repos 208,058

For comparison, the top 3 instruments in terms of the number of reported transactions in Q1 2016 included:

  • FX forwards 97,202
  • FX swaps 29,323
  • OTC repos 4,350

Corporate Actions Center

In Q1 2017, 635 shareholder meetings were held using the e-proxy voting technology; this was almost five times more than for the same period in 2016 (133). 2,941 corporate actions involving Russian issuers’ securities were processed in Q1 2017; this was 11.7% increase compared to Q1 2016 (2,634 actions).

2,753 corporate actions involving foreign securities were processed in Q1 2017; this was considerably more than in the previous year – 1,667 actions (+65.1%).

Information Services

In Q1 2017, the number of information services users increased by 30% and reached a record high of 393 contracts.

In the first quarter of the current year, the Company began presenting to clients and testing a new API service based on a new platform – www.nsddata.ru. The modern customized service allowing to upload data on issuers, securities, and their fair value will be launched in Q2 2017. It will replace a wide range of NSD commercial information products.

Market participants using NSD information products are primarily interested in its Valuation Center. In Q1 2017, an agreement to transmit Valuation Center data via Bloomberg was signed. Thus, information on the fair value of 1.9 thousand financial instruments calculated by NSD is now available to users of the global network which includes Bloomberg, Thomson Reuters, Interfax, and Cbonds. Valuation Center customers include Russian users, as well as users in the United States, Great Britain, Hong Kong, India, Luxembourg, and Singapore. Sixty-nine financial institutions receive Valuation Center data directly from NSD.

Payment and Settlement System

In Q1 2017, the value of money transfers grew 26% and reached RUB 103.9 trillion (compared with RUB 82.3 trillion in Q1 2016). This was caused by an increased number of corporate actions, especially those involving foreign securities.

National and Substitute Numbering Agency and pre-Local Operating Unit (pre-LOU)

NSD acts as Russia’s Numbering Agency and as the substitute numbering agency for the CIS countries, assigning ISINs and CFIs. NSD also has got a status of pre-Local Operating Unit (pre-LOU) and applied for accreditation as a LOU. LEIs assigned by NSD are recognized by regulators, market participants, pre-LOU and LOU of other countries.

In Q1 2017, NSD assigned 19 new LEIs and verified 86 LEIs (11.8% and 13.2% increase, respectively).

In Q1 2017, NSD assigned 591 ISINs and CFIs to Russian financial instruments (334 codes in Q1 2016).

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