Main office. Settlement depositary NCO JSC NSD
– a legal entity that carries out all operations on securities accounts when carrying out transactions. This activity is licensed.
What is a settlement depository?
The settlement depository is one of the subjects of the stock market. The depository in its work is based on accounting rules. This instruction is developed by the entity itself and is the basis for obtaining a license. The rules describe the procedure for conducting depository operations, accounting instructions for staff, the procedure for carrying out client instructions, and others. is a separate area, but can be combined with other activities of a legal entity.
The actions of the depositary can be classified as:
- administrative – operations related to changing data in accounting registers, questionnaires on securities accounts and other information, except for the balances and value of a security;
- informational – generation of reports on securities accounts, provision of information on the execution of operations and generation of reports;
- inventory – operations related to a change of owner and the display of these actions in securities accounts;
- global – actions related to the issue of securities that entail a change in the state of accounting registers.
Characteristics of a settlement depository in the Russian Federation
For the fund market to function properly, there must be a regulatory framework that regulates the behavior of market participants. The formation of a high-quality depository system is the key to optimizing and improving accounting, storage, movement of securities, as well as promptly obtaining information and changing property rights.
To achieve this, in 2002, Russia adopted the “Concept for the development of the securities market in the Russian Federation.” In Russia, depositories can be banks or separate organizations. Companies that engage in depository activities professionally are more experienced and attractive. But most small players work with bank depositories, this is especially pronounced in the regions.
For more effective development of Russian depositories and their entry into the international level, it is necessary to solve a number of problems:
- improving the legal framework;
- using technological capabilities to minimize risks;
- transition of depositories to work within a system with a single space of securities accounts.
The central depository of the Russian Federation is the National Settlement Depository. It is a non-bank credit organization that is a subject of the Russian (stock) market and carries out depository activities. NSD serves the Russian Federation, as well as those issued abroad. It received its central status in 2012. NPO CJSC NSD is the largest depository in terms of value and number of securities, defined as valuable, that are being serviced.
Features of a settlement depository in the USA
The USA has a fairly developed depository system. National Securities Clearing Corporation is the largest US depository. The main objective of state depositories is to simplify the accounting and speed up the circulation of certificates and other securities, as well as reduce operational risks arising during settlements. The depositary ensures the safety of securities storage. He opens special accounts for clients in which he keeps records of their movements.
In the USA there is the concept of “American Deposit Receipts” (ADR). This is a document issued by the depository, which confirms the right to a certain package of depositary shares.
The system for working with ADRs greatly simplifies and speeds up the functioning of the depository system, since deposit receipts are traded on the stock market. One can replace 50 depositary shares, and those, in turn, can replace 500 shares of a foreign company. A special feature of ADRs is that they can only be traded on the American fund market.
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Hello everybody!
I’ll try to look at what will change, what will be new in the CD.
Depository activities- financial services related to the storage of securities certificates and/or accounting and transfer of rights to securities. A professional participant in the securities market carrying out depository activities is called
depositary. A person who uses the services of a depository for storing securities and/or recording rights to securities is called a depositor. The agreement governing their relationship is called a depository agreement (or a custody account agreement).
The depository performs quite a lot of operations, but among them the following key ones can be distinguished:
- Services for storing securities certificates- Securities can be stored in the depository’s vault; it is also possible to keep records of securities in intangible form in the form of entries in electronic registers.
- Services for accounting of rights to securities. The transfer of securities for storage to the depositary does not mean the transfer of ownership rights to these securities to the depository.
- Settlements for transactions with securities- carrying out operations on the exchange and over-the-counter markets.
- Dividend payment services- Accrual and payment of dividends, payment of income tax.
- Other services- depositories also offer other services, including securities lending, repo transactions, information services, etc.
What is NSD?
Non-bank credit organization closed joint stock company "National Settlement Depository" (NCO CJSC NSD)– the largest settlement depository in Russia, part of the MICEX-RTS Group. NSD services exchange and over-the-counter transactions with all types of equity securities of Russian issuers, and also provides settlement banking services, including cash settlements for transactions of financial market participants.
