FUTURE EVENTS. St Mark's Square, Venice, Italy. Winner of Photo Competition Among NSD Clients

Transcription

1 St Mark's Square, Venice, Italy Winner of Photo Competition Among NSD Clients CONTENTS REGULATIONS... 2 Law On Central Securities Depository Signed by President Dmitry Medvedev... 2 President Dmitry Medvedev Proposed Giving Lawmaking Functions Back to FFMS... 2 Russian Banks Will Be Fully Disclosed to Their Clients... 2 MARKET NEWS... 3 Russia Admitted to WTO... 3 MICEX-RTS GROUP... 3 NSD Supervisory Board Elects Chairpersons of User Committees... 3 NSD Accepts First Foreign Issuer's Corporate Bonds for Servicing... 4 NSD Total Liability Cover Set at US$202 Million... 4 Shares to Be Traded in MICEX-RTS Will Circulate Via NSD-DCC Bridge... 5 NSD User Committee Consider Integrated Depository's Draft Product Range and Tariff Model... 5 NSD Expands Issuers Admitted to Inter-Depository Interactions... 5 NSD and DCC Cancel NSD-DCC Bridge Limits... 6 NSD Tests Its Contingency Plan... 6 MICEX and RTS Merger Creates Russian Exchange Powerhouse... 6 NSD Supervisory Board Makes Decision on Tariffs and Elects Members of User Committees... 7 NSD Reports Results of Its Supervisory Board Meeting... 8 NSD and Settlement Chamber RTS to Settle Using RTS Settlement Chamber's Correspondent Account with NSD... 8 PROSPECTS... 9 FUTURE EVENTS CSD in Russia Should Obtain Accreditation by April 1, Dmitry Pankin to Further Improve Conditions for Investment Events Calendar Disclaimer: The content reflects the views of the authors and may not reflect editor s opinion. All rights reserved. No part of this publication may be reproduced without prior permission from National Settlement Depository.

2 DEPOSITARIUM 2 REGULATIONS Law On Central Securities Depository Signed by President Dmitry Medvedev , RIA Novosti Dmitry Medvedev, President of Russia, has signed the law On Central Securities Depository which was adopted by the State Duma on 17 November, 2011 and by the Federation Council on 29 November The new law determines the rights and obligations of the CSD and the terms and conditions of the depository activity of the CSD. The law also implements the foreign nominee concept which was expected by foreign market participants. NSD has an ambition to become the CSD and at the moment The Federal Law will come into force on January 1, 2012, except for some of its provisions. President Dmitry Medvedev Proposed Giving Lawmaking Functions Back to FFMS , Kommersant Russian President Dmitry Medvedev has ordered the government to make proposals to broaden the authority of the Federal Financial Markets Service (FFMS), as a result of the meeting held by the International Advisory Council in charge of the establishment and development of the International Financial Center in Moscow. According to the document, by 1 February, 2012, the government should submit proposals on how to widen the functions of the FFMS in order to prevent violations on the financial markets, to protect investor interest, including in court, and also to vest the FFMS with the right to work out and submit to the government draft federal laws and other regulations related to the financial market. It is proposed to grant the FFMS with lawmaking functions again that were assigned to the Ministry of Finance within the framework of distributing the powers and authorities of the FFMS and the Ministry of Finance in August. Market players note that the active distribution of functions between the Ministry of Finance and the FFMS was not efficient. Russian Banks Will Be Fully Disclosed to Their Clients , Kommersant Starting from January 1, information on all ongoing audits and inspections, sanctions for administrative violations, and imposed restrictions will be disclosed at the Bank of Russia website. This requirement was introduced in order to execute the Law On Misuse of Insider Information and Market Manipulation. The announcement was published in the Bank of Russia s journal, the official source of all information of the regulator. According to it, general public will gain access to information which has not been disclosed before. For example, a ban to take deposits imposed on a bank will have to be disclosed on the Bank of Russia s website. Banks will also have to present information on all ongoing inspections and audits, and partially on the results of such inspections, as well as information on whether the bank or any of its top-managers are facing administrative responsibility for instance, for violating the anti-money laundering legislation. This is the first time banks in Russia face such a degree of transparency. According to the Law On Misuse of Insider Information and Market Manipulation effective from 1 August 2011, the Bank of Russia has to compose a list of insider information required to be disclosed by banks, and to publish this information. The FFMS initiated the elaboration of this Law and was one of its most active developers.

