New Market Realities: Opportunities and Challenges
Nikolay EgorovDirector General, NDCMember of AECSD ACSDA Leadership Forum October 6 – 9, 2009 Santiago, Chile
Agenda
• AECSD evolution
• NDC strategic development
Association Members
Central Depository of Armenia
The National Depository Center (Azerbaijan)
Republican Central Securities Depository (Republic of Belarus)
Georgian Central Securities Depository
National Securities Depository of Moldova
Central Securities Depository (Kazakhstan)
Central Depository (Kyrgyzstan)
State CSD of the Republic of Uzbekistan
Interregional Stock Union (Ukraine)
The National Depository of Ukraine
Depository Clearing Company (Russian Federation)
The National Depository Center (Russian Federation)
AECSD was established in 2001.The Association incorporates 12 depositories from 10 CIS countries:
Objectives
• Harmonization of the regulatory framework
• Establishment of depository links among the members to support cross-border securities transactions
• Standardization of the technologies for the depository operation, procedures for depository transaction processing, and rules and regulations governing the depositories' activities
• Adoption of international messaging standards for depository transactions and their use in the national practice
• Development of Electronic Document Interchange
• Supporting a coordinated process to enable the Association members to integrate into the global depository system
Governance Structure
General Meetingof AECSD Members
Chairman
Secretariat
NDC, Russia
Working Groups• Depository Links• CSD Legal Issues• Development of Electronic Messaging Standards• Administration of the Association Website
Working Groups Activities
• Report “Correspondent accounts of non-residents in depositories
of the Association of Eurasian Central Securities Depositories”
(October 2008)
• Report “Clearing Activities in AECSD Member Countries”
(October 2008 )
• Corporate actions survey (October 2009)
International Activities of the Association
• An observer status in ECSDA, AMEDA and ACG
• Participation in international conferences and forums (CSD10, Annual Russian Securities Forum, SIBOS etc.)
• Organizing and holding seminars and trainings on depository and clearing services for Association members
• Proposal on cross-membership of AECSD and ACSDA as observers
VI International AECSD Conference
Tashkent, Republic of Uzbekistan
15-16 October, 2009
Main Agenda of the Conference:
• The role of depository in the issuer's corporate actions in AECSD
• Record-keeping of rights for securities: from depository to custodian
• Regional markets during the crisis period: does the crisis generate ideas or obstacles
Agenda
• AECSD evolution
• NDC strategic development
“The National Depository Center” (Closed Joint Stock Company)
• Member of the MICEX Group
• The biggest Russian settlement depository servicing all types of securities
• NDC provides DVP settlement services for both primary and secondary markets and FOP /DVP settlement for OTC trades
• Settlement depository of three Russian stock exchanges
• AA- Thomas Murray rating
NDC performance highlights for IH 2009
• Value of securities held in NDC: RUB 4.7 trillion (+7.2%)
• Number of issues held: 2758
• Number of inventory operations: 1 164 366 (-8.1%)
• Turnover: RUB 26.7 trillion (-7%)
• Capital and retained earnings (RAS) for IQ2009 vs IQ2008 : RUB 1,85 bln. (+25%).
• Net Income (RAS) for IQ2009 vs IQ2008: RUB102 mln. (-21,1%)
Strategic Direction: Effective Corporate Governance Structure
• On August 10, 2009 NDC became a Closed Joint Stock Company
• MICEX SH and NDC – on the way to merge
Benefits for clients
• Providing a full range of settlement services
• Raising capitalization to strong the market position
• Improving perception of the Russian financial infrastructure globally
The National Depository Center
(NDC)
MICEXSettlement House
(MICEX SH)
MERGE
NDC as Efficient Locationfor Domestic Settlement (1)
Government bondsNDC – de-facto CSD
• Trading only on MICEX
• Main Trading Mode – T+0, Negotiated Deal Mode– T+0-T+2
• Payment agent – Bank of Russia
• All trades are settled on DVP basis
EquitiesNo CSD
• Book-entry form• Exchange trades (on MICEX, RTS) – same as bonds• OTC: re-registration vs. settlement
depository/custodian• Trade settled through registrar – T+3 – T+7 cycle• Trade settled via settlement depository/custodian –
T+0
Corporate & Regional BondsNDC – de-facto CSD
• Issued in dematerialised form with global certificates
• Main Trading Mode T+0, DVP, Negotiated Deal Mode T+0-T+30 DVP basis
• NDC as a paying agent in 29% of all transactions
NDC as Efficient Locationfor Domestic Settlement (2)
• NDC and ING Wholesale Banking project• SSS - a temporary scheme, like NDC-DCC Bridge, will be
replaced by more sophisticated CSD settlement services• STP• Fixed fee• Blue chips • Non-exclusive scheme
SSS was created to allow faster settlements
and faster links with various markets
Speedy Settlement Scheme (SSS)
International Settlement Facilities
Correspondent accounts
• CSD the Republic of Kazakhstan
• NDC of the Republic of Azerbaijan
• CSD of the Republic of Belarus
• Clearstream Banking• Euroclear
New DVP service via Euroclear Bank
link
Сash clearance account16420
Securities
clearance account
12065
Corporate Actions in Russia: NDC’s Value Proposition
• 75% of documents handled by NDC are related to CAs
• NDC is the biggest Russian payment agent for the issuers of corporate and regional bonds
• NDC acts as the Russian National Numbering Agency and is authorized by FFMS of Russia to qualify the foreign securities for trading on the Russian market
NDC statistics, 2007 - 1Q 2009
* Excluding bonds of the Bank of Russia
0
50
100
150
200
250
300
350
2007 1Q 2007 2Q 2007 3Q 2007 4Q 2008 1Q 2008 2Q 2008 3Q 2008 4Q 2009 1Q
Merger / pari passu (cancellation of additional issues)
Corporate actions (conversions, entitlements, exchange offers, redemptions, repurchases etc.)
Alliance Lite: Service Aimed at Boosting International Standards in Russia
Back-office
LUCH
Web-access
Alliance Lite(Operator entry)
File Act(file exchange)
NDC Participant
Internet (web)SWIFT security
Internet (web)NDC security
Internet (e-mail)NDC security LUCH files
Custody Banks
Brokers/Investment Managers
LUCH files
SWIFT files
LUCH files
SWIFT Community
The First Step to CCP and Securities Lending
• CCP for MICEX SE market - new project aimed to implement risk management system for fair market participants
• Securities lending as NDC service for CCP
Accepted orders
Lender MICEX Stock Exchange
Trading floor
MICEX as a
Clearing system
Borrower -Central
Counterparty
NDC Settlement depository
Securities available for ASL trades
Net – positions
Net - positions
Instructions
Contact Information
• AECSD Secretary
The National Depository Center
13, bldg 1, Mashkova St., Moscow,105062, Russia
Tel.: +7 (495) 232-0513
E-mail: [email protected] • AECSD Website: www.aecsd.com
Thank you for attention!