Clearing services DVP settlement Delivery versus payment (DVP) is a method of settlement for securities that involves the simultaneous delivery of securities in exchange for the payment. As part of the DVP service, NSD determines the amount of a Clearing Participant s net settlement obligation (or net claim) for cash in the relevant currency and for securities against each counterparty also being a Clearing Participant, such amount being the difference between the amount of claims and the amount of obligations. If the difference is negative, the Clearing Participant has a net obligation for cash in the relevant currency or for securities, and if the difference is positive, the Clearing Participant has a net claim for cash or securities. NSD settles trades on a DVP basis, using the DVP model 1, DVP model 2, or DVP model 3, either in Russian roubles or in a foreign currency (USD, Euro or CNY), through trading bank accounts held by resident Clearing Participants or other residents (account No. 30411), or by nonresident Clearing Participants or other non-residents (account No. 30412) with NSD and intended to hold cash funds (including an individual clearing margin) to be used for the purpose of settling and/or ensuring the settlement of liabilities eligible for clearance, or liabilities to pay a fee payable to a clearing house or any other organization that supports trades in accordance with the Clearing Law, or through USD-denominated cash accounts held with foreign banks (Citibank N.A., New York, JP Morgan Chase Bank N.A., New York, Deutsche Bank Trust Company Americas, New York.).
Contents Glossary... 3 1. Signing Up to DVP Settlement Service... 4 1.1 Procedure for registration of Clearing Participants... 4 1.2 Registration of the Clearing Participant's Customers... 4 1.3 Registration of Bank Account Details... 4 1.4 Opening Cash Accounts... 6 1.5 Opening a Securities Account with NSD... 6 2. Acceptance and Matching of Instructions, Submission of Foreign Exchange Control Documents... 7 2.1 Giving Clearing Instructions... 7 2.2 Acceptance of Instructions... 8 2.3 Instruction Matching using the Tolerance Principle... 10 2.4 Matching instructions by type of settlement model (DVP-1, DVP-2, DVP-3)... 11 2.5 Providing currency control documents... 11 2.6 Forming a Clearing Batch... 12 3. DVP Settlement Schemes... 13 3.1. Settlement via accounts with Foreign banks... 13 3.2. Settlement via accounts in NSD... 14 3.3 Settlement via account with a foreign bank and account with NSD... 15 4. Settlement... 16 4.1. Control of Clearing Participants Obligations... 16 4.2. Replenishment of Accounts during an Operational Day... 16 4.3. Debiting a Clearing Participant s Account... 17 4.4 Clearing Batches... 17 4.5 Debiting of the Clearing Participant's account upon completion of clearing batch... 17 4.6 Crediting of Clearing Participant's account upon completion of clearing batch... 17 4.6 Transfer of securities between securities accounts... 17 5. Documents Provided by NSD to Clearing Participants... 18 6. Fees... 19
Glossary Agreement on Clearing Services means the agreement whereby NSD agrees to provide clearing services in accordance with the Clearing Rules to the Clearing Participant, and the Clearing Participant agrees to pay for such services. Clearing Participant means a legal entity to which NSD provides clearing services under the Clearing Services Agreement entered into with the Clearing Participant. The Clearing Services Agreement is entered into by way of accession to such agreement. Only a legal entity with which NSD has entered into a securities account agreement may become a Clearing Participant. Clearing Participant's Customer shall mean a legal entity or an individual registered by the Clearing House as a client of a Clearing Participant. Foreign Bank means one of the three settlement banks, i.e., Citibank N.A., New York, JP Morgan Chase Bank N.A., New York, Deutsche Bank Trust Company Americas, New York. Special Processing Account means the clearing account for securities used by NSD to settle trades based on the clearing results. A trading bank account is a separate bank account held by a resident Clearing Participant or any other resident (account No. 30411), or a separate bank account held by a non-resident Clearing Participant or any other non-resident (account No. 34012), in each case with NSD, and intended to hold cash funds (including an individual clearing margin) to be used for the purpose of settling and/or ensuring the settlement of liabilities eligible for clearance, or liabilities to pay a fee payable to a clearing house or any other organization that supports trades in accordance with the Clearing Law (Article 15). Trading Cash Account means a customer's bank account in Russian roubles or a foreign currency maintained with NSD for the Clearing Participant/Clearing Participant's Customer. Cash Account means the cash account of the Clearing Participant/Clearing Participant's Customer maintained with a Foreign Bank. Trading Securities Account means the securities account maintained with NSD for the Clearing Participant.