3 DEPOSITARIUM 3 MARKET NEWS Russia Admitted to WTO , RIA Novosti Russia s Prime-Minister Vladimir Putin signed the document which officially finalizes the procedure of Russia s joining the World Trade Organization (WTO). The accession protocol was signed for Russia by the Minister of Economic Development, Elvira Nabiullina, and for the WTO by its Director General, Pascal Lamy. After that Russia will be given 220 days to implement its internal ratification measures. It means that no later than 23 July 2012 Russia will officially become a member of the World Trade Organization. Russia has been working to join the WTO since The last remaining obstacle for its entry has been Georgia. Russia's chief WTO negotiator, Maxim Medvedkov, said in early November that Moscow and Tbilisi had reached a compromise deal on monitoring goods crossing the borders of the former Georgian regions of Abkhazia and South Ossetia. MICEX-RTS GROUP NSD Supervisory Board Elects Chairpersons of User Committees MOSCOW National Settlement Depository (NSD), Russia's only settlement depository servicing the full range of debt and equity securities of Russian issuers, reports that at the meeting held on 30 November, 2011 its Supervisory Board elected the chairpersons of NSD user Committees. Tatiana Chepeleva, a representative of OTKRITIE Brokerage House JSC, Head of Moscow representative office of OTKRITIE Securities Limited, UK, was elected Chairwoman of the Committee of Settlement and Depository Operations and Tariffs, NSD. Yuri Dubin, Director, Depository, Sberbank, was elected Chairman of the Quality Control and Risk Management Committee, NSD. Natalia Sidorova, Head Securities Services, ING Commercial Banking, was elected Chairwoman of the Committee for Interactions with Registrars and Depositories, NSD. The members of the Supervisory Board approved the number of members of the Committee of Settlement and Depository Operations and Tariffs (22 members), of the Quality Control and Risk Management Committee (20 members), and of the Committee for Interactions with Registrars and Depositories (17 members). The Supervisory Board authorizes the chairpersons of the Committees to nominate the candidates to the members of the respective Committees and to submit the lists of the candidates to the Board for approval. NSD Supervisory Board also approved the Policy for Reputation Risk Management, as well as the corrected NSD's Budget of revenues, expenditures and profit for 2011, and considered few other issues.

4 DEPOSITARIUM 4 NSD Accepts First Foreign Issuer's Corporate Bonds for Servicing MOSCOW - National Settlement Depository (NSD) reports that on 6 December it accepted for servicing the first corporate bonds issued by a foreign issuer. Uranium One Inc.'s (U1), the Toronto-based uranium producer, Canada, places its Series 1 bond issue denominated in Russian rubles. The issuance terms provide the mandatory centralized custody of the bond certificate in Russia with NSD. International codes ISIN RU000A0JRTS1 and CFI DBVXXB were assigned to the bond issue beforehand. NSD applied its best efforts to receive the bond issue for servicing and contributed a lot to its forthcoming placement. In particular, the company agreed the issuance documents and certificates with the parties of the process, concluded an issuer depository account agreement and received the regulator's clarifications contributing to formation of the foreign issuers' bond market in Russia. The first U1 bond issue is to be placed in Closed joint-stock company «MICEX Stock Exchange». Uranium One Inc.'s bond issue as a bond issue of the foreign issuer was admitted to the public offering in the Russian Federation by the Federal Financial Markets Service on 10 November, The aggregate sum of two issues of U1 bonds is RUB29 billion. The parameters of U1 series 1 bond issue are as follows: Bond issue amount: RUB16.5 billion Nominal value: RUB1,000 per one bond Circulation term: 3,640 days (10 years) The parameters of U1 series 2 bond issue are as follows: Bond issue amount: RUB12.5 billion Nominal value: RUB1,000 per one bond Circulation term: 3,640 days (10 years) NSD Total Liability Cover Set at US$202 Million MOSCOW - National Settlement Depository (NSD) and Ingosstrakh Insurance Company, one of Russia's leading insurers, report that they have concluded an annual agreement for complex insurance covering criminal and professional liability of NSD. The policy liability limit was fixed at US$65 million for all claims for the duration of the policy, and potentially for any single claim during the period. Including internal funds allocated for the purposes, the total amount of liability cover is over US$202 million (as of 1 December, 2011). The re-insurers behind the policy include Lloyd s syndicates (UK). The activities carried out in accordance with NSD s securities market licenses, its bank operations, as well as the company's clearing operations, depository services and services related to custody of securities but not connected with depository operations are covered by the new policy. The new insurance policy covers losses incurred by the policy-holder and third parties (including, but not limited to NSD's clients) as a result of the third parties' voluntary acts, the managers' and employees' mistakes and negligence while implementing professional activities. The policy also covers losses incurred by the policy holder as a result of electronic and computer crimes, technical errors or failures of computer hardware, software, and telecommunications equipment leading to a partial or full loss of information associated with NSD clients' accounts.