NSD– the head depository, providing storage of global certificates and depository accounting of 99% of corporate bond issues, issues of subfederal and municipal bonds. Serves 100% of transactions in the OFZ and Bank of Russia bonds market, more than 99% of exchange transactions in the corporate and regional bond market, most transactions in shares, as well as transactions with mutual funds and foreign securities.
What is DCC?
CJSC "DCC" – leading Russian settlement depository for shares. As a key link in the centralized settlement and depository system, DCC provides its clients with a full range of modern settlement depository services that correspond to international service practices: asset custody, settlement and clearing of transactions, corporate actions, information services. DCC carries out all forms of settlements on securities, including DPP (delivery versus payment), in national and foreign currencies.
Who will become the central depository?
On November 6, 2012, the Federal Service for Financial Markets (FSFM of Russia) assigned the status of a central depository to NPO CJSC NSD.
Let's see how depositories acted before and how they will act now:
Why are NSD and DCC merging?
The merger of NSD and DCC is a logical continuation of the process of integration of their shareholders - the MICEX and RTS exchange holdings, which in December 2011 formed the single MICEX-RTS exchange. The integration of two settlement depositories will contribute to the consolidation of post-trading infrastructure in Russia and will allow more efficient settlement of transactions with Russian securities.
What is the benefit of unification?
The integration of two settlement depositories will contribute to the consolidation of post-trading infrastructure in Russia and centralized settlement services for transactions with Russian securities. As a result of the formation of a single settlement depository, a reduction in the cost of settlements for participants in the Russian stock market is expected.
What accounts will be opened in the CD?
Securities accounts opened by the central depository.
1. The Central Depository opens owners' securities accounts valuable papers:
- the Russian Federation, constituent entities of the Russian Federation and municipalities represented by the relevant authorized bodies or organizations;
- Bank of Russia;
- professional participants in the securities market;
- management companies of investment funds, mutual funds and non-state pension funds;
- other persons, provided that the authority to submit instructions to conduct transactions on the relevant securities account is granted to a professional participant in the securities market.
- The Bank of Russia, if in accordance with Federal Law No. 86-FZ of July 10, 2002 “On the Central Bank of the Russian Federation (Bank of Russia)” it has the right to carry out trust management of securities;
- professional securities market participants engaged in securities management activities;
- management companies of investment funds, mutual funds and non-state pension funds.
4. The Central Depository opens securities accounts of a foreign nominal holder the following foreign organizations included in the list approved by the federal executive body in the field of financial markets:
- which are international centralized systems for recording rights to securities and (or) settlements on securities;
- which, in accordance with their personal law, are central depositories and (or) carry out settlements on securities based on the results of trading on foreign stock exchanges or other regulated markets or carry out clearing based on the results of such trading. (Part 4 of Article 25 comes into force on July 1, 2012.)
6. The Central Depository does not have the right to refuse to open securities accounts provided for by this Federal Law to persons who meet the requirements of this Federal Law and the conditions for carrying out depository activities of the central depository, except for cases provided for by federal laws.
7. The Central Depository has the right to open accounts that are not intended to record rights to securities, including an emission account and an account of unidentified persons.
The most interesting thing is what will change for foreign investors:
Will it be possible to open foreign nominee holder accounts in a CD?
Yes. The Law on the Central Depository provides for the opening of a foreign nominee account for foreign organizations included in the list approved by the federal executive body in the field of financial markets (FFMS), which:
- are international centralized systems for recording rights to securities and (or) settlements on securities;
- are, in accordance with their personal law, central depositories and (or) carry out settlements on securities based on the results of trading on foreign stock exchanges or other regulated markets or carry out clearing based on the results of such trading.
Will foreign institutional investors be able to open nominee accounts with a CSD?
No. Foreign organizations that are not international centralized systems for recording rights to securities and (or) settlements on securities and central depositories, not included in the list approved by the Federal Financial Markets Service of Russia, will have the right to open a nominee account in other Russian depositories, in accordance with Art. 8 of the “companion law” (No. 415-FZ of December 7, 2011).
What is changing due to the adoption of the CD law?
