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24.01.17

National Settlement Depository Reports 2016 Results

  • The value of assets under custody grew 15% and reached RUB 36.4 trillion;
  • The number of foreign security issues serviced by NSD almost doubled and reached 5.1 thousand;
  • The value of Federal Treasury repos with the use of NSD collateral management service increased two-fold to RUB 37.4 trillion;
  • The value of transactions registered with the NSD Repository amounted to RUB 403.7 trillion. 

Central Securities Depository

In 2016, the value of securities under custody reached RUB 36.4 trillion; this was a 15% increase as compared with 2015 (RUB 31.7 trillion). The number of security issues (ISIN) serviced by NSD rose one-third (from 9.2 thousand in 2015 to 11.9 thousand in 2016). The number of foreign security issues almost doubled – up to 5.1 thousand (2.7 thousand in 2015).

The value of federal loan bond (OFZ) balances in foreign nominee accounts increased 50% as compared with the previous year and reached RUB 1.5 trillion (RUB 1 trillion in 2015).

In 2016, the value of regional and corporate bond issues accepted for servicing increased dramatically, reaching RUB 5 trillion (+70% against 2015).

In August, NSD began servicing a new Russia’s securities market instrument – commercial bonds. In 2016, 6 commercial bond issues worth more than RUB 3,3 billion and 2 bond issue programs for more than RUB 100 billion were registered. 

The number of inventory operations in the central securities depository (CSD) increased 9% – 2.7 million operations in 2016 compared with 2.4 million in 2015, including 2.14 million on-exchange trades (+9%; 1.95 million operations in 2015) and 516.4 thousand OTC trades (489.1 thousand operations in 2015).

In 2016, the value of off-exchange DVP transactions grew substantially and amounted to RUB 4.5 trillion. This was almost twice as high as in 2015 (RUB 2.5 trillion).

The most important event of the year was the successful placement of a US$ 3 billion Eurobond issue by Russia’s Ministry of Finance (held in two phases in May and September). For the first time in the Russian financial market’s history, it was conducted solely via the national infrastructure; NSD placed the issue as the Head Depository.

SWIFT assigned Premier certification status to NSD’s service bureau. Compliance with Premier requirements allows NSD to guarantee its clients maximum reliability and safety when using NSD for SWIFT system work. NSD became the first Eastern European service bureau to achieve this designation. 54 market participants have been connected to NSD’s service bureau.

Collateral Management System (CMS)

In 2016, the aggregate value of repo transactions serviced by the NSD collateral management system slightly increased compared with the previous year (RUB 46.3 trillion in 2015) and amounted to RUB 47.3 trillion.

However, the value of repo transactions with the Federal Treasury performed with the use of the NSD CMS increased more than twice YoY and exceeded RUB 37.4 trillion (RUB 15.5 trillion in 2015). The number of transactions exceeded 2.2 thousand; this was higher than in 2015 – 1.2 thousand transactions. Meanwhile, in 2016, the value of repo transactions with the Bank of Russia conducted via the NSD collateral management system decreased to RUB 9.9 trillion (RUB 30.8 trillion in 2015).

192 market participants use the NSD collateral management system.

In 2016, the Moscow Exchange Group’s project focused on repos with the repo general collateral certificate (GCC) was an important one for the company. NSD’s role is to keep GCCs and basic assets, and to provide collateral management services to automatically select clients’ securities for the pool on the basis of selected parameters and for margins calls.

In December 2016, NSD and Bloomberg began testing a new service allowing collateral management when processing OTC repos. The new service will expand the number of users of NSD’s CMS service and will allow new repo transactions to be processed in a similar way to the functionality available for repos with the Bank of Russia and the Federal Treasury. The commercial launch of the service is scheduled for March 2017.

Repository

In 2016, the number of trades registered with NSD’s Repository reached 2.4 million (as compared with 454 thousand in 2015). Such growth was attributed to the October introduction of mandatory reports on all OTC repos and derivative transactions, including those concluded beyond master agreements. The value of registered trades was RUB 403.7 trillion (-9%; RUB 441.3 trillion in 2015).

