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Duma Passes Central Depositary Act

17.11.2011 18:03 / Rossiiskaya gazeta

The Central Depositary bill has been passed by the State Duma in the third reading.

The CD is a non-bank depositary with a minimal capital amount of RUB 4bn. The CD has the right to ensure liability risk.

The CD has an exclusive right to open nominee accounts at registrars for listed securities.

The Act also provides a daily security accounts reconciliation between the Central Depositary and the nominee account at the registrar. In case of discrepancy, precious reconciliation results are deemed correct. The registrar must verify shareholder positions with the CD prior to disclosure to the issuer or the shareholders.

The CD status will be granted by the Federal Financial Markets Service (FFSM) according to the procedure approved by the Ministry of Finance.

Central Depositary cannot be managed by state officials, including the Central Bank of Russia.

Today, the only contender for the status of CD is the MICEX depositary CJSC National Settlement Depositary.

CD reorganization is only allowed under approval from FFSM and the Central Bank, voluntary liquidation of the CD is also forbidden.

The CD is restricted from acting as Central Counterparty or lending funds or securities.

The CD shall have a Member Committee in place comprised of no less than ? of all clients. The committee controls the monopoly raising of Central Depositary fees.

If the Committee vetoes a rise in fees, the Board of Directors can pass the amended fees only with a 2/3 vote in favour.

Enacted 1 January 2012, the Act allows the Central Depositary another year to open nominee accounts at registrars.

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