Euroclear/NSD link offers cross-border opportunities in Russia

Euroclear Bank and National Settlement Depository in Russia are planning a direct link to provide cross-border services for all classes of Russian domestic securities.

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Euroclear Bank and National Settlement Depository (NSD) in Russia are planning a direct link to provide cross-border services for all classes of Russian domestic securities. This follows a new CSD law that will recognise NSD as Russia’s central securities depository and will allow it to open a ‘foreign nominee account’ for Euroclear Bank to develop a direct link. 

Pending regulatory approvals, settlement, custody and related services will be provided for stock exchange and OTC equity trades, government (OFZ) and corporate bond transactions by a market infrastructure outside of Russia. The development aims to advance the goal of creating a Russian financial centre, said Eddie Astanin, chief executive officer of NSD. Russian cash equity market capitalization increased by 29% in 2011, reaching US$954 billion. 

The direct link between NSD and Euroclear Bank is scheduled for launch in the coming months. As a result, more than 1,300 of trading firms with Euroclear Bank accounts will be able to settle bilateral trades at Euroclear Bank and with counterparties in Russia through the link with NSD. Russian domestic securities will also become eligible as collateral in Euroclear Bank’s triparty services. 

The latest development expands on a memorandum of understanding signed between Euroclear and NSD (formerly known as The National Depository Center - NDC) in 2007, whereby participants of NSD have been settling transactions and safekeeping international securities via NSD’s account with Euroclear.

Astanin said: “Partnering with Euroclear Bank clearly adds value to our clients and to the Russian economy by easing cross-border flows between the Russian and international investment communities. It helps advance the goal of creating a Russian Financial Centre.”

Frederic Hannequart, chairman of Euroclear Bank, said: “It is very important to create the type of service for Russian securities that will appeal to our sophisticated client base. The portfolio of services we will launch for Russian securities will earn the trust and confidence of securities professionals who follow the same principles as Euroclear when it comes to efficiency, effectiveness and operational risk control. Working directly with NSD is the optimal way forward in this regard. Having an easy and convenient post-trade arrangement in place for cross-border trades will facilitate foreign investor flows to MICEX-RTS, as well as boost domestic liquidity for all Russian securities.”

Nadezhda Ushakova, head of custody at VTB Bank, said: “We are very pleased to have been selected by Euroclear Bank as its custody agent in Russia. The launch of Euroclear Bank services for the full range of Russian securities is a major step towards further developing Russian financial services and increasing Russia’s attractiveness to international capital flows. As a leading Russian bank with many international clients and unique expertise in providing high-level banking services worldwide, VTB Bank will contribute in a beneficial way for Euroclear Bank clients.”

Upon launch of the link with NSD, Euroclear Bank will have links with CSDs in 45 major countries. NSD has links with CSDs/ICSDs in seven countries.


Reporting by: Janet Du Chenne, Global Custodian, an Asset International publication