The concepts of "commercial paper" and "commercial paper program" were introduced into Federal Law No. 39-FZ dated 22 April 1996 "On the Securities Market" by Federal Law No. 218-FZ dated 21 July 2014 "On Making Amendments to Certain Laws of the Russian Federation".
Specific aspects of commercial papers:
- Commercial papers are issued without registration of a securities prospectus and without state registration of an issue placement report (without submission of a notice of issue placement by the issuer to the Bank of Russia).
- Commercial papers are issued as certificated bearer securities subject to mandatory centralized safekeeping.
- Commercial papers are issued by private offering.
- The principal and interest are paid in cash only; commercial papers may not be secured by collateral.
- An identification number to a commercial paper issue/program is assigned by the CSD.
4-steps issuance process:
1. The issuer takes a decision to issue commercial papers
The following steps can be taken before, in parallel to, or after entering into agreements with NSD:
- Take a decision to issue commercial papers / approve a commercial paper program.
- Approve the decision to issue commercial papers / approve the terms and conditions of the commercial paper issue.
2. The issuer enters into agreements
- A services agreement for the assignment of an identification number to the commercial paper issue / commercial paper program.
- An issuer account agreement.
- A treasury securities account agreement (if applicable).
- An electronic data interchange agreement.
The agreements listed above have to be signed in duplicate and submitted to NSD along with the set of documents (see the list under item II).
3. An identification number is assigned by NSD
The issuer provides NSD with documents required for the assignment of an identification number to the commercial paper program/issue.
4. Offering
- Following the receipt of a notice of the identification number assigned by NSD to the commercial paper issue, the issuer decides on the date when the offering process is to start.
- The issuer provides NSD with the documents required for the commercial paper offering.
- During the period from the offering start date until the offering end date, the issuer gives instructions (Form MF010 for FOP deliveries, or Form MF170 for DVP) to NSD to transfer the commercial papers from the issuer's issuer account, and also notifies the buyers of the need to give a matching instruction (regardless of the settlement basis chosen).
- On the offering end date, the issuer gives a Notice of the Results of Securities Offering to NSD.