5 DEPOSITARIUM 5 About Ingosstrakh Insurance Company Ingosstrakh Insurance Company ( has operated in the domestic and international market since The Company is the leader among Russian insurers in terms of the size of insurance premiums in voluntary insurance, other than life insurance. Ingosstrakh is authorized to render all types of insurance services (with a view to underwriting specialization) provided in Article 32.9 of the Russian Federation s Law About Insurance in the Russian Federation, and reinsurance services. The company operates in 220 Russian cities. Ingosstrakh's representative offices and subsidiary companies operate in the CIS and other countries. For further information about Ingosstrakh: , , pr@ingos.ru Shares to Be Traded in MICEX-RTS Will Circulate Via NSD-DCC Bridge MOSCOW - National Settlement Depository (NSD) and Depository Clearing Company (DCC) expand a list of issuers with shares circulated using a scheme of inter-depository interactions and admitted to trading in MICEX-RTS in respect of balancing the lists of securities traded in MICEX and RTS. Starting 6 December, 2011, 286 issues of shares (including one RDR issue) of 186 issuers are admitted to circulation via NSD-DCC Bridge, the link facilitating transfers between Russia's MICEX and RTS stock exchanges. 31 companies were admitted to the inter-depository interactions scheme. NSD User Committee Consider Integrated Depository's Draft Product Range and Tariff Model MOSCOW On 21 November, 2011, National Settlement Depository (NSD) and DCC held a joint meeting of their user committees. The participants of the meeting considered information about an approach to formation of the product range and tariff model of the integrated depository. After the meeting NSD's and DCC's user committees issued a number of recommendations to NSD and DCC, including the following: To determine a range, priorities and terms of implementation of the integrated depository's products and to submit the prepared information to the committees for consideration; To select approaches to formation of regimes of use of Long Term Safekeeping (LTS) and to suggest a final version of LTS tariff model developed on basis of the approaches. In the course of the discussion the meeting participants mentioned DCC's most popular services such as DVP operations denominated in foreign currencies, and services rendered to close joint stock companies and issuers who maintain their registers independently. NSD Expands Issuers Admitted to Inter-Depository Interactions MOSCOW - National Settlement Depository (NSD) expands a list of issuers with shares circulated by means of inter-depository schemes of NSD's interactions with DCC, ZAO Citibank and ING Commercial Banking (legal name ING BANK (EURASIA) ZAO ). Since 12 December, 2011, shares of Varyeganneftegaz OJSC, Morion OJSC, Murmansk TPP OJSC, Nizhnekamskshina OJSC, Russkiye Samotsvety OJSC, Ufaneftekhim OJSC, Ufaorgsintez OJSC, Chernogorneft OJSC, Electrozinc OJSC and Novosibirskenergo OJSC are to be included in the interdepository NSD's interactions with DCC, ZAO Citibank and ING Commercial Banking.

6 DEPOSITARIUM 6 Shares of Kuibyshevazot OJSC, Russian Energy Company OJSC, ALROSA-Nyurba OJSC and Khimprom OJSC are to be included in the inter-depository NSD's interactions with DCC. Shares of Kuibyshevazot OJSC are to be included in the inter-depository NSD's interactions with ZAO Citibank. Shares of Khimprom OJSC are to be included in the inter-depository NSD's interactions with ING Commercial Banking. On 6-7 December, 2011, shares of 25 issuers were included in the inter-depository NSD's interactions with ZAO Citibank and ING Commercial Banking. NSD and DCC Cancel NSD-DCC Bridge Limits MOSCOW - National Settlement Depository (NSD) and Depository Clearing Company (DCC) announce that starting 19 December, 2011, they cancel mutual limits of overall evaluation of securities in the interdepository account of DCC opened with NSD. This step will allow to reduce expenses for NSD-DCC Bridge, the link facilitating transfers between Russia's MICEX and RTS stock exchanges, and to raise efficiency of the Bridge during NSD and DCC integration. NSD Tests Its Contingency Plan MOSCOW - National Settlement Depository (NSD) reports that on 3 December, 2011, it held a training session/test check aimed at NSD staff's ability to function in emergency situation leading to evacuation from the headquarter and at check of the operating capability of the company's backup office. A program of the training session/test check included testing of a contingency plan focused on uninterrupted operations and/or recovery of functioning of the credit organization in unforeseen circumstances by means of modeling of an emergency situation leading to mandatory evacuation of NSD personnel from the head office and switching to a backup office. The developed scenario provided involvement of the employees of NSD's twelve divisions (including the core ones). Among the participants of the training session/test check were few depositors of NSD as well as a group of observers including independent specialists of the organization specialized in consulting on uninterrupted operations and information security for credit organizations, as well as a specialist of NSD's Internal Control Service. After completion of the training session/test check the company has issued a report based on the observers' statement and a protocol signed by the secretary of the Emergency Situation Management Committee. The report's conclusions confirm successful results of the training session/test check and the operating capability of the company's backup office. The backup facilities are designed to implement a full complex of operations efficiently with minimal down time. The results of the training session/test check confirmed the reliability of NSD as a settlement depository. MICEX and RTS Merger Creates Russian Exchange Powerhouse , Moscow, 19 December 2011 The opening bell at the start of trading today marked the completion of the merger of MICEX and RTS, creating a single Russian exchange that is well-positioned to become one of the leading venues globally for trading across asset classes.

