Thomas Murray Issues a Central Securities Depository Rating of A+ for The National Depository Center

21 June 2006
Print version

LONDON - Thomas Murray, the specialist custody rating, risk management and research firm is pleased to announce the issue of a Public Depository Rating to National Depository Center (NDC) of Russia. NDC has been awarded a Public CSD rating of A+, being a low overall risk rating made up of the following components:

Public CSD Rating NDC Rating
Overall Rating A+
Asset Commitment Risk A+
Liquidity Risk A+
Counterparty Risk A
Financial Risk A+
Operational Risk A
Asset Servicing Risk AA-

The National Depository Center is the major depository for fixed income securities in Russia and also has a significant share of equity business in respect of safekeeping and settlement activities. NDC has a strong ownership structure with the Central Bank of Russia, Moscow Interbank Currency Exchange (MICEX) and eleven commercial banks all having an ownership interest. It is a member of the European Central Securities Depositories Association and owns material interests in two other depositories in Russia, the Depository Clearing Company (DCC) and the Settlement Depository Company (SDC). NDC is run on sound operating principles and good control measures are in place. It is regulated by The Federal Financial Markets Service (FFMS) of the Russian Federation to whom it provides reports on a quarterly basis. Internally it adopts good corporate governance practices, which includes a Risk Management Committee and a Depository Committee.

NDC demonstrates a low overall risk management profile and has been awarded a rating of A+ with an On Watch outlook by Thomas Murray. The outlook reflects the uncertainties surrounding the developments in the Russian market towards rationalizing the infrastructure and implementing a central counterparty, the National Clearing Centre (NCC), which will have an impact on the clearing and settlement arrangements of NDC. In addition there is an almost complete reliance on pre-funding to manage liquidity and counterparty risk at NDC. While this works for the exchange transactions in the current market, it is likely to be less effective and may not be sustainable as the market grows, which could result in significant future liquidity difficulties. Other issues that influence the outlook include a significant IT development project for a new settlement system that NDC has commenced.

NDC demonstrated strengths in the areas of corporate information services and corporate action processing and by law it must assume full liability for any errors attributed to it in its operations. The depository has implemented an on-line messaging and reporting tool, Electronic Document Interchange and also makes use of SWIFT messaging. Counterparty Risk is reduced by employing Delivery versus Payment settlement processes on a near-simultaneous basis. Financial risk is considered to be low as NDC has made annual profits and has boosted its reserves through retained earnings. It has announced a target to grow its reserves to RUB 1.5 billion (USD 55 million) by 1 January 2010, in line with the average capitalisation of European CSDs.

Simon Thomas, CEO and Chief Ratings Officer of Thomas Murray said: "Thomas Murray is delighted to be able to announce the public rating of National Depository Centre. NDC has employed good risk management controls and adopts processes that work well within the current Russian marketplace. It has continued to grow its business especially in the safekeeping and settlement of equities while maintaining its share (almost 100%) of the fixed income safekeeping and settlement business. Nevertheless NDC faces considerable challenges in the future with the expected consolidation of the Russian capital markets infrastructure, which will create some uncertainties. NDC appears to be well-placed to feature strongly in any future infrastructure arrangements. The rating reflects NDC's capabilities and commitment to mitigating risk in the Russian securities marketplace."

Nikolay Egorov, Director of The National Depository Centre, said "National Depository Centre is pleased to have worked closely with Thomas Murray on the Central Securities Depository rating. We found that Thomas Murray's rating methodology provided our business with a comprehensive benchmark assessment of our operating processes and has been helpful in identifying areas on which to focus our future risk development efforts. The A+ rating is an indicator of the progress and improvements that have been made by the depository over recent years. We are sure that from the point of view of both the regulatory authorities and clients, the rating from Thomas Murray being an independent expert will give National Depository Centre a platform on which to further develop its business and compete in any future infrastructure arrangements in the Russian securities market".

The Central Securities Depository rating assesses the performance of the CSD to mitigate risk in its activities of safekeeping and the clearing and settlement of securities, where applicable. It assesses six key risks. The methodology considers the capabilities of the depository and the quality and effectiveness of its operational infrastructure. It also assesses the depository's willingness and ability to protect its participants or clients from losses. As part of the rating, the scope and quality of the depository's services is assessed. The ratings are on a consistent global scale, using the familiar AAA to C ratings scale. Once the rating is assigned there is an ongoing surveillance process to monitor the depository.

Separately, Thomas Murray has maintained proprietary assessments of over 140 CSDs globally as part of the Thomas Murray Depository Risk Assessment services. These reports are available via the Thomas Murray on-line store at

For further information contact:

Simon Thomas/John Woodhouse
Thomas Murray +44 (0) 207-830-8300

Olga Rink
The National Depository Center +7 (495) 232 0910

About Thomas Murray :

Thomas Murray is a specialist custody rating, risk management and research firm specialising in the global securities services industry. Thomas Murray was established in 1994. The Company tracks and analyses over 250 custodians globally and monitors the risk of over 100 capital market infrastructures. The Company has a strong position as a provider of public and private ratings and risk assessments on global custodians, domestic custodian banks and capital market infrastructures.

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