Main changes related to the CD Law:
- the possibility of opening a foreign nominee account for foreign central depositories;
- recognition of NSD as an “eligible depositary” under Rule 17f-7;
- the obligation to exchange information and documents in electronic form during the interaction of the central depository with its clients and registrars;
- opening a personal account of a nominal holder of a central depository in the registers excludes the possibility of opening personal accounts of a nominal holder for other depositories;
- restrictions on the types of securities accounts opened by the CD for depositors;
- carrying out transactions in the register on the personal account of the nominal holder of the central depository on the basis of counter orders;
- provision by the central depository of services for storing a backup copy of the register of owners of registered securities;
- reconciliation of entries on the personal account of the nominal holder of the central depository in the register, correction of erroneous entries on the personal account of the nominal holder of the central depository only with the consent of the Central Depository;
- confirmation by the central depository of data on the owners of securities for the exercise of rights under securities;
- provision by the central depository of permanent access for depositors to the data of their securities accounts in electronic form.
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General provisions
This user agreement (hereinafter referred to as the Agreement) must be read by anyone who intends to use the information posted by the Non-Banking Credit Organization Joint Stock Company "National Settlement Depository" (hereinafter referred to as the Central Depository) on its official website (hereinafter referred to as the Site) in the section "CCI News" (hereinafter referred to as Information).
The user of the Site may be any person interested in receiving Information (hereinafter referred to as the User).
By going to the “CSC News” section of the Site, the User thereby confirms that he is familiar with the Agreement and fully accepts all its provisions.
By concluding this Agreement, the User consents to the processing of his personal data, with the exception of actions for their distribution to third parties. The Central Depository undertakes to take all necessary measures to protect the User’s personal data from unauthorized access, modification, disclosure or destruction.
Providing access to Information
In the section of the Site “CCI News”, the Central Depository publishes information (with the possibility of copying and transferring it) related to the exercise of rights under securities, received by it from issuers of securities or persons liable for securities. This section of the Site also contains other information obtained from open sources, including those published by issuers of securities. The information is posted in the form of a news feed, which is updated on working days of the Central Depository on-line from 9:00 to 18:00.
Website of the Central Depository www.. If it is impossible to access the Site, the User notifies the Central Depository of this by sending a letter in free form to the email address [email protected].
The User does not have the right to use the received Information to prepare information products distributed by him on a paid basis, as well as distribute the data contained in information messages on a paid basis.
A user who wishes to receive an additional service in the form of a newsletter must subscribe by following the instructions on the home page of the Site.
Disclaimer
The Central Depository is liable in accordance with the legislation of the Russian Federation for distortion of information received from the issuer and/or the person obligated under the securities.
The User is responsible for failure to comply with the terms of this Agreement, rules and instructions posted on the Site.
The User is responsible to third parties for his actions related to the use of Information obtained on the Site, including if such actions lead to a violation of the rights and legitimate interests of third parties, as well as for compliance with the law when using the Site.
The Central Securities Depository is not responsible: for the result and/or usefulness of the use of the Information; for direct or indirect damage caused to the User during the period of providing access to the Information, including those incurred as a result of errors, omissions, interruptions in work, deletion of files, changes in functions, defects, delays in the transfer of data and similar events that did not occur through the fault of the Central Depository; for the benefit lost by the User; for the quality of the Internet when accessing the Site.
The Central Securities Depository does not provide any guarantees or conditions regarding the suitability of the Information for the specific purposes of the User.
Resolution of disputes
The Central Depository has the right to conduct an audit of the use and distribution by any person of the Information posted in the section of the Site “CCI News”. If facts of unauthorized use or dissemination of Information by the User are detected, the Central Depository reserves the right to seek judicial protection of its rights, including claims for compensation of losses and protection of business reputation.
It is assumed that all disagreements between the parties to the Agreement will be resolved through negotiations. If the disagreement cannot be resolved through negotiations, the issue is referred to the judicial authorities.
Final provisions
All rights to the Site and the Information posted on it belong to the Central Depository.
The Central Depository has the right to unilaterally change the structure of the site pages, the composition and volume of posted Information.
