National Settlement Depository Sums Up Q3 2016 Results

• The value of assets under custody grew 13% and reached RUB 33.6 trillion;
• NSD acted as the Head Depository for the Ministry of Finance’s additional placement of US$ 1.25 billion Eurobonds;
• NSD’s Valuation Center submitted documents for accreditation with the Bank of Russia.

In the third quarter of 2016, the value of securities under custody continued to grow and reached RUB 33.6 trillion; this was a 13% increase as compared with Q3 2015 (RUB 29.6 trillion). The number of security issues serviced by NSD rose by one third (from 8.2 thousand in Q3 2015 to 11 thousand in Q3 2016).

The number of inventory operations in the central securities depository (CSD) increased by 11% in the reporting period – to 672.5 thousand (608.5 thousand in Q3 2015), including 545.2 thousand operations on exchange trades (+11%; 490.2 thousand operations in Q3 2015) and 127.3 thousand operations on OTC trades (118.3 thousand operations in Q3 2015).

In Q3 2016, the value of off-exchange DVP transactions grew substantially and amounted to RUB 1.2 trillion. This was twice as many as in Q3 2015 (RUB 585.4 billion).

The value of federal loan bond (OFZ) balances in foreign nominee accounts increased by half (RUB 946.7 billion in Q3 2015) and reached RUB 1.4 trillion.

In September 2016, Russia’s Ministry of Finance placed a sovereign Eurobond top-up in the amount of US$ 1.25 billion. As in the previous placement, when the Eurobond issue was conducted for the first time solely by Russian infrastructure, NSD placed the new issue as the Head Depository.

SWIFT assigned the Premier certification status to NSD’s service bureau, making it the first Eastern European service bureau to achieve this designation. Compliance with Premier requirements allows NSD to guarantee its clients the maximum level of reliability and safety when using NSD for SWIFT system work.

Collateral Management System (CMS)

In Q3 2016, the value of repo transactions with the Federal Treasury performed with the use of the NSD collateral management system increased more than twice YoY and exceeded RUB 10 trillion (RUB 4.6 trillion in Q3 2015); the number of transactions stood at 495, this was higher than in Q3 2015 – 334 transactions. Meanwhile, the value of repo transactions with the Bank of Russia conducted via the NSD collateral management system amounted to RUB 3 trillion (RUB 8.1 trillion in the same period of 2015).

NSD implemented functionality which allows it to select securities to secure NCC’s clearing operations. This gives the option of replenishing individual clearing collateral, including stress and collective clearing collateral (guarantee funds).

Repository

In Q3 2016, the number of trades registered with NSD’s Repository reached 126.8 thousand (+17.6%; 107.8 thousand in Q3 2015). The value of registered trades was RUB 99.5 trillion (-5.5%; RUB 105.3 trillion in Q3 2015).

The largest number of transactions registered in Q3 2016 included contracts with the following types of instruments:

• Currency forward (82,187);
• Currency swap (35,427);
• OTC repo (4,179).

The similar situation was in Q3 2015:

• Currency forward (61,095);
• Currency swap (38,094);
• OTC repo (5,058).

In advance, since July 2016, the repository has implemented a mechanism to report on trades concluded beyond master agreements which are mandatory to report on starting as of 9 October 2016. For participants’ convenience, as part of the Repository 2.0 project, NSD allowed its clients not to indicate principle reporting agents and provide hard copies of power of attorneys.

Corporate Actions Center (CAC)

On 1 July 2016, the new legal framework for corporate actions reform came into force. Legislative changes assume the creation of a Corporate Information Center based on the CSD and the opportunity for securities holders to take part in corporate actions associated with their involvement in managing their companies and with the flow of securities and cash via depositories registering rights to securities.

In Q3 2016, 550 shareholder meetings were held using the e-proxy voting technology based on ISO 20022 (41 meetings were held during the same period of 2015). In addition, 9 repurchases of securities as part of a mandatory/voluntary offer were held; and more than 400 bids in the ISO 20022 format were processed by NSD. Prior, clients could participate in such actions by exchanging paper documents without the involvement of record-keeping institutions; this might cause risks of shareholder non-participation in these actions.

1,160 corporate actions on foreign securities were held in Q3 2016; this was twice as many as in Q3 2015 (562 actions).

Information services

In Q3 2016, the number of requests for basic information on securities and issuers on NSD’s website rose more than 2 times – to 227.5 thousand requests (98.2 thousand in Q3 2015). Meanwhile, the number of subscribers for commercial information services tripled YoY.

NSD began placing information on concession agreements and concessionary issuers’ operations on its website. Information on this market segment was added to NSD’s DISC (Depository Information Service Center).

In the third quarter of 2016, NSD officially formed its Valuation Center: the composition of its expert council and the method for calculating fair value were approved; the Company initiated a procedure for accreditation with the Bank of Russia. The number of users of NSD’s Valuation Center increased 2.5 times during 2016.

Payment and settlement system

In Q3 2016, the value of money transfers slightly declined (-8%) against the same period of 2015 and reached RUB 82.6 trillion (RUB 89.7 trillion in Q3 2015).

National Numbering Agency and pre-Local Operating Unit (pre-LOU)

NSD acts as Russia’s Numbering Agency and the substitute numbering agency for the CIS countries, assigning ISINs and CFIs.

In Q3 2016, NSD assigned 258 ISINs and CFIs to Russian financial instruments; in addition, as a substitute numbering agency, it assigned 6 more codes.

In Q3 2016, NSD as pre-LOU assigned 34 new LEIs and verified 94 LEIs.