National Settlement Depository has released its results for Q2 2018. In Q2, the value of securities under custody reached RUB 42.4 trillion – this was a 20% increase as compared with the same period of 2017 (RUB 35.5 trillion). The number of foreign securities issues (ISIN) serviced by NSD grew 63% – from 6.7 thousand to 10.9 thousand.
The total number of securities issues serviced by NSD grew 34% – from 13.54 thousand in Q2 2017 to 18.14 thousand in Q2 2018.
In Q2 2018, the total number of companies which joined the centralized platform for record keeping and distributing UIT units reached nine brokerage companies/nominees and seven asset management companies. NSD and ARQA Technologies completed the complex test of the integrated solution of the UIT platform with QUIK software. Investors will be able to conduct UIT unit transactions on the primary market via QUIK terminals.
The number of inventory operations in the CSD increased 17% Y-o-Y and reached 829 thousand operations in Q2 2018 (compared with 708 thousand in Q2 2017), including 640 thousand exchange trade operations (+15%; 555 thousand operations in Q2 2017) and 190 thousand OTC trade operations (+23%; 154 thousand operations in Q2 2017).
In Q2 2018, the volume of DVP transactions grew to RUB 2.4 trillion; this was 36% more than in Q2 2017 (RUB 1.7 trillion).
There was a stable interest of NSD’s clients in using the new services (linked transactions and instruction prioritization). In Q2 2018, the total number of operations involving these services amounted to 1,413.
In Q2 2018, two commercial bond programs in a total maximum amount of RUB 30.5 billion and eight commercial bond issues in a total amount of RUB 1.73 billion were registered. Ten commercial bond issues worth RUB 1.94 billion were completed.
National Settlement Depository received the status of the authorized depository of Belarus which allows NSD to record the rights to government securities issued by the Ministry of Finance (on behalf of the Republic of Belarus) and to expand the range of NSD services provided to clients in CIS markets.
In Q2 2018, NSD together with market leaders – MTS, Russia’s leading telecommunications operator, and Sberbank CIB, Sberbank’s corporate investment business – for the first time in Russia placed commercial bonds denominated in rubles and based on blockchain with cash settlements. This was the first transaction in the Russian market which gave blockchain the status of an industrial technology which ensured confidentiality and accelerated securities settlements.
Also, in Q2 2018, NSD and Sberbank CIB announced the intention to test an Initial Coin Offering (ICO) technology at the Bank of Russia’s regulatory platform.
Corporate Actions (CAs)
In Q2 2018, 2,039 meetings of security holders were held using e-voting technology. 87 repurchases of shares and 12 corporate actions to exercise the pre-emptive right to purchase shares were also initiated. In Q2 2018, the total value of repurchased shares reached RUB 8.3 billion.
Totally, 4,981 corporate actions involving Russian securities were conducted in Q2 2018 (5,117 actions in the same period of the previous year). In Q2 2018, the number of corporate actions involving foreign securities grew 61% due to the increase in the number of securities issues serviced by NSD (from 4,102 issues in Q2 2017 to 6,592 ones in Q2 2018).
In Q2 2018, the amount of payments on Russian securities was RUB 4.6 trillion (RUB 3.4 trillion in Q2 2017). The amount of payments on foreign securities reduced 10% to RUB 365 billion (as compared with RUB 405 billion in Q2 2017).
In Q2 2018, major Russian issuers, such as the Moscow Exchange, IC Russ-Invest, NLMK, Rostelecom, Alrosa, and NSD itself used the E-voting option provided by NSD; it allowed security holders to participate in general meetings by means of filling in electronic ballots on NSD’s website.
The Collateral Management System (CMS)
In Q2 2018, against the background of the increasing liquidity surplus, the value of repo transactions which the Federal Treasury performed using NSD’s collateral management system reached RUB 4.4 trillion, and the value of repo transactions with the Bank of Russia performed using NSD’s CMS was RUB 138.8 billion.
The number of the OTC repo market participants who signed up for NSD’s CMS service grew to 169 companies.
In the reporting period, Bank of Russia’s coupon bonds were added to the unified collateral basket for repos with the Bank of Russia.
In Q2 2018, the Federal Treasury successfully carried out the first repo auction with the floating rate based on RUONIA using NSD’s collateral management system. The value of repo transactions which the Federal Treasury performed using NSD’s collateral management system with the floating rate and the fixed discounted long term rate was RUB 125.8 billion.
