NSD Sums Up Q2 2019 Results

In Q2 2019, the value of securities under custody reached RUB 49.1 trillion, having increased by 14% compared to the same period of 2018 (RUB 43 trillion). The number of foreign securities issues serviced by NSD increased 27% – from 10.9 thousand to 13.7 thousand. The value of the federal loan bond (OFZ) balances in foreign nominee accounts amounted to RUB 2.5 trillion; it demonstrated a 29% increase compared with Q2 2018 (RUB 1.9 trillion).

The total number of securities issues serviced by NSD increased 18% - from 18.1 thousand in Q2 2018 to 24.1 thousand in Q2 2019.

NSD continued to develop services integrated in the global financial system. Raiffeisen Bank International (Vienna) became the first foreign custodian which established direct access to the Russian securities market by opening a foreign nominee account holder directly with the Russian central securities depository. Owing to this, the bank is now able to provide its clients with access to a wide range of Russian financial instruments.

In Q2 2019, one more company connected to the centralized system for record keeping and distributing mutual fund units (NSD’s Mutual Fund Distribution Platform).  Currently, 13 brokerage companies/nominees and nine asset management companies use this service.

The number of inventory operations in the CSD increased 16% Y-o-Y and reached 965 thousand operations in Q2 2019 (compared with 829 thousand in Q2 2018), including 742 thousand exchange trade operations (+16%; 640 thousand operations in Q2 2018) and 223 thousand OTC trade operations (+18%; 190 thousand operations in Q2 2018).

In Q2 2019, the value of OTC DVP transactions increased and amounted to RUB 2.4 trillion; this was 2% more than in Q2 2018.

The total number of transactions conducted with the use of the Linked Transactions and Instruction Prioritization services amounted to 3,449 transactions (as compared to 1,413 transactions in Q2 2018).

In Q2 2019, two new commercial papers programs with a RUB 251 billion total maximum value of the issuance and six issues of commercial papers with a RUB 0.30 billion total value. The placement of five commercial papers issues with a RUB 0.44 billion total value was completed.

Corporate actions (CAs)

In Q2 2019, 2,030 meetings of securities holders were initiated using the E-voting technology, along with 108 corporate actions to repurchase shares, and 15 corporate actions to exercise the pre-emptive right to purchase shares.  In Q2 2019, the total value of repurchased shares reached RUB 34 billion.

Nine issuers used the E-voting service in the reporting period; RusHydro used the service for the first time. 11 general meetings of shareholders with the use of E-Voting service were held (six meetings in Q2 2018); of them, at six meetings the simultaneous use of the two remote voting systems – NSD’s E-voting system and the registrar’s electronic voting system – was provided; it allowed to expand the options for shareholders. As compared to the same period of the previous year, there was a nine-fold increase in the number of shareholders who took part in general meetings using the E-voting service.

In total, 5,684 corporate actions involving Russian securities were conducted in Q2 2019. It was 14% more than in the same period of the previous year (4,981 corporate actions in Q2 2018).  In Q2 2019, the number of corporate actions involving foreign securities continued to grow due to the increase in the number of securities issues serviced by NSD (from 6,333 issues in Q2 2018 to 8,036 ones in Q2 2019).  The growth amounted to 27%.

Tri-party services (Collateral Management System, CMS)

In Q2 2019, the value of Federal Treasury repos conducted via NSD’s CMS amounted to RUB 6.5 trillion; it was 47% more than in Q2 2018; the average repo maturity grew from 40 to 42 days. Among one of the factors which resulted in the increase in the value of Federal Treasury repos was conducting repos with floating interest rates linked to RUONIA. In Q2 2019, the total volume of Bank of Russia repos reached RUB 23.2 billion. The total number of clients connected to the CMS was 160.

In Q2 2019, the first constituent entity of the Russian Federation – the St. Petersburg Committee of Finance – joined NSD’s platform that allows investing temporarily available funds in repo transactions using NSD’s CMS. One more liquidity source was provided to credit organizations by way of admitting more borrowers to the process of selecting bids for repo agreements. The use of repo transactions allows to expand the range of instruments for placing temporarily available budget funds and to minimize risks that occur when these funds are invested in unsecured bank deposits.

