NSD Concludes Third Independent Validation of its CPMI-IOSCO PFMIs Level of Observance Performed by Thomas Murray

26 April 2016
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MOSCOW, LONDON – Thomas Murray, the specialist post-trade research, ratings and risk information firm, has provided an independent third-party view of National Settlement Depository’s (NSD’s) level of observance of the CPMI-IOSCO Principles for Financial Market Infrastructures (PFMIs). FMIs are expected to undertake regular self-assessments in order to establish their degree of observance of the PFMIs, using the Disclosure Framework and Assessment Methodology published in 2012.

The results of the 2015 analysis show that NSD has improved observance of 5 of the 24 principles, and remains as ‘broadly’ observant overall of the PFMIs. Of the 24 principles, NSD ‘fully’ observes 10, ‘broadly’ observes 8, and there are 6 principles not applicable to NSD’s operations1. There are no principles that NSD partially observes or does not observe.

The main improvements were in the following principles:

  • Principle 2 “Governance”;
  • Principle 7 “Liquidity Risk”;
  • Principle 9 “Money Settlements”;
  • Principle 16 “Custody and Investment Risk”; and
  • Principle 21 “Efficiency and Effectiveness”.

Eddie Astanin, Chairman of the Executive Board of NSD, said: “NSD has a status of a central securities depository on the Russian market. Bank of Russia recognized NSD as the systemically important CSD and settlement depository, our payment system has a status of the nationally important. All this causes special requirements to company’s risk management. Beside this Russian post-trading infrastructure is actively integrating into the global financial market, and ensuring the compliance with common standards and rules is the key to our success in this direction. NSD has been supervised in order to establish the degree of observance of the PFMIs for the third year in a row. In 2015 we have managed to achieve our goal – all applicable to NSD activity principles are fully or broadly observed”.

Nick Bradley, Chief Risk & Ratings Officer of Thomas Murray, said: “Thomas Murray has assessed the changes made by NSD to improve its level of observance of the CPMI-IOSCO PFMIs. We have observed  significant improvements in some areas in particular in Principle 9, Money Settlements, where NSD launched a facility to settle in central bank funds. Although, this is not currently used due to low liquidity in the central bank’s RTGS System, it has provided an option for participants to settle in central bank money and has paved the way for the market to move away from internal cash settlements. Thomas Murray expects further developments as NSD continues to implement its strategy in the next few years”.


Financial market infrastructures (FMIs) that facilitate the clearing, settlement, and recording of monetary and other financial transactions play a critical role in fostering financial stability. However, if not properly managed, they can pose significant risks to the financial system and be a potential source of contagion, particularly in periods of market stress. Although FMIs performed well during the recent financial crisis, events highlighted important lessons for effective risk management. These lessons, along with the experience of implementing the existing international standards, led the Committee on Payment and Market Infrastructures (CPMI) and the Technical Committee of the International Organisation of Securities Commissions (IOSCO) to review and update the standards for FMIs. All CPMI and IOSCO members intend to adopt and apply the updated standards to the relevant FMIs in their jurisdictions to the fullest extent possible.

The Committee on Payment and Market Infrastructure (CPMI) is a part of the Bank for International Settlements. The CPMI is a standard setting body for payment, clearing and securities settlement systems. It also serves as a forum for central banks to monitor and analyse developments in domestic payment, clearing and settlement systems as well as in cross-border and multicurrency settlement schemes.

The International Organisation of Securities Commissions (IOSCO) develops, implements, and promotes adherence to internationally recognised standards for securities regulation, and is working intensively with the G20 and the Financial Stability Board (FSB) on the global regulatory reform agenda. IOSCO's membership regulates more than 95% of the world's securities markets.

1 — CPSS-IOSCO Principles include standards and recommendations for all types of financial infrastructure. During validation of NSD Thomas Murray used principles applicable for CSDs.

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