NSD has launched settlement of repo trades using correspondent accounts with the Bank of Russia, involving NSD’s collateral management and clearing services. This will improve settlement experience of NSD’s clients through a combination of reliability offered by DVP settlement and the benefits of using a clearing participant’s correspondent account with the Bank of Russia. The service is available to all commercial banks.
Settlement of repo trades involving NSD’s collateral management and clearing services is implemented in cooperation with the Bank of Russia. The Bank of Russia has, at NSD’s request, offered a new tool for setting aside cash funds in a correspondent account, and NSD, as clearing house, has implemented a mechanism for pre-calculation of net cash requirements for reservation optimization purposes. As a result, clients now can buy or sell securities and make repo trades on a DVP-2 or DVP-3 basis (with the netting with respect to cash payments) in NSD’s clearing sessions, with further settlement through the Bank of Russia Payment System.
Alina Akchurina, Managing Director for Collateral Management and Tri-Party Services: “The solution offered together with the Bank of Russia makes it possible to set aside only a net position in a bank’s correspondent account, which is highly important in repo settlement due to significant volumes of repo trades. In Q3 2021, an average open position in repos with collateral management by NSD exceeds RUB 2.3 trillion.”
Public Joint-Stock Commercial Bank “Derzhava” is the first client to use the new settlement solution for repo trades. Derzhava had successfully connected to and tested the settlement service before taking part in a repo auction. As a result, an overnight refinancing repo trade was successfully made in September 2021.
Vyacheslav Androsov, Head of Treasury Department, Derzhava Bank: “In view of the growing role of credit institution funding by global creditors, the new service offered by NSD is efficient in optimizing and speeding up the settlement process, while significantly reducing operational and liquidity gap risks.”
For the detailed information about the service, please visit https://www.nsd.ru/en/raschety-repo-v-dengakh-banka-rossii/.