Euroclear Bank will offer post-trade services for Russian government bonds from tomorrow through a link established with the National Settlement Depository (NSD), Russia's central securities depository (CSD).
The link allows major international trading firms to settle trades and deposit positions in the bonds - known as OFZs - with Euroclear Bank.
The new service will start with OFZ contracts traded OTC, with on-exchange transactions due to be added in March. The connection between Euroclear Bank and the NSD will also enable clients of each depository to settle cross-border transactions.
Euroclear Bank plans to extend the service to include other Russian fixed income securities - including municipal and corporate bonds - in coming months.
OFZs held by Euroclear Bank will also be eligible as securities collateral for securitised transactions where Euroclear Bank is the tri-party collateral management agent.
"The 7 February milestone will mark a new era in the ability of Russia to fund its growth and development through the international capital markets," said Frederic Hannequart, chairman of Euroclear Bank. "Industry experts are predicting new foreign capital inflows to Russia in the region of US$20 billion (RUB 615 billion). Euroclear Bank is proud to become part of the new Russian Financial Center by making OFZs eligible for Euroclear services."
"We have worked with colleagues at the Bank of Russia, Russia's Federal Financial Markets Service and the Russian Ministry of Finance to make the necessary legislative changes that will greatly enhance the appeal of Russian Federal bonds," commented NSD CEO Eddie Astanin. "Together with Euroclear Bank, NSD is offering the Government of Russia a broader, cheaper and more efficient way to fund the country's growth through the bond markets."
The NSD recently completed its transition to a fully-fledged CSD, making it easier and cheaper for US firms to invest in Russia. The NSD has established links with seven other CSDs.