NSD receives central depositary status
MOSCOW. Nov 6 (Interfax) - CJSC National Settlement Depositary (NSD), which is part of the Moscow Exchange MICEX-RTS group, has officially received central depositary status.
"Yes, we signed it," head of the Federal Financial Markets Service (FFMS) Dmitry Pankin told Interfax when asked if the FFMS had signed the corresponding order.
According to an FFMS press release, the regulator assigned NSD central depositary status on November 6. This was the last link in the creation of a central depositary on the Russian financial market.
The presence of a central depositary will make it possible to register titles to securities in accordance with international standards, thereby substantially reducing risks for market participants. The system for registering titles to securities will also become more transparent and understandable for citizens and investors, the FFMS reported.
"The opening of accounts for foreign entities, in which securities can be calculated in the interests of other entities, should lead to a reduction in costs associated with foreign investor access to the Russian financial market," the press release said.
The federal law 'On the central depositary,' which establishes the features of the legal position and activities of the central depositary, was adopted at the end of last year.
The creation of a central depositary in Russia has been under discussion for more than a decade. The presence of such an institution is necessary to boost the inflow of foreign investment to Russia. According to the SEC's Investment Company Act, funds have the right to directly invest in the equities of another country only if the country has a central depositary that meets certain requirements.
Following the merger of the MICEX and RTS indexes, the NSD became the sole contender to act as Russia's central depositary.
According to market players, one of the dangers coinciding with the establishment of a central depositary in Russia could be an outflow of liquidity on Russian equities because of the direct access for payment systems such as Euroclear and Clearstream to the domestic market.
As a result, the Russian authorities arrived at a compromise: Euroclear and Clearstream will be able to work directly with state and corporate issues until July 1, 2014.