1. Signing Up to DVP Settlement Service 1.1 Procedure for registration of Clearing Participants Upon entry into a Clearing Services Agreement, the Clearing Participant is assigned a Clearing Participant unique code. The register of Clearing Participants containing information on the Clearing Participants of record is maintained by NSD. In addition, each Clearing Participant has a twelve-character code, which is assigned upon registration of the legal entity's information form (Form АА001) at the time when its securities account is opened with NSD and which must be indicated in its clearing instructions for the purpose of identifying the Clearing Participant. A Clearing Participant may be assigned several such codes. Such codes are used to identify the Clearing Participants when giving instructions and generating reports. 1.2 Registration of the Clearing Participant's Customers A Clearing Participant's Customer can be registered pursuant to the Clearing Participant's instruction containing a reference to the submission of the information form (AF005) of such Clearing Participant's Customer and accompanied with the legal entity's information form (Form АА001) or the private individual's information form (Form АА006). The information form attached must specify the code of the Clearing Participant's Customer assigned to it by the Clearing Participant in accordance with the requirements of Russian laws. A Clearing Participant's Customer must be assigned unique Clearing Participant's Customer code. Having completed the processing of the instruction to register the Clearing Participant's Customer information form, NSD will send the Clearing Participant a report accompanied with the registered information form of the Clearing Participant's Customer and specifying the code assigned to such customer. Information on Clearing Participants' Customers is included in the register of Clearing Participants' Customers. The Clearing Participant's Customer is also assigned a twelve-character code of the information form which the Clearing Participant must include in its clearing instructions to identify its customer. 1.3 Registration of Bank Account Details To be able to settle funds based on the clearing results, the Clearing Participant should register the details of its Trading Cash Accounts/Cash Accounts to be used for settlement. After that, the Clearing Participant will need to submit to NSD, in hard copy or electronic format, an instruction requesting to record the bank account details (Form AF005), accompanied with a notice of bank account details (Form GF088). If the Trading Cash Account/Cash Account is owned by a Clearing Participant's Customer, these documents must be signed both by the Clearing Participant and its customer. The bank account details are recorded as linked with the trading securities account to be used for securities settlement. The Form GF088 application is used by the Participant to establish a linkage between its trading securities account with NSD and its Trading Cash Account with NSD or its Cash Account with the Foreign Bank. Registration of bank account details is effected if the following documents are provided: - Notification in form D03, - Documents confirming legal relationship between a Clearing Participant and his clients (if these documents are required for currency control procedures on the side of NSD). There are several ways to link Trading Cash Accounts/Cash accounts with securities accounts:
1.1 Cash account and securities account belong to one entity ICSD, CSD or Russian Custodian/Broker 1.2 Cash account belongs to the Client of ICSD, CSD or Russian Custodian/Broker The Client ICSD, CSD or Russian Custodian/Broker ICSD, CSD or Russian Custodian/Broker Trading cash account opened with NSD or with the foreign bank 1.3 (A) Several cash accounts, opened in the name of the Clients of ICSD, CSD or Russian Custodian/ Broker are linked with omnibus securities account 1.3 (B) Several cash accounts, opened in the name of the Clients of ICSD, CSD or Russian Custodian/ Broker are linked with segregated securities account Trading securities account opened for NSD clearing Resident Nonresident Resident Client A Client В Client C ICSD, CSD or Russian Custodian/Broker Subaccount for Client A Subaccount for Client B Subaccount for Client C ICSD, CSD or Russian Custodian/Broker 1.4 Cash account is linked with segregated securities account. Clearing participant/ The Client Subaccount for Client A Subaccount for Client B Clearing participant X 1.5 Cash account is linked with several securities accounts, belonging to the same Clearing participant Clearing participant/ The Client Clearing participant X Clearing participant X Clearing participant ICSD, CSD or Russian Custodian/Broker. Any one sub-account within a Clearing Participant s trading securities account may be linked with several trading bank accounts held with NSD and/or several cash accounts held with Citibank N.A., New York, JP Morgan Chase Bank N.A., New York, Deutsche Bank Trust Company Americas, New York. Several sub-accounts within trading securities account may be linked with one trading cah account/ cash account. Several trading securities accounts of the same Clearing Participant may be linked with one trading cash account/ cash account. A single instruction may be given to link several bank accounts (either in the same currency or in different currencies) with one or more than one sub-accounts within the same securities account, or with one or more than one sub-accounts