Russian Central Bank to update requirements for foreign depositories from 2025

MOSCOW. Nov 19 (Interfax) - The Central Bank of Russia will introduce new criteria for foreign organizations that account for securities rights starting from January 1, 2025.

According to the guidance published on the regulator's website, Russian depositories, when choosing a foreign organization for securities accounting, should pay attention to its status or the rules for providing services.

The Central Bank permits the opening of accounts with foreign organizations if they are either a central depository or an international centralized securities rights accounting system, or if they settle securities transactions based on the results of exchange trading.

If the counterparty of a Russian depository does not have such a status, it must meet the following requirements:

The organization must ensure equality between the number of securities it reflects on the Russian depository's account and the number of the same assets held in its interest on the account of a higher-level foreign accounting institution.

The legislation of the foreign state must not include the assets on the Russian depository's account in the bankruptcy estate of the accounting organization if it is declared bankrupt.

The document also expands the geography of jurisdictions where accounting institutions with which Russian depositories can cooperate are registered. The list of countries has been supplemented by nations from the Asia-Pacific region, Africa, South America and the Middle East. However, membership in international associations is no longer a criterion for selection.

"The new requirements will help minimize infrastructure risks for the domestic accounting system and enhance protection of investors' interests," the Central Bank said.

The CBR published a draft of the corresponding guidance in June 2024.