- The value of securities under custody reached RUB 39.4 trillion;
- The value of OFZ balances in foreign nominee accounts increased 49% YoY and reached RUB 2.2 trillion;
- NSD conducted the first transaction using the blockchain platform in Russia and settled commercial bonds;
- The number of corporate actions related to Russian securities rose 6% and amounted to 15,812. Of them 4,067 shareholder meetings were initiated using the electronic voting technology;
- The number of corporate actions involving foreign securities grew 84% and reached 14,650;
- The volume of settlements held via NSD’s settlement and payment system grew 10% and amounted to RUB 389.8 trillion;
- NSD’s Valuation Center received the Bank of Russia’s accreditation.
Central Securities Depository (CSD) services
In 2017, the value of securities under custody reached RUB 39.4 trillion – this was an 8% increase compared with 2016 (RUB 36.4 trillion). The number of foreign securities issues serviced by NSD grew 66% – from 5.1 thousand in 2016 to 8.5 thousand in 2017.
The total number of securities issues serviced by NSD grew 29% – from 11.9 thousand in 2016 to 15.4 thousand in 2017.
In 2017, 14 companies joined the centralized platform for record keeping and distributing UIT units developed by NSD together with NAUFOR. To date, eight brokerage companies (nominees) and six asset management companies (TRINFICO Asset Management Company, TRINFICO Property Management, Arsagera Asset Management Company, TRANSFINGROUP Asset Management Company, Raiffeisen Capital Asset Management Company, and DOKHOD Asset Management Company) are using the platform.
The number of inventory operations in the CSD increased 14% YoY and reached 3 million operations in 2017 (compared with 2.7 million in 2016), including 2.4 million exchange trade operations (+11%; 2.1 million operations in 2016) and 666 thousand OTC trade operations (+29%; 516 thousand operations in 2016).
In 2017, the volume of DVP transactions grew to RUB 7.3 trillion; this was 63% more than in 2016 (RUB 4.5 trillion).
In the reporting year, an upward trend in the number of operations conducted by clients with the use of new settlement services (linked transactions and instruction prioritization) was observed – 2,873 operations were held by the end of 2017.
The value of balances of Federal Loan Bonds (OFZ) in foreign nominee accounts amounted to RUB 2.2 trillion – this was a 49% increase compared with 2016 (RUB 1.5 trillion).
In 2017, eight commercial bond programs in a total maximum amount of RUB 22.89 billion and 20 commercial bond issues in a total amount of RUB 4.34 billion were registered (of them, 16 issues for a total sum of RUB 278 were placed).
In 2017, NSD provided a blockchain-based settlement platform for issuing commercial bonds of MegaFon, Russia’s leading mobile operator. Raiffeisenbank was the organizer and a buyer of the RUB 500 million bond issue.
The Collateral Management System (CMS)
The value of repo transactions which the Federal Treasury performed using NSD’s collateral management system reached RUB 41.9 trillion in 2017 – a 12% increase compared with the previous year (RUB 37.4 trillion); the number of transactions amounted to 1,796. The value of repo transactions with the Bank of Russia performed using NSD’s CMS was RUB 688 billion – this was less than in 2016 (RUB 9,869 billion).
In December 2017, NSD launched a new service – liquidity management which automates cash transfers between client trading banking accounts open for clearing operations with NSD and NCC, and provides for regular cash liquidity transfers to the clearing banking account with NCC using the client’s settlement code. The new service reduces clients’ costs when managing cash positions in clearing organizations (NSD and NCC). Prior to this, NSD launched a CMS service to manage securities balances in client accounts to accelerate settlements on OTC and on-exchange markets.
In 2017, 33 clients that concluded repo transactions with the Federal Treasury used NSD’s service for the automatic selection and return of securities from accounts with NSD/to clearing accounts with NCC; as a result, approximately 3,000 automatic transfers were formed in 2017.
The Moscow Exchange Group plans to continue to develop NSD’s collateral management system for servicing on-exchange and OTC repo and derivative segments.