At the same time, the Central Depository undertakes to promptly inform the User of any changes in the procedure for posting and/or access to Information by publishing a corresponding notice on the Site.
The User undertakes not to take any actions that may lead to interruptions in the functioning of the Site, including actions that are associated with an increased load on the Site.
Issues not regulated by this Agreement shall be resolved in accordance with the legislation of the Russian Federation.
I agree with the conditions
"National Settlement Depository" (NSD) - a Russian non-banking credit organization, the central depository of Russia, a professional participant in the securities market, carrying out depository activities. It is part of the Moscow Exchange Group and specializes in providing depository, settlement banking and related services to financial market participants. NSD is the central depository of the Russian Federation and carries out servicing of both securities provided for by Federal Law dated December 7, 2011 No. 414-FZ “On the Central Depository”, and other Russian and foreign securities. The status of a central depository was assigned to the Federal Financial Markets Service of Russia by Order No. 12-2761/PZ-I dated November 6, 2012. The largest depository in Russia in terms of the market value of issued securities accepted for servicing. Full name - Non-bank credit organization joint stock company "National Settlement Depository". Headquarters - in Moscow.
Story
The National Depository Center (NDC) was established on January 21. The NDC was created as the main depository for servicing the government securities market, and at the end of March of the year began to carry out this mission. In the same year, NDC began working with corporate, subfederal and municipal securities. Having achieved a leading position in the market of debt instruments of Russian issuers, NDC began to rapidly increase the volume of transactions with shares, investment shares and Eurobonds, becoming the largest in terms of assets in custody and the only settlement depository in Russia servicing all types of Russian equity securities.
Owners and management
The majority shareholder of NSD is Moscow Exchange OJSC (99.997%). The remaining shares are owned by a number of banks and securities market participants. On June 30, 2011, a shareholder agreement was signed in relation to the non-profit organization NSD JSC, which secured the right of users to manage NSD and ensured a balance of interests of the majority and minority shareholders. In accordance with the shareholders' agreement, annually up to five large users of NSD's services can become its shareholders and receive rights to participate in management.
Chairman of the Board - Eddie Astanin. The Chairman of the Supervisory Board is Bella Zlatkis.
Activity
Central Depository
NSD is the central depository on the Russian stock market and provides securities services as a central depository in accordance with Federal Law dated December 7, 2011 No. 414-FZ “On the Central Depository,” as well as as a nominal holder of other Russian and foreign equity securities.
NSD carries out storage of global certificates and depository accounting of 100% of issues of federal loan bonds (OFZ), 99% of issues of corporate and regional (subfederal and municipal) bonds.
In 2014, the largest foreign depositories Euroclear and Clearstream received full access to the Russian securities market, providing foreign companies and funds with greater investment opportunities. In 2014, in accordance with FATCA requirements, NSD was registered with the US Tax Administration and received a global financial intermediary identification number.
The National Settlement Depository meets all of the requirements to be an “eligible depository” and meets the criteria set forth in Rule 17f-7 of the Investment Company Act of 1940.
Tax agent
Since 2014, NSD, in accordance with the Tax Code of the Russian Federation, has performed the duties of a tax agent when paying income on equity securities - shares and bonds of Russian issuers.
NSD, in established cases, calculates, withholds and transfers to the budget of the Russian Federation income tax and personal income tax in accordance with the provisions of the Tax Code of the Russian Federation, as well as international treaties and agreements governing taxation issues. NSD, as a depository, performs the duties of a tax agent when paying income on securities to foreign organizations, foreign nominee holders, as well as when paying dividends to Russian organizations on shares held in securities accounts of the owners.
Repository activities
From October 1, 2013, NSD begins to perform the functions of a repository for all types of transactions (repurchase agreements, agreements that are derivative financial instruments, concluded not in organized trading, as well as other types of agreements concluded under the terms of the general agreement (single agreement), defined in paragraph 6 Article 51.5 of the Federal Law “On the Securities Market”.
Repository of NPO JSC NSD:
- collects and registers information on derivative financial instruments and repurchase agreements concluded on the basis of master agreements. As part of the launch of the first stage of the repository, repo transactions and “currency swap” transactions are registered;
- maintains a register of registered contracts;
- provides confirmation of registered contracts to clients and the regulator;
- ensures the integrity and safety of information.