within different securities accounts. There are no restrictions as to the number of entries in a single instruction. To ensure that several bank accounts in the same currency are linked with the same securities sub-account, it is required to specify bank account details for all such bank accounts in the same instruction. When a second instruction is submitted with respect to the same securities sub-account and in the same currency, all bank account details registered in accordance with the previous instruction, but not specified in such new instruction will be deregistered. To add a new trading bank/cash account in the same currency to the accounts earlier registered for the same securities sub-account, it is required to duplicate all bank account details for the bank accounts in the same currency (even if such details remain unchanged) from the previous instruction and add the details of
the new trading bank/cash account. It is allowed to link bank accounts in different currencies with the same securities sub-account by giving different instructions. Where there is only one bank/cash account linked with a securities sub-account, it is allowed not to specify such bank/cash account in a clearing instruction. In this case, trades will be settled using the bank/cash account linked with such securities sub-account (transaction 07). Where upon registration of a trading bank/cash account for a sub-account within a nominee s securities account a customer in an instruction for transaction 07 has been specified by default, it is not required to specify a Clearing Participant s customer in a clearing instruction. In this case, trades will be settled in favour of the customer by default. If necessary, a clearing instruction for such trading bank/cash account may specify any other customer instead of the customer whose details were registered by transaction 07. Upon registration of a cash account held with a foreign bank, it is mandatory that an instruction for transaction 07 specifies the following details of the cash account owner: the code of the details form registered with NSD (the 12-character code), the owner s name in the relevant foreign language (starting with NSD- ), and the owner s address in such foreign language. The owner s name and address will be indicated in MT103 format messages, in field 50K. 1.4 Opening Cash Accounts For the purpose of holding their funds and conducting settlement on a DVP basis, Clearing Participants/Clearing Participants' Customers are required to do the following: to open trading bank account with NSD for sector NSD Clearing in roubles or foreign currency providing a package of documents to open an account as per the "List of Documents to Be submitted by non-resident clients in order to conclude agreements and open accounts with NSD". If the customer already has cash accounts with the Foreign Banks, it will need to complete and send the relevant documents to the Foreign Bank concerned (Citibank N.A., New York, JP Morgan Chase Bank N.A., New York, Deutsche Bank Trust Company Americas, New York) authorising NSD to operate the customer's account with the bank. The following types of trading cash accounts may be opened for Clearing Participants: Account No. 30411 a separate bank account for a resident Clearing Participant or any other resident; or Account No. 30412 a separate bank account for a non-resident Clearing Participant or any other non-resident. 1.5 Opening a Securities Account with NSD A Clearing Participant should open a trading securities account of owner/ nominee holder/ trustee/ foreign nominee with NSD providing the package of documents to NSD as set out in the "List of Documents to be submitted by non-resident clients in order to conclude agreements and open accounts with NSD" and instruction in form GF085. The following types of accounts may be opened under the respective agreements: an owner securities account (TS) a nominee holder (interdepository) securities account (TL nominee holder, TF foreign nominee holder (ICSD), TW foreign nominee holder (CD/SD)) a trustee account (TD) For the purpose of securities settlement based on the clearing results (DVP), the following sub-accounts of securities accounts will be used: main sub-account ( sub-account code 00)
main customer s sub-account ( sub-account code 70) main additional sub-account (sub-account code 73) The procedure for opening and using the above sub-accounts is described in the Guidelines on the Procedure for Interaction between NSD and Clients (Clause 3.2.3 and Section 4). Transactions in trading accounts are executed either on the basis of instructions submitted by the relevant clearing house (without instructions from the person in whose name such trading securities account is opened), or on the basis of instructions submitted by such person with the consent of the clearing house. The clearing house will give its consent to the execution of a transaction in the trading securities account on the basis of an instruction submitted by the person in whose name the account is opened, provided that such transaction will not result in a breach of any terms and conditions provided for by the Clearing Rules for settlement of liabilities of the relevant Clearing Participant. Sub-accounts to be used for settlement based on the clearing results will be designated at the time of registration of the bank account details linked with the particular section of the securities account (transaction code: 07, bank account details designation code: 14). 