- The value of assets in custody grew 13% and reached RUB 38 trillion;
- The value of OFZ balances in foreign nominee accounts increased 52% YoY and reached RUB 2.1 trillion;
- NSD conducted the first transaction using a blockchain platform in Russia and settled commercial bonds;
- 613 shareholder meetings were held using the e-proxy voting technology.
Central Securities Depository services
In Q3 2017, the value of securities under custody reached RUB 38 trillion – this was a 13% increase compared with Q3 2016 (RUB 33.6 trillion). The number of foreign security issues serviced by NSD grew from 4.2 thousand in Q3 2016 to 7.5 thousand in Q3 2017 and reached 52% of all issues serviced; the amount of the issues was 5.3 trillion in ruble equivalent, including Eurobonds issued by Russia’s Ministry of Finance.
Two companies (TRINFICO Asset Management Company JSC and TRINFICO Property Management LLC) joined the centralized platform for UIT units record keeping and distribution developed by NSD. To date, five brokerage companies (nominees) and five asset management companies are using the platform.
The number of inventory operations in the central securities depository (CSD) increased 16% and reached 780.8 thousand operations in Q3 2017 (compared with 672 thousand in Q3 2016), including 609 thousand exchange trade operations (+12%; 545 thousand operations in Q3 2016) and 170 thousand OTC trade operations (+34%; 127 thousand operations in Q3 2016).
In Q3 2017, the value of off-exchange DVP transactions* grew substantially and amounted to RUB 1.9 trillion. This was 62% more than in Q3 2016 (RUB 1.2 trillion).
The number of transactions carried out using the new settlement services (Linked Transactions and Prioritization) continued to grow and reached 950 operations by the end of the third quarter.
The value of balances of Federal Loan Bonds (OFZ) in foreign nominee accounts amounted to RUB 2.1 trillion – this was a 52% increase compared with Q3 2016 (RUB 1.3 trillion).
Two commercial bond programs in a total maximum amount of RUB 10.3 billion and eight issues in a total amount of RUB 2.95 billion were registered. The aggregate nominal value of commercial bonds in circulation is RUB 6.05 billion.
In Q3 2017, NSD provided a blockchain-based settlement platform for issuing bonds of MegaFon, Russia’s leading mobile operator. Raiffeisenbank was the organizer and a buyer of the RUB 500 million bond issue.
The Collateral Management System (CMS)
The value of repo transactions which the Federal Treasury performed using NSD’s collateral management system reached RUB 13 trillion in Q3 2017 – a 25% increase compared with the same period in the previous year (RUB 10.4 trillion); the number of transactions amounted to 418. The value of repo transactions with the Bank of Russia performed using NSD’s CMS reached RUB 119.7 billion – this was less than in Q3 2016 (RUB 3,010.4 billion).
Given the rapid digitalization of financial technologies and the promotion of the servicing model, NSD plans to continue developing its platform focused on servicing on-exchange and OTC inter-dealer repo segments.
Increased client activity registered in the beginning of 2017 was seen again in the third quarter: the number of trades registered with NSD’s Repository exceeded 3 million (compared with 127 thousand in the same period of 2016). The value of registered transactions was RUB 125.7 trillion (RUB 99.5 trillion in Q3 2016).
In Q3 2017, the top 3 instruments in terms of the number of reported transactions included:
- FX forwards — 130,211;
- FX swaps — 40,798;
- OTC repos — 2,799,994.
For comparison, the top 3 instruments in terms of the number of reported transactions in Q3 2016 included:
- FX forwards — 82,187;
- FX swaps — 35,427;
- OTC repos — 4,179.
The number of Repository clients remained stable – 1,142 participants as of 31 October 2017.
In September 2017, NSD increased the length of the Repository’s business day to 24 hours to upgrade automation and to use STP. Moreover, NSD added notes to the message fields of the Web Client in order to facilitate interactions with the Repository.
In addition to the daily aggregated statistics, in the beginning of the third quarter, NSD clients got access to the monthly analysis of the structure of the register of contracts, including expanded information about the structure of repos and FX swaps for the first six and nine months of 2017, respectively.