At the end of 2014, the number of repository clients reached 1,130 market participants, who collectively registered over 138 thousand reports on general agreements and transactions.
Payment system
The NSD Payment System was assessed as systemically important by the Bank of Russia. The audit determined the degree of its compliance with international standards - the Principles for Financial Market Infrastructures, developed by the Committee on Payment and Settlement Systems of the Bank for International Settlements and the International Organization of Securities Commissions (CPMI-IOSCO) and recommended by the Bank of Russia for compliance by significant payment systems. Based on the results of the inspection, the Bank of Russia noted the high level of compliance of the NSD Payment System with the Principles for Financial Market Infrastructures. No principles have been identified that are not observed by the NSD Payment System.
Number of money transfers to customer bank accounts for 2014: 998.39 thousand.
The volume of money transfers to customer bank accounts for 2014 in Russian rubles: RUB 298.06 trillion.
The volume of money transfers to customer bank accounts for 2014 in foreign currency (in ruble equivalent): RUB 9.62 trillion.
Corporate actions and corporate information
NSD is one of the initiators of reforming the system of corporate actions in Russia. The reform involves the creation of a modern mechanism for corporate actions that meets international standards, in particular:
- creation on the basis of the central depository of a source of reliable information on corporate actions, which will be provided with the information necessary for carrying out corporate actions in a structured form;
- legalization of electronic voting (e-voting and proxy-voting) for use at meetings of owners of shares, shares, mortgage certificates of participation and bonds;
- creating a system for distributing corporate information and carrying out the entire range of corporate actions centrally through the institutions of the accounting system.
In August 2014, NSD developed and launched a fork of the Nxt system, available under the MIT license - the e-proxy voting service. Professional investors were able to send voting instructions electronically through their banks. By the end of 2014, more than 220 shareholder meetings were held with the possibility of using the electronic voting service.
NSD, together with the NFA, is developing a Price Center project, which calculates fair prices for bonds, including mortgage bonds, according to a methodology agreed with AHML.
Electronic matching services (search for potential counter instructions) have been launched: NSD provides clients with the opportunity to receive information about the presence of potential counter instructions - unmatched instructions that differ from the original one by one field. To increase reliability and control on the client's part, a Hold & Release mechanism is in place.
Number of Bank of Russia repo transactions with a basket of securities: 2013 - 3,727; 2014 - 8858 pcs.
Volume of Bank of Russia repo transactions with a basket of securities: 2013 - 14.04 trillion rubles; 2014 - 57.22 trillion rubles.
Numbering Agency and Pre-Local Operating Unit (pre-LOU)
NSD acts as the National Numbering Agency for Russia and the Substitute Numbering Agency for the CIS countries, assigning ISIN and CFI identification codes to securities and other financial instruments issued or registered in Russia and other CIS countries. NSD also has the status of a preliminary Local Operating Unit (pre-LOU). Pre-LEI codes assigned to NSD are published on the website of the international center GLEIF (Global Legal Entity Identifier Foundation), authorized by the global regulator ROC (Regulatory Oversight Committee) to maintain an international database of pre-LEI codes, and are recognized by regulators, market participants and pre-LOUs of other countries .
The Regulatory Oversight Committee (ROC), the supervisory body that regulates and monitors the functioning of the global legal entity identification system (GLEIS), decided to integrate NSD into GLEIS as a globally recognized pre-LOU (preliminary Local Operating Unit), confirming NSD's compliance with all principles required for pre-LOU.
In 2014, a representative of NSD was elected for the third time to the Technical Committee of the Service Bureau of the Association of National Numbering Agencies.
NSD assigned 186 pre-LEI codes as pre-LOU. NSD itself also received a pre-LEI code, which identifies NSD in its daily reporting of the codes assigned to them. In September 2014, a specialized portal dedicated to international pre-LEI identifiers of financial market participants was launched: www.lei-code.ru.