2. Acceptance and Matching of Instructions, Submission of Foreign Exchange Control Documents 2.1 Giving Clearing Instructions After the trade is made, the Clearing Participants expected to deliver and receive securities will give their respective clearing instructions to NSD in the approved form. Clearing Participants must state in their instructions the settlement model to be used by specifying "DVP-1" or "DVP-2" or "DVP-3" in the "Type of Settlement" field. DVP-1 DVP-2 DVP-3 - Settlement occurs on a trade-by-trade basis; - Securities are settled on a gross basis, but cash is settled on a net basis 1 ; - Net settlement of both securities and cash; Where no type of settlement is specified by the Clearing Participant in a clearing instruction, cash settlements will be made on a net basis (DVP-2). It is the Clearing Participant's responsibility to ensure that the necessary quantity of securities is available in the sub-account of its trading securities account from which the delivery will be made. Clearing Participants can set a priority order for the execution of their clearing instructions. If in the instruction of a Clearing Participant who acts as the transferee of securities for the performance of the transaction Fulfillment of a contract for the sale and purchase of 1 Technically there is no difference in obligations netting within DVP2 and DVP3 models, as both models include cash and securities netting but information in report MS102 will be reflected in a different way.
securities. Receipt of securities (transaction code 19/1) there is filled out the data field called With reservation of cash funds, then such an instruction will be executed first, i.e. it will have priority over the other earlier registered instructions of that Clearing Participant in respect of the account to be debited specified in the clearing instruction or in the bank details registration instruction. At the time a trade is made, there is no need to have sufficient securities in the sub-accounts of trading securities accounts and/or cash in the trading cash accounts/cash accounts. The securities and cash needed to settle the trades must be available in the trading securities accounts and trading cash accounts/cash accounts, respectively, on the date the Clearing Participant's instruction is due to settle, 15 minutes in advance of the clearing session. Instructions will be executed on the settlement date specified in the instruction or on the date the pairs of instructions are matched, where one of the instructions is missing on the settlement date. 2.2 Acceptance of Instructions Instruction Format Instruction Cut-off Time: Instruction Recycling Period Instruction formats Clearing instructions should be given to NSD in an electronic format. For hard copy documents, 5:00pm MSK on the settlement date; For electronic documents, 7.30pm MSK on the settlement date. For clearing instructions, the recycling period is 30 days after the due date for settlement specified in the instruction, which is the start date for executing the instruction. If it is impossible to execute the instruction due to insufficiency of cash/ securities/ not matching, upon expiration of this period, the Clearing Participant will receive a fail report via Louch system GS001 or via SWIFT MT548 specifying "Instruction expiry" as the reason for such failure. Instructions are accepted in the electronic format 2 : -through the Louch system in the form of an MF 190 message; -through SWIFT, in the form of clearing instructions (MT541 or MT543). 2 The electronic interchange of information and documents is carried out in accordance with the agreement on electronic document interchange between the clearing participants.
List of matched fields in DVP instructions for the purpose of clearing Instruction cancellation Instructing party and counterparty. Sender's securities account number and securities sub-account code. Receiver's securities account number and securities sub-account code. Transaction number (to be checked if the field is populated in one of the instructions). Trade date. Securities and their quantity. Instruction execution start date (trade settlement date). Type of settlement (to be checked only in the event of gross settlement). Transaction amount, taking into account tolerance of both parties. Transaction currency. Currency of trading cash account/ cash account. If a Clearing Participant's instruction has a completed optional field which needs to be matched, the content of such field must be the same as the content of the relevant field in the counterparty's instruction. In the course of processing, the settlement provider will check whether the currency of the account to be debited and the account to be credited match. For instance, if the receiver's instruction specifies a rouble account, and the deliverer's instruction specifies a USD account, such instructions will not be allowed to settle. As a general rule, the transaction currency must be the same as the account currency. An exception is when the trade is made in US dollars and the cash accounts in both the deliverer's and receiver's instructions are rouble-denominated. In this case, the trade amount in USD will be converted into Russian roubles at the exchange rate set by the Bank of Russia for the day immediately preceding the actual settlement date. To cancel matched clearing instructions both clearing participants should submit cancel instructions (form GF070 or MT541/543). Nonmatched instruction can be cancelled by Clearing participant being initiator.
