Russia's NSD loses income from depository services on NWF assets - law

MOSCOW. June 11 (Interfax) - The State Duma has approved a bill exempting the Finance Ministry from paying fees for depository services on securities purchased with National Wealth Fund (NWF) funds.

The savings on payments to the National Settlement Depository (NSD, part of Moscow Exchange Group) will amount to 1.39 billion rubles in 2025-2027.

The government submitted the draft law (no. 914321-8) to parliament in May.

"When managing financial assets where National Wealth Fund resources are placed, the central depository provides services to the Russian Finance Ministry free of charge," the amendment to the Budget Code says.

Current depository services for NWF securities are paid and operate through a scheme where the Finance Ministry interacts with VEB.RF, which in turn works with the NSD, the explanatory note to the bill says.

"As of January 1, 2025, the NWF securities portfolio reached 2.1 trillion rubles, with projected growth of another 0.36 trillion rubles by the end of 2027. The depository service tariff for the Finance Ministry is set at 0.02% annually of the portfolio amount, with corresponding commissions totaling 335.54 million rubles in 2024 and projected at 462.40 million rubles in 2025," it said.

The financial and economic rationale indicates that switching to free NSD depository services for the Finance Ministry could generate budget savings of 1.39 billion rubles in 2025-2027, with annual federal budget savings on depository services exceeding 430 million rubles.

"Given that NWF investments in securities receiving depository services are made for long terms of 25-27 years, the positive budget effect will persist for an extended period, until the 2050s," it said.

According to the NSD's 2024 report, the depository's total commission income reached 11.62 billion rubles, including 8.12 billion rubles from depository operations. The explanatory note said that the Finance Ministry paid 335.54 million rubles for NWF asset depository services in 2024, representing around 4.13% of the NSD's total depository revenue and approximately 2.89% of its annual commission income.

The NSD's 2024 net profit totaled 30.3 billion rubles, making NWF-related depository service payments equivalent to around 1% of revenue.

The law takes effect upon its official publication.