International activity
Integration into the global financial infrastructure
Eurasian integration
Compliance with international standards
The international rating agency Thomas Murray, which specializes in assigning ratings to infrastructure financial organizations, confirmed NSD’s rating at AA-, which corresponds to an extremely low level of risk, with a “stable” outlook.
International Advisory Committee
At the beginning of 2012, the International Consulting Committee (ICC) was created under NSD, which included representatives of the eight largest international custodial and investment banks. The Committee was created so that NSD could use global experience to improve the infrastructure of the Russian securities market and NSD services as a central depository.
Memoranda of Understanding
| A country | Organization | date of signing |
|---|---|---|
| China China | China Central Depository and Clearing Co., Ltd. | June 24, 2015 |
| Türkiye Türkiye | Central Depository of Turkey Merkezi Kayıt Kuruluşu A.Ş. (MKK) | November 7, 2014 |
| Armenia Armenia | Central Depository of Armenia | January 10, 2014 |
| Kyrgyzstan Kyrgyzstan | CJSC "Central Depository" | September 12, 2013 |
| Romania Romania | Depositarul Central S.A. | May 30, 2013 |
| Mongolia Mongolia | Mongolian Securities Clearing House and Central Depository | May 28, 2013 |
| Luxembourg Luxembourg | REGIS-TR, the European Trade Repository | May 22, 2013 |
| Poland Poland | Krajowy Depozyt Papierów Wartościowych S.A. | May 15, 2013 |
| Belarus Belarus | Republican Unitary Enterprise "Republican Central Securities Depository" (RUE "RCSD") | April 4, 2013 |
| Austria Austria | Oesterreichische Kontrollbank Aktiengesellschaft (OeKB) | March 18, 2013 |
| The Republic of Korea The Republic of Korea | Korea Securities Depository | May 2, 2012 |
| Ukraine Ukraine | PJSC National Depository of Ukraine (NDU) | February 22, 2012 |
| Japan Japan | Japan Securities Depository Center, Incorporated | September 18, 2011 |
| Hong Kong Hong Kong | Hong Kong Securities Clearing Company Limited (HKSCC) | September 17, 2009 |
| India India | Central Depository Services Limited (CDSL) | April 8, 2008 |
| India India | National Securities Depository Limited (NSDL) | April 8, 2008 |
| Azerbaijan Azerbaijan | CJSC National Depository Center of the Republic of Azerbaijan (NDC) | September 7, 2007 |
| Uzbekistan Uzbekistan | Central Securities Depository of the Republic of Uzbekistan | February 9, 2006 |
Membership in other organizations
- European Central Securities Depository Association (ECSDA)
- Association of National Numbering Agencies (ANNA)
- Association of Central Depositories of Eurasia (ADCDE)
- "National Stock Association (self-regulatory non-profit organization)"
- Russian National SWIFT Association (ROSSWIFT)
- Non-profit partnership "Community of users of information security standards ABISS"
- World Forum of CSDs (WFC)
- International Securities Services Association (ISSA)
- SWIFT SCRL (Society for Worldwide Interbank Financial Telecommunication)
Performance indicators
Risk management
The main objective of the risk management system at NSD is to ensure the reliability of operation and stable development of NSD's main activities - the central depository, trilateral services, payment system, repository and information center.
- The Thomas Murray rating agency confirmed NSD's rating at AA-, with a stable outlook, which corresponds to an extremely low level of risk.
- PricewaterhouseCoopers conducted an operational audit in accordance with ISAE 3402 standard. The internal control systems used in the provision of custody, clearing and repository services to NSD were analyzed.
- In 2014, NSD underwent an independent assessment of the level of compliance with the Principles for Financial Market Infrastructures (CPMI-IOSCO Principles). The analysis showed that NSD generally complies with the Principles for Financial Market Infrastructures, and there are no principles that it does not comply with.
- The Bank of Russia assessed the activities of the NSD Payment System for compliance with the Principles for Financial Market Infrastructures (CPMI-IOSCO), which resulted in a high level of compliance with the Principles.
- KPMG conducted an audit of NSD's business continuity system, which resulted in an assessment of the maturity level of NSD's business continuity system, and also formed a roadmap for the development of the business continuity system.