2.3 Instruction Matching using the Tolerance Principle NSD matches instructions based on the tolerance principle, which makes it possible to match and settle pairs of transactions if the trade amounts specified in such pairs of transactions by the Clearing Participants differ insignificantly. A tolerance value is set by each Clearing Participant at his own discretion and specified in a Notice of Bank Account Details (Form GF088) submitted for registration of bank account details. In accordance with the tolerance principle, a trade is settled using the trade amount specified in one of the matching instructions, provided that the trade amount specified in the other instruction does not exceed the tolerance value specified in the relevant Notice of Bank Account Details. For matching instructions related to accounts for which tolerance values are set, where the trade amounts in matching instructions differ, the trade amount specified by the transferee of the securities will be used. In this case, the instructions submitted will be matched, and the trade amount to be used will be determined as follows: - The instructions are deemed to have been matched, and the trade is settled using the trade amount specified in the instruction submitted by the transferee of the securities, if the difference between the trade amounts in the matching instructions does not exceed the tolerance value set by the transferor of the securities; or - The instructions are deemed to have been matched, and the trade is settled using the trade amount specified in the instruction submitted by the transferor of the securities, if the difference between the trade amounts in the matching instructions does not exceed the tolerance value set by the transferee of the securities. Where a tolerance value is set only for one of the accounts for which matching instructions are submitted, if the trade amounts in matching instructions differ, the instructions submitted will be matched, and the trade amount to be used will be determined as follows: - The instructions are deemed to have been matched, and the trade is settled using the trade amount specified in the instruction submitted by the Clearing Participant who set no tolerance value for the account specified in his Notice of Bank Account Details, if the difference between the trade amounts in the matching instructions does not exceed the tolerance value set for the account specified in the instruction submitted by the Clearing Participant who set the tolerance value in his Notice of Bank Account Details. The maximum tolerance value is USD 25 (twenty-five US dollars) or RUB 800 (eight hundred Russian roubles). The tolerance currency must be the same as the account currency. If the tolerance currency and the transaction currency are different, the tolerance will not be applied. Where the account currency is any currency other than USD (e.g. Euro), the tolerance value will be converted into USD at the exchange rate set by the Bank of Russia for the date immediately preceding the execution date of the instruction for registration of bank account details, and the resulting tolerance value will be matched against USD 25.
2.4 Matching instructions by type of settlement model (DVP-1, DVP-2, DVP-3) Clearing Participants must state in their clearing instructions the settlement model to be used by specifying "DVP-1" or "DVP-2" or "DVP-3" in the "Type of Settlement" field. If DVP model 1 is used, both Clearing Participants' instructions must contain an indication that settlement is based on DVP model 1. For DVP-2 and DVP-3 settlement, it is permitted to match instructions for different types of transactions: If the Clearing Participant delivering securities specifies DVP model 2 settlement in its instruction, while the Clearing Participant receiving such securities indicates DVP model 3 settlement in its instruction, then the MS102 report (on the results of securities transfers) sent to the deliverer of securities will specify the transfers processed on a gross basis for each individual instruction settled during the batch run, and the MS102 report addressed to the receiver will show only one securities transfer settled by netting all the instructions processed during the batch run. If the instruction does not contain information on the settlement model, DVP model 2 (gross settlement of securities and net settlement of funds) will be applied by default. As provided by Russian law, for DVP-2 and DVP-3 settlement, a clearing securities account (i.e., a Processing Account) must be used, that is why the MF102 depository reports will specify such clearing securities account as a linked securities account. DVP model 1 settlement does not require the use of the clearing securities account (processing account), that is why the MF102 depository reports will specify the counterparty's securities account. 