The Moscow Exchange Group is implementing the Single Account project; in Q2 2018, the project participants conducted 362 securities transfers between NSD and NCC using the CMS. The Single Account service let the participants manage their funds in accounts with NSD and NCC automatically for accelerating trade settlements in the exchange and OTC markets.
During Q2 2018, the number of trades registered with NSD’s Repository exceeded 3 million (compared with 2.74 million in Q2 2017). The value of the transactions was 16% less than in the same period of 2017 – RUB 100.8 trillion (RUB 120.7 trillion in Q2 2017).
In Q2 2018, the top 3 instruments of registered transactions included:
|Instrument||Q2 2018||Q2 2017|
The top 3 instruments in terms of the volume of reported transactions included (RUB trillion):
|Instrument||Q2 2018||Q2 2017|
Despite the increase in the number of reports submitted, the number of messages canceled reduced 25% (from 17,982 messages canceled in Q2 2017 to 13,427 messages canceled in Q2 2018). The formatting and logic check (FLC) service improves the quality of information sent by clients to NSD’s Repository, reducing the number of errors related to incorrect reporting deadlines, interest rates and trade types.
In Q2 2018, the number of contracts concluded with information service users grew 20% and reached 478 contracts. The highest growth of the number of users – 89% as compared with Q2 2017 – was demonstrated by NSD’s Valuation Center.
In Q2 2018, the Valuation Center began calculating values of mortgage securities based on the methodology developed by NSD and the Agency for Housing Mortgage Lending (AHML).
At the 27th International Financial Forum, NSD and Interfax Group under the support of Thomson Reuters announced the launch of the integrated product RU Data Price, which allows institutional investors to access a full set of data to analyze market risks and generate regulatory reports, in particular, to evaluate the fair price of bonds based on the Valuation Center’s data.
NSD and Interfax tested the first version of the Single Disclosure Window. This service will give issuers the ability to disclose material facts via information agencies’ news feeds, and also to inform NSD’s Corporate Actions Center about corporate actions.Five major issuers are involved in the service’s trial run. The Single Disclosure Window was designed to reduce issuers’ costs associated with disclosing information that is important for the market, to accelerate the inflow of corporate actions in the accounting system, and to resolve the issue of data discrepancy.
NSD continues to develop services focused on the provision of reference data on securities and issuers. In Q2 2018, the historical data service was added to NSD’s API which allows to monitor database changes; information volume and coverage of NSD’s API and DISC systems were increased. Also, agreements for distributing data via Interfax and Cbonds products were expanded.
The distribution of corporate information among end investors via the specialized information systems of professional participants of the securities market became a new area of NSD’s information services. The agreement concluded by NSD with VTB Registrar was the first project in this sphere.
Payment and Settlement System
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.
In Q2 2018, the value of money transfers reduced by 9% and reached RUB 84 trillion (compared with RUB 92.4 trillion in Q2 2017). The number of these transactions reached 288 thousand – this was equal to the indicator of Q2 2017.
In Q2 2018, the value of DVP settlements using correspondent accounts with the Bank of Russia (settlements in central bank money) reached RUB 1,042 million (28 transactions) – this was by 31 times more than in Q2 2017.
National and Substitute Numbering Agency and Local Operating Unit (LOU)
NSD is the first and only company in Russia and the CIS countries that has received accredited LOU status. This is a permanent status which replaced the temporary one (pre-LOU). It confirms NSD’s compliance with GLEIF’s regulatory and technological requirements for a LOU.
In Q2 2018, NSD assigned 35 new LEIs and verified 118 LEIs. LEIs assigned by NSD are recognized by regulators, market participants, pre-LOUs, and LOUs of other countries.
NSD continues to act as Russia’s Numbering Agency and as the substitute numbering agency for CIS countries, assigning ISINs, CFIs, and FISNs.
In Q2 2018, NSD assigned 367 ISINs, CFIs and FISNs to Russian financial instruments and 4 respective codes to financial instruments of CIS countries. In Q2 2018, the number of qualified foreign securities amounted to 1,707 securities.
NSD as the central link of the financial market pays special attention to the development of the reliable IT platform and partner programs, and ensures the high level of information security.
In Q2 2018, the total number of users of SWIFT services provided by NSD’s SWIFT Service Bureau reached 66. The Service Bureau clients’ average daily traffic increased 48% compared with the same period of 2017 and reached 347,164 messages per month.
As part of the implementation of the Transit 2.0 platform allowing banks and corporations to exchange financial messages, NSD launched a trial run where the pilot project participants exchanged test documents. The new project will reduce corporate clients’ expenses for interactions with settlement banks focused on the receipt and delivery of payment documents.