National Settlement Depository (NSD), Russia’s central securities depository, has announced its 2020 financial results:
- net profit increased 14.6% and amounted to more than RUB 4.2 billion in accordance with IFRS;
- fee and commission income reached RUB 7.5 billion (+ 23.5%);
- the value of assets under custody with NSD increased 20.8% and reached 63.6 trillion, in ruble equivalent;
- the total number of securities issues serviced by NSD grew 13.6% to 26.6 thousand;
- the number of cash transfers reached 1.54 million (+25.5%);
- the value of repo trades with Federal Treasury conducted via NSD’s Collateral Management System (CMS) amounted to RUB 24 trillion (+ RUB 5 trillion);
- the number of trades reported to the repository increased to 25.32 million (+66.6%).
Maria Krasnova, Acting Chairman of NSD’s Executive Board, said:
“Last year was a challenge for global and Russian financial systems, including our company. Despite these difficulties, NSD demonstrated financial stability and operational reliability. While maintaining a focus on our clients, their objectives, and their values, we continue to strengthen our market position by actively developing our core business, settlement and depository operations. We also expand our offering of complementary services and implement new projects and initiatives.
All of this enabled us to complete 2020 with record results. The value of assets under custody with NSD increased 20.8% and reached 63.6 trillion in ruble equivalent. Fee and commission income grew 23.5% and reached RUB 7.5 billion. Net profit rose 14.6% to reach more than RUB 4.2 billion.
Quickly adapting to the new conditions allowed us to maintain a high customer satisfaction index level. At the end of the year it was 8.99 on a ten-point scale.”
Settlement and depository infrastructure
2020 demonstrated increased stock market volatility, as a result of which there was a growth of transactions and balances under custody. On the one hand, this increased the load on infrastructure; on the other hand, it was a growth driver of the Company's fee and commission income, which reached new historical peaks.
In 2020, value of securities under custody reached RUB 63.6 trillion – this was a 20.8% increase as compared with 2019 (RUB 52.67 trillion). The total number of securities issues (ISIN) serviced by NSD grew 13.6% – from 23.4 thousand in 2019 to 26.6 thousand in 2020. The number of securities issues of foreign issuers and Eurobonds issued by Russia’s Ministry of Finance grew 17.4% - to 18.2 thousand (15.5 thousand issues in 2019).
The value of federal loan bond (OFZ) balances in accounts with NSD was RUB 13.7 trillion; this was 52.9% more than in 2019.
The value of OFZ balances in foreign nominee accounts with NSD increased 10.7% Y-o-Y and reached RUB 3.1 trillion (RUB 2.8 trillion in 2019).
In 2020, the number of OTC DVP trades cleared by NSD stood at 422.7 thousand (+47.6%). The value of transactions increased to RUB 15 trillion - by 60.6% against 2019. In 2020, clearing participants submitted instructions in such currencies as USD, RUB, GBP, EUR, and CHF.
54 commercial paper issues of 30 issuers valued, in aggregate, at RUB 446.96 billion, were registered. Maturity of the issues varied from 9 months to 10 years. In 2020, 11 commercial paper programs with a total value of RUB 817.7 billion were registered.
NSD completed placement of 48 commercial paper issues with a total value of 432.14 billion, redeemed 12 commercial paper issues for a total sum of RUB 2.74 billion, and provided placement of two Eurobond issues of Russia’s Ministry of Finance with a total value of EUR 2 billion.
In 2020, 17,286 corporate actions (CAs) that involved Russian securities were initiated (+9.3% as compared to 2019). Also, 43,610 CAs that involved foreign securities were initiated (36.3% more than in 2019). The increase in the number of corporate actions was mainly due to new securities issues accepted for servicing by NSD. The largest increase in CA number was related to coupon and dividend payments.
Trading Infrastructure for US securities on the Moscow Exchange was built.
- NSD launched a service for settling DVP-2 transactions using correspondent accounts with the Bank of Russia. The total value of trades settled by way of this service exceeded RUB 2 billion.
- NSD accomplished tasks aimed at increasing its cyber security level: protection of resources and IT infrastructure from current and potential cyber threats to information security was strengthened.
New services and client segments
As part of its 2019-2024 Strategy, NSD continued to develop new services and client segments; it allowed creating additional value for clients and diversifying revenues.
- The Registrar of Financial Transactions (RoFT) was launched. RoFT accumulates all trades concluded on various financial platforms. Deposit trades were the first product information about which was registered with RoFT. In late 2020, transactions in compulsory motor third-party liability insurance (OSAGO) policies, mutual fund units, and bonds were processed. Now RoFT infrastructure is ready to expand marketplace product ranges and to register any product.
- NSD became the first Russian institution to receive the status of a Service Bureau of the Financial Messaging System of the Bank of Russia (SPFS). The SPFS Service Bureau was formed on the basis of NSD’s own infrastructure.
- NSD continued to develop Transit 2.0, a system allowing banks and corporations to maintain the automatic exchange of financial messages and other documents. Eight new corporate clients joined Transit 2.0 in 2020. Now, the platform provides services to 33 clients: 22 corporate clients and 11 banks (including eight systemically important ones).
- In 2020, NSD connected to the Faster Payments System (FPS) of the Bank of Russia to provide its clients with an option to conduct C2B payments, in particular, to credit retail investors' funds in broker accounts opened with NSD.
- Clearing operations with cash liabilities under on-exchange agreements for selling and purchasing sugar and wheat concluded on the National Mercantile Exchange were launched (a member of the Moscow Exchange Group).
Against the backdrop of global volatility, the Bank of Russia and the Federal Treasury significantly increased the volume of operations to provide liquidity to credit institutions, including through repo transactions with a basket of securities. In 2020, the Federal Treasury placed RUB 24 trillion in repo trades with the use of NSD’s CMS (+ RUB 5 trillion against 2019). More than a third of this sum was placed as long term repo trades (more than 30 days) with a floating rate. The average maturity of the Federal Treasury repo trades conducted with use of NSD’s CMS increased to 18.9 days (7.4 days in 2019).
In July 2020, an option to conduct currency repo trades became available to Global Lenders – the Bank of Russia and the Federal Treasury. The amount of placed funds reached USD 401 million (an equivalent of RUB 30.66 billion).
2020 was the most successful year in the development of NSD’s information services.
The number of current commercial information service contracts reached 641 – it was a tenfold increase since 2015. During the same period, NSD’s Information Center revenues increased eightfold, with a 35% growth in 2020 alone.
NSD Valuation Center products were a key driver of revenues of the Information Center – sales of these products have doubled for the third year in a row. According to NSD’s estimations, approximately 70% of active market participants have become the users of the Valuation Center’s products. About 90% of the debt securities issued by issuers whose business is concentrated in Russia are valued on a daily basis by NSD’s Valuation Center. In 2020, calculation methodologies for bonds with a floating scheme of payments, Russian government Eurobonds, and corporate Eurobonds expanded significantly.
- The Moscow Exchange has created a new channel for accessing NSD’s information. In November 2020, the Exchange began providing its clients with reference information about securities, issuers, forthcoming and processed corporate actions, a corporate action calendar, and the current fair value of bonds calculated by NSD’s Valuation Center.
- In February 2020, clients who used the NSD Valuation Center and NSD DISC services were provided with My Portfolio, a new service that reduced the time required to find and monitor necessary information.