National Settlement Depository (NSD), Russia’s central securities depository, launched a new technology of organizing shareholder meetings that includes informing about shareholder meetings and e-proxy voting. Now NSD uses international standards allowing to exchange structured standartized electronic messages with issuers, registrars and depositors and provides an opportunity of straight through processing (STP) of information at all stages of document circulation.
The new interaction formats have been developed in accordance with ISO 20022; they are based on international standards for organizing and conducting shareholder meetings and take into account the Russian securities market’s specifics. In addition, the NSD’s depositors that use SWIFT will be able to interact on the basis of ISO 15022 (NSD will be responsible for converting messages into ISO 20022/ISO 15022 formats).
Implementation of ISO 20022 will allow NSD to receive structured information about convened shareholder meetings and documents related to the meetings’ agenda items and results from issuers. The information received will be sent automatically in unchanged form to NSD’s depositors. The new message format will be also used for transmission of electronic documents containing information about securities owners’ votes at shareholder meetings (e-proxy voting).
The new technology of conducting shareholder meetings simplifies interactions between securities market participants and guarantees them a high level of protection of their rights. The use of ISO international standards makes organization of shareholder meetings and the e-proxy voting process more convenient, transparent and understandable for foreign and local investors.
Eddie Astanin, Chairman of the Executive Board, NSD, said: “Corporate actions represent a sphere which needed qualitative changes. All market participants, including foreign investors, agree with this. This sphere’s reform should have a complex effect by improving the market infrastructure, corporate governance quality and the investment attractiveness of Russian assets in general strategically. There are examples of this effect among emerging countries. For instance, in 2011, when e-proxy voting technology was introduced in Turkey, foreign investors’ attendance at shareholder meetings increased more than five fold.”
The new technology has been developed with the active participation of securities market participants: issuers, registrars and depositories.
Previous formats
In 2014, legislative efforts were made to introduce an opportunity for securities owners to vote by sending electronic documents via their depositories. Up to this day, the e-proxy voting service allowed to use internal message formats agreed with market participants. Since the moment of legal establishment of the opportunity to send electronic documents connected to voting via NSD, more than 369* shareholder meetings have been initiated using e-proxy voting via NSD.
* — As of 15.03.15
In future, market participants will switch to the new technology step by step, in accordance to their technical and regulatory readiness for this switch. After that the exchange of documents in outdated formats will be phased out.
Corporate actions reform in Russian market
NSD, with the market regulator’s support and in close cooperation with issuers, registrars and customers, implements the corporate actions reform in Russia’s financial market for the purpose of introducing newest technologies and international standards based on EDI.
The reform provides complex changes affecting the legal base and corporate actions processing technologies. Elimination of the use of paper documents, application of electronic technologies and accounting institutions’ involvement will allow market participants to minimize their risks and to reduce costs associated with corporate actions.
Issuers in which registers CSD accounts are open are obliged to provide an opportunity of e-proxy voting. Shareholders will still be able to vote by sending a paper ballot or by attending a general shareholder meeting personally.