The Repository’s formatting and logic check (FLC) service launched 10 months ago led to a substantial improvement in the quality of information submitted by clients to NSD’s Repository. The number of errors in transaction parameters reported by clients connected with the FLC service has been significantly reduced. As of the end of October, new algorithms for data quality checks were added to both free and paid FLC services.
Corporate Actions Center
3,422 corporate actions involving Russian securities were conducted in Q3 2017; this was 6% more than in Q3 2016 (3,232 actions).
3,790 corporate actions involving foreign securities were conducted in Q3 2017 – a 93% increase compared with the same period in 2016 (1,960 corporate actions).
The Moscow Exchange began using NSD’s e-voting service. On 14 September, MOEX shareholders (individuals and legal entities) took part in an extraordinary general meeting (held by absentee voting) and used the service for the first time. 73% of the EGM participants voted using e-proxy voting and e-voting services.
In Q3 2017, the number of information service users reached 369 contracts. The number of Valuation Center users increased 91% and amounted to 86.
NSD completed a large-scale project focused on transferring its information services to nsddata.ru, the Corporate Information Center’s new technological platform.
NSD’s new product range is based on a flexible service that provides for the customized exporting of information about securities and organizations related to securities and corporate actions to the client’s API NSD system; this system replaced SIR-NSD and SIR-NSD Light products. The new platform contains upgraded NSD DISC and NSD Valuation Center services, and also allows for the use of additional CSD services.
Starting 1 September 2017, NSD has initiated the publication of fair values of ruble-denominated bonds calculated based on a new methodology that incorporates the latest concepts for assessing fixed income financial instruments.
The new methodology was developed by NSD’s Expert Council for Prices with the involvement of the Interfax methodological group. The methodology uses the Central Securities Depository’s unique data on the distribution of securities across market participants; it more precisely assesses liquidity indicators which, in turn, have impact on fair value. The methodology fully meets IFRS13 requirements.
Payment and Settlement System
In Q3 2017, the value of money transfers grew 23% and reached RUB 101.6 trillion (compared with RUB 82.5 trillion in Q3 2016). The number of transactions reached 320.8 thousand – this was 4% more than in the same period of the previous year (307.4 thousand).
NSD is Russia’s largest settlement non-banking credit organization in terms of the scale of settlement operations, capitalization, and the number of serviced participants in financial markets; it is also a nationally important payment system.
National and Substitute Numbering Agency and pre-Local Operating Unit (pre-LOU)
NSD acts as Russia’s Numbering Agency and as the substitute numbering agency for the CIS countries, assigning ISINs and CFIs.
In Q3 2017, NSD assigned 385 ISINs and CFIs to Russian financial instruments; the number of qualified foreign securities amounted to 1,576 securities.
NSD also received the status of a pre-Local Operating Unit (pre-LOU); it signed a master agreement with the Global Legal Entity Identifier Foundation (GLEIF) and became a candidate for accreditation as a LOU. LEIs assigned by NSD are recognized by regulators, market participants, pre-LOUs, and LOUs of other countries.
In Q3 2017, NSD assigned 16 new LEIs and verified 92 LEIs.
In Q3 2017, NSD began disclosing LEI Level 2 Data. In accordance with GLEIF requirements, NSD developed and implemented a Level 2 format to transfer information about the parent companies of market participants with LEIs to GLEIF, and to make it available for free on NSD’s website.
In Q3 2017, four new users received technological access to SWIFT services via NSD; the total number of SWIFT service users was 62. The Service Bureau clients’ average daily traffic increased 47% compared with Q3 2016 and reached 11,715 messages per day.
NSD and Waves announced joint development of a blockchain platform for post-trade servicing of digital assets. According to the partners’ plans, the first prototype will be presented in 2018. The new platform architecture focuses on identifying the owners of cryptocurrency wallets, on accounting and safekeeping of tokenized assets that have occurred as part of ICOs, and on settlements. Project implementation depends on developing a relevant legislative framework.