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Corporate law and governance, financial transaction taxes

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Financial infrastructure and financial market regulation


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NSD to Consult Foreign Investors on Central Depositary

27.04.2012 18:49 / Interfax

National Settlement Depositary (NSD), part of MICEX-RTS Group, has established an International consulting committee (ICC) to act as advisory on Russian financial market post-trading infrastructure development, Head of NSD Eddie Astanin told the press on Friday.

NSD is the sole contender for Central Depositary in Russia.

Astanin said that today the committee includes eight top-ranking executives form major foreign companies, operating in the Russian market: JP Morgan Chase, UBS Investment Bank, BNP Paribas Securities Services, Nomura Securities, SEB, Bank of New York Mellon, KBC Securities, Pictet & CIE. “These companies represent a multitude of investors”, said Astanin.

“Such committees are in place at both Euroclear and Clearstream. They aim to develop client-oriented business as well as channel information to clients”, said Astanin.

The first committee session took place this week. According to Eddie Astanin, it was dedicated to an action plan for NSD to increase settlement efficiency in the Russian market and meet investor expectations, including NSD’s future Central Depositary function.

Astanin added that the agenda also covered nominee account opening, standards and practices of corporate actions, including dividend payment and taxation. It was said that rouble settlement should be developed in foreign investor trades with Russian securities, including BESP (Banking Electronic Speed Payment System), as this boost the attractiveness of the national market.

“Following up on the results of our session, we will send the gist of all points to the Russian regulators for their information. This will probably happen in late May”.

ICC member, Managing Director at International Advisory Services Alan Meyers told the press: “We left our corporate interests outside and talked only about what the market needs”.

Earlier, Russian market participants, especially custodians, expressed fears that opening nominee accounts for international central depositaries such as Euroclear and Clearstream at the Russian Central Depositary would cause Russian securities liquidity to drain abroad.

In a comment on liquidity drain fears, A. Meyers said: “Investors are big egotists, always going where it’s most convenient. They care about effective and safe investment first. If ICSDs open nominee accounts in the near future, Russia faces the risk of investors taking the easy route and choosing to work through these organizations”.

He also added that the best safety measure for Russia is opening the market, showing the world that there are no bubbles there. “Investors have to have a choice where they want to settle. The important part is domestic investors such as Sberbank and VTB remaining in the local market, doing their settlement here”, said Meyers. He mentioned Japan as an example, where major local investors help preserve the local market and its liquidity.

Trading infrastructureProject Group №1Eddie Astanin