2.5 Providing currency control documents If a Clearing Participant is a legal entity resident of the Russian Federation (not a credit organisation) and is going to affect settlement in a foreign currency, it is necessary to provide the relevant currency control supporting documentation. An instruction submitted by the Clearing Participant must contain the details of the transaction basement documents, which have been sent to NSD as currency control supporting documents, as well as the transaction details and the details of the transaction document. Currency control supporting documentation is to be submitted simultaneously with the DVP settlement instructions or in advance of the settlement date. As currency control documents a document confirming deal conclusion (agreement, ticket, etc.) or a "Register of Executed Trades") on or before the settlement date to NSD through the Louch system in the form of a free-format message, or in hard copy form, signed by the Clearing Participant's authorised persons. If a transaction is made by a legal entity (not a credit organisation) that is a nominee's customer, the supporting documents must be submitted to NSD by the nominee that is the Clearing Participant. No currency control documents need to be provided by non-resident customers. If the Clearing Participant's instruction on bank details registration contains cash accounts, opened with Citibank N.A., New York, JP Morgan Chase Bank N.A., New York, Deutsche Bank Trust Company Americas, New York., to be used for funds transfer based on the clearing results, the Clearing Participant must provide only a brokerage services agreement / agency agreement / accession agreement / trust management agreement / depository services agreement (to be provided only once upon banking details registration). NSD will complete a certificate of currency operations on the basis of documents provided by the Clearing participant or documents concerning clearing results settlements available at NSD. If and when the relevant currency control documents are subsequently received, the customers' instructions will be included in the next following clearing batch. Customers' instructions, for which currency control supporting documents have not been received, are not included in the batch of
transactions for clearing. No currency control documents need to be provided by non-resident customers. 2.6 Forming a Clearing Batch A clearing batch is based on matched instructions for which currency control documents have been received. A clearing batch may include obligations to be terminated and/or fulfilled using DVP model 2 or DVP model 3.
3. DVP Settlement Schemes 3.1. Settlement via accounts with Foreign banks Citibank N.A., NY/ JP Morgan Chase Bank N.A., NY/ Deutsche Bank Trust Company Americas, NY Account of Seller/ Seller s client Cash 6 Account of NSD Cash 5 Account of Buyer/ Buyer s client 7 NSD 4 2 1 Seller s trading securities account 3 *Aggregate 8 clearing account for securities 8 settlements Buyer's trading securities account 1 Clearing participant (Seller) Clearing participant (Buyer) * For DVP-2 and DVP-3 settlements. DVP-1 settlements are conducted without Aggregate clearing account. 1. Clearing participants (Seller and Buyer) send DVP instructions to NSD; 2. NSD executes netting of liabilities in pool of matched instructions; 3. Securities blocking; 4. NSD on the basis of Power of Attorney sends instruction to debit Buyer s/ Buyer s client cash account opened with the foreign Bank. 5. Citibank N.A., New York, JP Morgan Chase Bank N.A., New York, Deutsche Bank Trust Company Americas, New York transfers funds from the Buyer s/ Buyer s client cash account to the account of NSD; 6. NSD sends instruction to transfer funds from the correspondence account opened with Citibank N.A., New York, JP Morgan Chase Bank N.A., New York, Deutsche Bank Trust Company Americas, New York to the account of Seller/Seller s client; 7. NSD receives confirmation that the account of Seller/ Seller s client has been credited; 8. NSD settles securities.
3.2. Settlement via accounts in NSD * For DVP-2 and DVP-3 settlements. DVP-1 settlements are conducted without Aggregate clearing account. 1. Clearing participants (Seller and Buyer) send DVP instructions to NSD; 2. NSD executes netting of liabilities in pool of matched instructions; 3. Securities blocking; 4. NSD simultaneously settles funds and securities.