Increased client activity was seen in 2017: the number of trades registered with NSD’s Repository exceeded 11 million (compared with 2.5 million in 2016). The value of the registered transactions was RUB 472.3 trillion (RUB 403.9 trillion in 2016).
In 2017, the top 3 instruments of registered transactions included:
The top 3 instruments in terms of the volume of reported transactions included (RUB trillion):
In September 2017, NSD increased the length of the Repository’s business day to 24 hours to upgrade automation and to utilize STP. Moreover, NSD added notes to the message fields of the Web Client; it facilitated interactions with the Repository.
In addition to the daily aggregated statistics, in the beginning of the third quarter, NSD clients received access to the monthly analysis of the structure of the register of contracts, including expanded information about the structure of repos and FX swaps for the first six, nine and twelve months of 2017, respectively.
The Repository’s formatting and logic check (FLC) service which was launched in 2017 led to a substantial improvement in the quality of information submitted by clients to NSD’s Repository. The number of canceled messages due to clients’ errors in transaction parameters was reduced from 183 thousand to 100 thousand (in particular, it was related to the upgrade in the description of formats and notes to the fields of messages about transactions). The FLC services allow to minimize the number of incorrect parameters of transactions, to avoid cases of sending information to the Repository after the reporting deadline set by the law.
Corporate Actions Center
In 2017, NSD tested a new technology to process corporate actions involving Russian securities. 4,067 shareholder meetings were held using e-proxy voting technology; 321 repurchases of shares in the total amount of RUB 124 billion and 55 corporate actions to exercise the pre-emptive right to purchase shares for RUB 8 billion were also initiated.
Totally, 15,812 corporate actions involving Russian securities were conducted in 2017; this was 6% more than in the previous year (14,977 actions). In 2017, the number of corporate actions involving foreign securities increased significantly due to the increase in the number of securities issues serviced by NSD (from 7,943 issues in 2016 to 14,650 ones in 2017) and reached the highest growth level – 84%.
In 2017, there was a considerable growth in yields paid and repayments on securities made via NSD. The amount of payments on Russian securities increased from RUB 4.4 trillion in 2016 to 14.2 trillion in 2017; this was mostly attributable to overnight bond repayments. The amount of payments for foreign securities increased 45% to RUB 0.9 trillion (as compared with RUB 0.6 trillion in 2016).
The e-voting technology was successfully tested as part of the AGM of Sberbank: for the first time, 99 shareholders of Sberbank used the option to receive the materials of the shareholders meeting remotely and to vote online at the AGM held on 26 May. In total, 806 shareholders representing 33.3% votes of the total number of voting shares used electronic voting technologies at the AGM (including the e-proxy voting technology allowing shareholders to vote via their depositories).
The Moscow Exchange began using e-voting service based on the platform developed by NSD. On 14 September, MOEX shareholders (individuals and legal entities) took part in an extraordinary general meeting (held via absentee voting) and used the service for the first time. 73% of the EGM participants voted using e-proxy voting and e-voting technologies.
In the end of 2017, NSD and VTB Registrar provided Alrosa, Russia’s leader in diamond mining, with e-voting services at its general meeting of shareholders. Almost 30% of the meeting’s participants used VTB Registrar’s and NSD’s e-voting services; 92.5% of voting ballots were received in the electronic form (given votes sent via nominees).
In 2017, the number of information service users grew 11% and reached 403 contracts. The highest growth of the number of users was demonstrated by NSD’s Valuation Center.
NSD completed a large-scale project focused on transferring its information services to nsddata.ru, the Corporate Information Center’s new technological platform (nsddata.ru).
NSD’s new product range is based on a flexible service that provides for the customized exporting of information about securities and organizations related to securities and corporate actions to the client’s API NSD system; this system replaced SIR-NSD and SIR-NSD Light products. The new platform contains upgraded NSD DISC and NSD Valuation Center services, and also allows for the use of additional CSD services.
