National Settlement Depository (NSD), Russia’s central securities depository, has expanded settlement opportunities for its clients: it has conducted the first DVP transaction via a correspondent account with the Bank of Russia.
Along with DVP settlements in NSD and on accounts with foreign banks, NSD also provides its clients with the opportunity to conduct settlements using correspondent accounts with the Bank of Russia (settlements in the central bank money). ZENIT Bank was the first to use this service.
Alexandr Dendeberya, Head of operations divisions of ZENIT Bank said: “Settlements using the new service allow us to reduce the level of operational and credit risks, as well as transaction costs. This practice is in line with international standards and meets our operational needs in full.”
The service widens the range of options for settlements for NSD’s clients and combines the advantages and reliability of DVP settlements with money management flexibility.
Delivery Versus Payment (DVP) is a principle of settling securities transactions when the counter transfer of securities (to a purchaser) and money (to a seller) are conducted simultaneously. Key advantages of conducting DVP settlements through NSD include the mitigation of the risk of the non-performance of both parties’ transaction liabilities, convenient schedules, and a unified clearing instruction to transfer money and securities, as well as the opportunity to quickly pass securities for trading.
The service enables clients – credit organizations – to conduct settlements in the central bank money. Operations may be conducted by counterparties, one of which has opened an account with NSD and another – an account with the Bank of Russia.