2005 became a year of NDC's active movement towards consolidation of settlement and recordkeeping infrastructure in order to increase competitiveness of the Russian stock market.
NDC made first practical steps towards establishment of a Central Settlement Depository on the basis of the current settlement and recordkeeping institutions. NDC obtained stakes in DCC and SDC and introduced its representatives in the Board of Directors of those companies- four in the Board of Directors of DCC, two – in the Board of Directors of SDC.
Another important step on the path to consolidation of settlement and recordkeeping structure became a reform of NDC's corporate management. NDC's Board of Directors formed in 2005 consists of 6 representative of the founders of the partnership (Bank of Russia and MICEX) and 6 representatives of market participants (Vneshtorgbank, Gazprombank, Sberbank, International Moscow Bank, ING Bank (Eurasia), JP Morgan Bank International). New organizations became members of the partnership such as Gazprombank , ING Bank (Eurasia) and Deutsche Bank. The new structure of the Board of Directors and increased number of the partnership members allow market participants, representatives of trading systems and government institutions to form NDC's policy on an equal footing.
As a part of integration of Russian and international securities markets NDC opened a direct account in Clearstream Banking and received a confirmation that Euroclear Bank is also ready to open an account for NDC. Opening of correspondent accounts in major international securities depositories proves NDC’s compliance with international standards and acceptance of its role on the Russian securities market.
In line with the strategy of establishing inter-depository links with the central depositories of CIS countries NDC opened an inter-depository account in the Central Securities Depository of Kazakhstan and is in the process of establishing inter-depository links with the National Depository of Ukraine.
In order to further develop market infrastructure and to reduce costs for its participants throughout the year NDC substantially reduced the fee burden on its clients:
- From April 1, 2005 fees for safekeeping of government, municipal and corporate bonds were reduced by 5% in all lines of the regressive fee scale, while for big portfolios (over RUB 50 billion) the fees have been reduced by 7%. The fees for the NDC Clients, - settlement depositories, for safekeeping of shares and assets, deposited at international depositories were reduced by 10%.
- From October 1, 2005 fees for safekeeping of government, municipal and corporate bonds were reduced by 5% in all lines of the regressive fee scale, while for big portfolios (over RUB 50 billion) the fees were reduced by 7%. The fees for NDC Clients - settlement depositories - were reduced to the maximal level of the regressive fee scale applicable to the clients that are not settlement depositories.
- A decision was taken in October to decrease service charge by 20% for processing of electronic documents using NDC EDI system for customers not using any of the other NDC services.
In 2005 NDC began a project of establishing technological platform which will comply with international requirements for CSD's technology. Jointly with the leading software providers and business integrators a large amount of work was completed in order to achieve the optimal parameters of the project in terms of organization, cost, time and technology. The software will be provided by Tata Consultancy Services, system integration – Accenture. The development of a new technological platform is based on the international experience of CSD establishment, the spectrum of services provided by them and their settlement technology. One of the main features of the new business model is its universality. The technological platform being developed will make it possible to work with different trading systems and to provide any facility as prescribed in the law "On Central Depository". Switch to a new technological platform will increase reliability, efficiency and transparency of Russian market infrastructure.
Other NDC's key project is to switch to provide possibility for the clients and registrars to use electronic document interchange (EDI), which would allow straight through processing of data (STP). In 2005 NDC offered the market participants completely new set of services based on the technology of electronic documents transactions between registrars and securities' holders – users of NDC EDI system.
In order to standardize EDI on the collective investment market NDC initiated set up of a working group which included leading asset management companies, special depositories, registrars, League of Management Companies, PARTAD and NAUFOR.
During visit to Russia of the members of the Board of Directors of the Association of National Numbering Agencies (ANNA) and Wertpapier-Metteilungen (WM) representatives a protocol was signed about NDC's compliance with requirements set to the National Numbering Agency for Russia. In the course of meetings between ANNA and WM representatives with leading Russian market participants and representatives of governmental bodies a positive decision was formed about NDC's readiness to be assigned all NNA functions for Russia.
During the ANNA's Board of Directors meeting in Zurich in July NDC was assigned a status of a Qualified National Operator/Coordinator (QNOC) and it was decided to hold the regular General Meeting of ANNA members in 2006 in Moscow.
In April NDC launched a new corporate web-site. Its structure was developed in accordance with the customers’ demands found out in special questionnaire distributed before the modernization of the web-site. The English version of the web-site has been renewed completely. Most of the materials about the Partnership activities and corporate actions of issuers, whose securities are held at NDC, published simultaneously in two languages.
In 2005 NDC jointly with Securities Market magazine renewed issuance of "Depositarium" magazine. New "Depositarium" magazine became a platform for exchange of opinions on depository business in Russia. During the year numerous analytical reviews and opinions of professional market participants and regulators on important issues of infrastructure development were published in the magazine.
As a leading participant of the Russian settlement infrastructure NDC provided support to conferences and forums aimed at integration of Russian and international stock markets.
In June with the support of NDC the Second Annual International Russian Securities Infrastructure and Operations Forum was held in Moscow. Forum participants - Russian and international representatives of professional community - discussed relevant issues on functioning and further development of Russian infrastructure considering accumulated experience and modern technology in the world financial markets.
In October NDC organized the Second Conference of the Association of Eurasian Central Securities Depositories "Integration of the Central Securities Depositories of CIS states: problems and perspectives". The participants of the conference included directors of depositories of Association member countries, representatives of international organizations, managers of major Russian depositories and trading floors.
NDC plans for 2006 include further improvement of EDI technology and implementation of the new technological platform as well as implementation of new projects aimed at increasing Russian stock market investment attractiveness and cost reductions for market participants.