“Let’s be optimistic about the Centralized Depositary Act being adopted by the State Duma during the autumn session”, FSFM Head Dmitry Pankin said at the Russian Securities investment forum on Tuesday.

Earlier at the same conference, MICEX CEO Ruben Aganbegyan mentioned that the bill has several unresolved issues, but these issues have to be cleared up during the summer session of the Presidential financial market committee, chaired by the Deputy Prime Minister, the Russian Federation Finance Minister Alexey Kudrin.

As reported, in the beginning of April, the National Association of Stock Market Participants proposed to Alexander Voloshin, Head of the MIFC Taskforce, a new concept of the Centralized Depositary. They also alerted him that solving the Centralized Depositary problem should not be delayed; delaying it can cause irreparable damage.

NAUFOR considers it vital to give the Centralized Depositary a legal basis for priority registration of title to clients’ securities before registrars. This priority and a special information exchange procedure between the Depositary and the registrars is key to the concept of CD, as it deals with the unclear legal status of depositary records as final proof of title, also allowing to overcome the current fragmentation of the Russian stock market.

For the purpose of the international financial centre in Moscow, it is important to provide comfortable conditions to global investors in Russia. These conditions should be as good as those of Russia’s competitors. The NAUFOR experts consider the Centralized Depositary role to be very significant in this process.

According to NAUFOR, the Act should provide opportunities for creation and acquiring the status of Centralized Depository by other clearing depositaries. The law should include schemes that guarantee equal access to the Centralized Depositary services for clearing depositaries belonging to other stock exchanges or trading floors. In the case of multiple Centralized Depositories, the law should clarify the interaction between them, creating a unified system of registering title to securities.

NAUFOR experts suppose that due to the absence of the Centralized Depositary, Russia is not very attractive for long-term foreign investment.

“It is about time the problem with final settlement within the Centralized Depositary is solved, any further delays will cause irreversible damage to the future of the financial market in Russia”, the NAUFOR warned in a letter to Alexander Voloshin, proposing amendments to the Centralized Depository Act.

Project Group №1, Ruben Aganbegyan, Alexei Kudrin, Dmitry Pankin, Alexander Voloshin