NSD’s Valuation Center which had been created with the support of Expert Council banks and Interfax got a new impetus for development during the reporting year. In the beginning of 2017, the Valuation Center began supplying its products via Bloomberg, and in September, the Valuation Center launched a new methodology to calculate the value of ruble-denominated bonds. Now, the methodology covers 750 issues of Russian ruble-denominated securities with ratings signed by international agencies.
After considering a request to assess the quality of NSD Valuation Center’s functioning in determining the value of ruble-denominated bonds, the Bank of Russia has recognized the quality as satisfactory based on criteria listed in the Bank of Russia’s information letter No. IN-06-51/15 “On Assessing the Quality of Valuation Centers’ Performance” (dated 29 March 2016).
Payment and Settlement System
In 2017, the value of money transfers grew 10% and reached RUB 389.8 trillion (compared with RUB 354.8 trillion in 2016). The number of these transactions reached 1.19 million – this was 2% more than in the same period during the previous year (1.16 million).
Turnovers on conversion operations conducted as part of corporate payments amounted to USD 12 million in 2017, or ten times as much as in 2016 (USD 1.2 million), reaching EUR 1.09 million. Meanwhile, the quantity of converted currencies against USD and/or Euro greatly increased in comparison with the same ratio in 2016.
NSD is Russia’s largest settlement non-banking credit organization in terms of the scale of settlement operations, capitalization, and the number of serviced participants in financial markets; it is also a nationally important payment system.
National and Substitute Numbering Agency and pre-Local Operating Unit (pre-LOU)
NSD acts as Russia’s Numbering Agency and as the Substitute Numbering Agency for the CIS countries, assigning ISINs and CFIs.
In 2017, NSD, acting in compliance with ISO 18774 (Securities and Related Financial Instruments) and as the numbering agency, started assigning FISNs (Financial Instrument Short Names) to financial instruments. FISN, as an addition to ISIN and CFI, increases the reliability of identifying financial instruments. In January 2018, FISN became a mandatory reporting element in accordance with a new European law (MiFID II/MiFIR).
In 2017, NSD assigned 2,238 ISINs and CFIs to Russian financial instruments and 14 ISINs and CFIs to Uzbek securities; it also issued more than 10,000 FISNs for all financial instruments which were circulated on the market with ISINs assigned by NSD. In 2017, the number of qualified foreign securities amounted to 6,291 securities.
NSD also has the status of a pre-Local Operating Unit (pre-LOU); in 2017, it signed a master agreement with the Global Legal Entity Identifier Foundation (GLEIF), became a candidate for accreditation as a LOU, and by the end of 2017 successfully passed all phases of the accreditation process for receiving a LOU status. As part of this process, NSD followed GLEIF requirements and began disclosing information about LEI owners in the new format (CDF 2.1), as well as Level 2 data about parent companies and their connections with subsidiaries using Level 2 format. This information is sent to GLEIF every day and is available for free on NSD’s website.
In 2017, NSD assigned 134 new LEIs and verified 446 LEIs. LEIs assigned by NSD are recognized by regulators, market participants, pre-LOUs, and LOUs of other countries.
In 2017, NSD’s technological services became a separate strategic business line. NSD, being a central link in the financial market, pays special attention to the development of a reliable IT platform, partner programs, and provides a high level of information security.
In 2017, 19 new users received technological access to SWIFT services (Service Bureau) via NSD; the total number of SWIFT service users reached 67. The Service Bureau clients’ average daily traffic increased 48% compared with 2016 and reached 11,257 messages per day.
In 2017, NSD developed and approved a concept to develop a financial message transit service based on NSD’s EDI platform. Implementing the project will expand the list of participants in the transit by supporting document interchanges between corporate clients and banks using ISO 20022 messages.
NSD and Waves announced joint development of a blockchain platform for the post-trade servicing of digital assets. According to the partners’ plans, the first prototype may be presented in 2018. The new platform architecture focuses on identifying the owners of digital wallets, on accounting for and keeping digital assets that have occurred as part of ICOs, and on settlements. Project implementation depends on developing the relevant legislative framework.