To improve electronic interchange channels, the company implemented a functionality for exchanging in electronic confirmations related to OTС repo agreements. Electronic confirmation forms are available in NSD’s CMS web office and correspond to the model Master agreement for repo transactions conducted via NSD’s CMS; the model agreement had been developed by a legal group jointly with the Bank of Russia.

The Single Account service that was launched by the Moscow Exchange Group in late 2018 is being developed successfully. The service allows to automate the standard transfers of assets between a client’s positions in NCC and NSD. Since the launch, 17 clients joined the service. In Q2 2019, the number of automatic asset transfers via the Single Account service reached 439. The most popular service is automated securities transfers to the securities accounts opened for clearing in NCC after settlements carried out within NSD’s clearing session.

Repository

In Q2 2019, the number of trades registered with NSD’s Repository grew to 3.6 million (compared with 3 million in Q2 2018). The value of the registered transactions was 38% more than in the same period of 2018 and reached RUB 139.2 trillion (RUB 100.8 trillion in Q2 2018).
In Q2 2019, the top 3 instruments of registered transactions included:

The top 3 instruments in terms of the volume of reported transactions included (RUB trillion):

Information services

In Q2 2019, the number of contracts concluded with information service users grew 22% Y-o-Y and reached 584 contracts. The highest growth of the number of users was demonstrated by NSD’s Valuation Center – 29% (195 clients in Q2 2019 as compared with 151 users in Q2 2018).

In January 2019, PRIME, a Russian business news agency, became an official distributor of NSD Valuation Center’s products. Now, PRIME clients can receive theoretical fair prices as part of the package “NSD VC’s Financial Instrument Fair Values.”

Starting 1 May 2019, NSD’s Valuation Center began broadcasting the fair prices of floaters on a daily basis.

Bonds payments on which are linked to the Consumer Price Index and RUONIA, including OFZ-PC and OFZ-IN, are valued based on a new methodology. The list of valued floaters will be expanded at Valuation Center clients’ requests. The calculation methodology is based on IFRS 13 and follows Bank of Russia recommendations for forecasting payment flows.

Payment and Settlement System

In Q2 2019, the value of money transfers reduced 6% and amounted to RUB 78.7 trillion (RUB 84 trillion in Q2 2018). The number of client transactions amounted to 296 thousand or 3% less than in Q2 2018 (288 thousand).

National and Substitute Numbering Agency, and the accredited Local Operating Unit (LOU)

NSD is the first and only company in Russia and the CIS countries that has received an accredited LOU status.  This is a permanent status which replaced the temporary one (pre-LOU). It confirms NSD’s compliance with GLEIF’s regulatory and technological requirements for an organization which assigns and maintains LEIs.

In Q2 2019, NSD assigned 17 new LEIs and verified 116 LEIs. LEIs assigned by NSD are recognized by regulators, market participants, and LOUs of other countries. NSD continues to act as Russia’s Numbering Agency and as the substitute numbering agency for CIS countries, assigning ISINs, CFIs, and FISNs.

In Q2 2019, NSD assigned 405 ISINs, CFIs and FISNs to Russian financial instruments. The number of foreign securities qualified by NSD in Q2 2019 amounted to 1,962.

IT Services

As the core of the financial market, NSD gives particular attention to developing a reliable IT platform, implementing partnership programs, and ensuring a high level of information security.

In Q2 2019, Gazprombank and DIXY Group began conducting mutual settlements via NSD’s Transit 2.0, a platform to exchange financial messages between corporations and banks that service these companies. The platform unifies and standardizes participants’ interactions, and increases their effectiveness and safety.

In Q2 2019, two new users connected SWIFT services via NSD’s SWIFT Service Bureau, and the total number of users reached 70. Service Bureau clients’ average daily traffic grew 17% Y-o-Y and reached 406 thousand messages per month. NSD became the first CSD to sign up for SWIFT’s gpi service – a rapid cross-border payments service that provides real-time payments tracking and transparency on bank fees and foreign exchange rates. In future, NSD plans to provide its clients with access to the gpi service as part of the Service Bureau model.