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MOEX to Switch USD Eurobonds to Т+2

21.10.2015 12:00 / Vedomosti

Moscow Exchange plans to switch Eurobond trading to Т+2, Stock Market MD Anna Kuznetsova told the press. According to her, the exchange aims to boost Eurobond trading, “also offering participants the opportunity to use other assets as collateral in Eurobond trades”.

There is a limited number of these securities on the exchange – 10 issues of OFZs, 28 corporate and 14 VEB Eurobonds (only USD-nominated bonds are eligible for the new T+2 settlement). The exact date of the Т+2 switch is yet to be announced. Kuznetsova says the exchange polled the participants to gauge the settlement period and IT compliance with the new model. “As the timeframes become clearer, more announcements will follow”, said Kuznetsova.

“The switch to Т+2 settlement will make Eurobond trading much simpler, since the period will be synchronized with OTC. The seller will no longer have to pre-deposit the securities – two days are enough to transfer them from Euroclear”, says Konstantin Glazov, Head of Bond Trading at Aton. OTC Eurobonds are traded in Т+2. Today, in order to buy a Eurobond on the exchange, you have to deposit, take it from Euroclear and deposit in the National Settlement Depositary (takes roughly one day), only then you can sell it. Now that exchange and OTC settlement is in sync, the procedure can go through the exchange, because of partial deposit and using other assets as collateral”.

In September 2013, Т+2 was launched for shares, Russian Depositary Receipts, investment fund shares, mortgage certificates and foreign ETFs. The model was also used for OFZ settlement, however in Spring 2015, sovereign bonds were switched to Т+1.

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