Top 3 instruments in terms of the number of transactions reported in 2016:

Instrument 2016 2015
OTC repos 1,917,051 21,046 (3)
FX forwards 340,283 239,017 (1)
FX swaps 148,679 110,896 (2)

It should be noted that FX options tripled (from 3.4 thousand to 10.8 thousand), and commodity derivatives increased two-fold (from 2.2 thousand to 4.6 thousand).

Top 3 instruments in terms of the value of transactions reported in 2016 (RUB trillion):

Instrument 2016 2015
FX swaps 260 234.1
OTC repos 83.7 69.4
FX forwards 28.8 18.2

The Repository 2.0 project was completed; its key tasks included transitioning clients to special software for reporting transactions (WEB-client, File Gateway), facilitating reporting procedures, abandonment paper power of attorney forms, and switching to a “custodian” fee model where Reporting agents (messages senders) are the payers. In Q4 2016, new services were launched; among these were format and logical check, automatic termination of contracts, and nonstandard data provision from the Contracts register.

Corporate Actions (CAs)

On 1 July 2016, an important event took place – a new legal framework for corporate actions reform went into effect. From that moment to the end of the year, more than 950 voluntary corporate actions were conducted via NSD in the new mode; in particular, shares totaling more than RUB 4.6 billion were repurchased.

In total, approximately 15 thousand corporate events were processed in 2016; this is 13% more than in 2015 (13.2 thousand).

In 2016, more than 3.2 thousand shareholder meetings were held using the e-proxy voting technology based on ISO 20022 (497 meetings were held in 2015). 7.9 thousand corporate actions involving foreign securities were held in 2016; this was 50% more than in 2015 (5.3 thousand actions).

During the reporting year, NSD completed a key phase in developing electronic voting on general meetings via internet web-site (e-voting). As part of the e-voting project to identify securities holders, the Ministry of Telecommunications approved NSD’s connection to the Ministry’s services, allowing remote identification of persons on the Internet (the Integrated Identification and Authentication System (ESIA).

In April, NSD was the first company in the world to develop and successfully test a blockchain-based technology – a prototype for the e-proxy voting system. The new development was recognized by the global financial industry; in particular, it was nominated for numerous international awards. In 2017, NSD will continue developing a commercial version of the new technology. 

Information services

In 2016, the average monthly number of commercial information services users increased 2.9 times, reaching 362 users. The number of requests for basic information on securities and issuers on NSD’s website also rose – from 385.1 thousand requests in 2015 to 878.4 thousand in 2015 (+228%).

In 2016, NSD successfully completed the initial stages of its work on launching nsddata.ru: the Corporate Information Center’s news feed was organized, the Securities section offering free access to basic information about securities serviced by NSD was launched, and a data providing service (API) was introduced. In 2017, nsddata.ru will become a single point of access to all NSD information services and will provide users with the newest customization and data import options.

NSD formed its Valuation Center: the membership of its expert council and the method for calculating fair prices were approved; the Company initiated an accreditation procedure with the Bank of Russia. The number of users of NSD’s Valuation Center increased more than 2 times in 2016, reaching 53. Due to the expanded channels for distributing the Valuation Center’s data via Thomson Reuters, Interfax, and Cbonds, the geography of the Center’s clients now includes new jurisdictions, such as the USA, the UK, Hong Kong, India, and Singapore.

NSD began placing information about concession agreements and issuer-concessionaire activities on its website. Information on this market segment is available in the Depository Information and Reference Complex (DISK) of NSD.

Payment and settlement system

In 2016, the value of money transfers remained the same (compared with 2015) and stood at RUB 355 trillion.

In the reporting year, the Company launched a new service to process client cross-currency settlements – payment versus payment (PVP-1). PVP is a cash settlement principle that increases the reliability of settlements. It assumes that a participant’s cash transfer in one currency occurs if another participant’s cash transfer in another currency takes place simultaneously.

In 2016, NSD began providing a periodic cash transfer service using the «Bank client» system or SWIFT. Pursuant to a standing order, every day, NSD carries out instructions to transfer cash from client bank accounts on the basis of certain selected events, sums, and bank details, as indicated in the order.

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

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

In 2016, NSD assigned 1,233 ISINs and CFIs to Russian financial instruments (+23% YoY); in addition, as a substitute numbering agency, it assigned 160 codes.

As pre-LOU, NSD assigned 136 new LEIs; the number of serviced codes increased 30% (up to 835). The Company also verified 407 LEIs.

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