7 DEPOSITARIUM 7 The merger creates a one-stop-shop for local and international market participants to trade equities, bonds, derivatives and currencies. The combination of Russia s two exchanges benefits market participants by creating a single platform for issuers, traders and investors; it will reduce transaction costs, make trading easier and more accessible and facilitate product innovation. On the shareholder level, the merger will drive profitability, diversify the revenue pool and allow for the creation of a publicly-listed company. The merger also clears the way for further reforms that are necessary to establish Moscow as an international financial center. The capitalization of the combined company was valued at $4.5 billion ahead of the merger. Subject to market conditions, the exchange is targeting an IPO in As a further step toward an IPO, MICEX-RTS today took on the legal form open joint-stock company. In 2012 MICEX-RTS s plans include the launch of trading on the stock exchange in T+N and the selection of a technological platform that will establish a single trading account for the spot and derivatives market. Another key item on the agenda for next year is the merger of Russia s two main depositories, the National Settlement Depository and the Depository Clearing Company. Finally, in 2012 the exchange s indices will be brought under one roof with consistent rules and a single calculation platform. The exchange is currently undergoing a rebranding exercise and expects to roll out its new brand identity in the first half of Ruben Aganbegyan, President and Chief Executive Officer of MICEX-RTS, said: The completion of the merger between MICEX and RTS marks the culmination of months of hard work by our joint teams. In addition to creating a single home for the market, the merged exchange will act as a catalyst for continued improvements in Russia s financial infrastructure, including the creation of a central securities depository and settlement in T+N. Today we celebrate the merger of the two exchanges, and tomorrow we get back to work on building a world-class financial infrastructure for Russia. For additional information, contact: Press Service of MICEX-RTS, +7 (495) , pr@micex.com NSD Supervisory Board Makes Decision on Tariffs and Elects Members of User Committees MOSCOW - National Settlement Depository (NSD) reports that on 15 December, 2011, its Supervisory Board made the following decisions with regard to NSD tariffs: To reduce tariff for NSD services related to formation and sending of a report on the operation (a report on non-fulfillment of a depository order) to a participant of NSD's EDI system through S.W.I.F.T. from RUB100 to RUB35. The tariff and appropriate changes in NSD's List of Procedures for Participant's Access to EDI System, provision of EDI and EDI Tariffs will be put into effect starting 1 January, To approve tariffs for servicing of accounts using by NSD clients to conduct settlements on transactions concluded in RTS Money System: - monthly payment for formation of reports on foreign currency operations amounts to RUB500 plus VAT 18%; - monthly payment for servicing of accounts used by a client for settlements on transactions concluded in RTS Money System (in case of conducting minimum one operation in the account) on basis of documents submitted by the organization conducting clearing operations in RTS Money System, amounts to RUB1,000; These tariffs and appropriate amendments to NSD's Tariffs for settlement and cash services are to be put into effect starting 3 January, 2012.

8 DEPOSITARIUM 8 To apply existing regressive monthly rates for securities custody and/or recordkeeping of rights for securities to the inter-depository accounts of a participant acting as a settlement depository. Eddie Astanin, Chairman of the Executive Board, NSD, said commenting on the Supervisory Board's decisions: New tariffs are a result of a joint work of representatives and clients of two settlement depositories, NSD and DCC, conducted within the framework of integration processes. Introduction of these tariffs will help to reduce the users' expenses for conducting operations through NSD. DCC's clients using DCC holder accounts with NSD will be the first customers seeing the positive effect of the decision. The appropriate amendments to NSD's Tariffs for depository services are to be put into effect starting 1 January, More information about NSD's tariffs will be available at NSD's web site since the corresponding dates. NSD Supervisory Board has also elected the members of user committees. NSD Reports Results of Its Supervisory Board Meeting MOSCOW - National Settlement Depository (NSD) reports that its Supervisory Board carried out a meeting on 23 December. The members of the Board considered preliminary results of NSD's operations for 2011, approved the company's Budget of revenues, expenditures and profit as well as the capital investments budget for The Supervisory Board took into consideration a report on activities related to development of NSD's risk management system which includes an internal control system, a system of managing economic risks (risk of liquidity, market, currency and credit risks# and non-economic risks #operating and reputational risks#, a system of monitoring operations within the framework of anti-money laundering and counter financing of terrorism, and professional liability insurance. NSD's activities related to risk management are regulated by provisions and policies approved by the Supervisory Board, as well as by the company's internal documents, technological procedures of data collection, analysis and making managerial decisions. NSD Supervisory Board members also approved a progress on NSD and Settlement Chamber RTS integration. NSD and Settlement Chamber RTS to Settle Using RTS Settlement Chamber's Correspondent Account with NSD MOSCOW - National Settlement Depository (NSD) and Non-Banking Credit Organization Settlement Chamber RTS (Settlement Chamber RTS) announce the launch of settlements held by Settlement Chamber RTS via its correspondent account opened with NSD. The service is focused on the instant transfer of funds between NSD and Settlement Chamber RTS without using any external correspondent accounts. This will allow clients cost reduction for settlement servicing. In order to conduct a wire transfer in favor of Settlement Chamber RTS, NSD clients should submit settlement instruction to NSD via Electronic Settlements System, Internet Bank-Client system or Intranet Bank-Client system as internal ruble transfer. The rules of drawing up payment orders by the clients of Settlement Chamber RTS remain the same as usual. Settlement Chamber RTS at its own discretion will apply payment route through its correspondent account opened with NSD.

9 DEPOSITARIUM 9 PROSPECTS CSD in Russia Should Obtain Accreditation by April 1, , RIA Novosti The Central Securities Depository (CSD) should be established in Russia by April 1, 2012, said Sergey Shvetsov, Deputy Chairman of the Bank of Russia at the Opening Ceremony on the merged exchange MICEX-RTS. The CSD should obtain accreditation by April 1, 2012 and I hope the regulators will be quick with it", he said. Sergey Shvetsov noted that starting from July 1, 2012 the Russian stock market will be open for foreign depositories that could result in a capital outflow from the country abroad in case the CSD is not established by this time. So, he supposes it is essential that the CSD starts functioning by April 1, According to the FFMS Head Dmitry Pankin, in order to obtain accreditation for the CSD the Ministry of Finance should work out a procedure for this accreditation. We will do this, but there should be a corresponding application from the Central Securities Depository," he said, meaning that by July 1, 2012 the FFMS would approve all the necessary regulations required to execute the Law On Central Securities Depository and would be able to grant accreditation to the Central Securities Depository if a corresponding application is submitted. Dmitry Pankin to Further Improve Conditions for Investment , RBC-Daily The Head of the Federal Financial Markets Service (the FFMS) Dmitry Pankin proposed to eliminate misbalances in taxation in different types of investment activities. According to him, taxes should be collected equally from all types of investment. Mr. Pankin told that the subject of tax preferences for private individuals engaged in different types of investment activity would be raised at the April s meeting of the Presidential Council for financial markets. He explained that this question would deal with bank deposits and the financial market, as well as taxation of life insurers and pension funds. There exists inequality: interest at Sberbank s deposits is not taxed while the one on the financial market is, he commented. Alexander Svintsov, CEO of Kit Finance, thinks that if the government changed, for instance, taxation for deposits, this would stimulate people to bring funds to the stock market. The Chairman of the Association of Russian Banks (ARB) Garedin Tosunyan also supposes that different segments of the financial market should be in equal conditions. However, it should not be a reason to increase taxation.

10 DEPOSITARIUM 10 FUTURE EVENTS Events Calendar Event Location Date Contact information Derivatives in Russia TBD, Moscow, Russia February online.com/2012/690/derivativesin-russia Foreign Securities in Russia: Placement and Circulation Moscow, Russia March onf_securities Russian Securities Forum Baltchug Kempinski, Moscow, Russia 6-7 June Network Management Forum 2012 Budapest, Hungary June