3.3 Settlement via account with a foreign bank and account with NSD Citibank N.A., New York/ JP Morgan Chase Bank N.A., New York/ Deutsche Bank Trust Company Americas, New York Account of NSD Cash 5 Account of Buyer/ Buyer s client Trading bank account of Seller/ Seller s client 6 NSD 2 4 1 Trading securities account of Seller 3 *Aggregate clearing 7 account for securities 7 settlements Trading securities account of Buyer 1 Clearing participant (Seller) Clearing participant (Buyer) * For DVP-2 and DVP-3 settlements. DVP-1 settlements are conducted without Aggregate clearing account. 1. Clearing participants (Seller and Buyer) send DVP instructions to NSD; 2. NSD executes netting of liabilities in pool of matched instructions; 3. Securities blocking; 4. NSD on the basis of Power of Attorney sends instruction to debit Buyer s/ Buyer s client cash account opened with the foreign Bank. 5. Citibank N.A., New York, JP Morgan Chase Bank N.A., New York, Deutsche Bank Trust Company Americas, New York transfers funds from the Buyer s/ Buyer s client cash account to the account of NSD; 6. NSD reflects funds transfer from correspondence account opened with Citibank N.A., New York, JP Morgan Chase Bank N.A., New York, Deutsche Bank Trust Company Americas, New York to trading bank account of Seller/ Seller s client opened with NSD; 7. NSD settles securities.
4. Settlement 4.1. Control of Clearing Participants Obligations For the period during which a clearing pool of trades is being built up, Clearing Participants securities accounts are blocked. Upon building up the clearing pool of trades, only those securities remain blocked which will be needed to settle the relevant trade. Transactions in trading cash accounts/ cash accounts may only be made with the permission of NSD. 4.2. Replenishment of Accounts during an Operational Day Clearing Participants may replenish their trading bank accounts/cash accounts/trading securities accounts intended for settling trades on a DVP basis, during NSD s operational day. Cash/securities to be available for the purpose of settling a trade must be received by NSD at least 15 minutes before the start of the next clearing session. Securities will be credited in accordance with NSD s standard procedure. When replenishing his cash account, the Client may specify today in field 72 of his MT103/202 message. In this case, cash funds will be automatically credited to the cash account; otherwise such cash funds will be credited to the cash account the next day. For corporate Clients (other than banks), cash funds in a foreign currency received from outside and to be credited to Clients accounts will be first credited to a foreign currency-denominated transit account, as required by the Bank of Russia s regulations to be applied by NSD acting as a foreign exchange control agent. Cash funds are transferred by NSD from a foreign currency-denominated transit account to a Client s foreign currency-denominated current account without Client s further instructions, in case of the following Client s transactions: 1. Upon replenishment of the Client s account held with NSD for the purpose of settling trades on a DVP basis, by remitting cash funds from a Client s account held with another bank. 2. Upon crediting cash funds received from a Client s customer from outside to the Client s account held with NSD (e.g. under a brokerage services agreement or otherwise), provided that a copy of the agreement specified in the Purpose of payment field (in an MT 103 or MT 202 message) is available to NSD. However, - if a copy of such agreement specified in the Purpose of payment field (in an MT 103 or MT 202 message) is not available to NSD, the Client will be requested to submit a copy of such agreement to NSD; or - if no details of the document constituting the basis for the relevant foreign currency transaction are specified in the Purpose of payment field (in an MT 103 or MT 202 message), the Client will be requested to submit the following documents: the agreement or any other document constituting the basis for such transaction, a currency control form, and an instruction to transfer cash funds from the transit account to the current account.
4.3. Debiting a Clearing Participant s Account To debit cash funds from his trading bank account, a client may either submit to NSD an instruction (form MT 202) or a cash transfer application via the Bank-Client system. To withdraw cash funds from an account held with a foreign bank, a client has to submit to NSD either a payment instruction (form MF199/MT103) or a cash transfer application via Louch software. 4.4 Clearing Batches A clearing batch is the period of time during which NSD is making clearing of a group of transactions having a common feature (i.e., the terms of their processing). During a business day, NSD runs 8 clearing batches at 10.00, 12.00, 13.00, 15.00, 16.00, 18.00, 18:45 and 19.40 MSK. The batches running at 12:00, 16:00, and 19:40 MSK involve the trading cash accounts with NSD, while the batches running at 10:00, 13:00, 15:00, 18:00 and 18:45 MSK involve both trading cash accounts with NSD and cash accounts with the foreign settlement banks. 4.5 Debiting of the Clearing Participant's account upon completion of clearing batch Trading cash accounts opened with NSD are debited by NSD automatically upon completion of a clearing batch. Cash accounts opened with the Foreign Banks and operated by NSD are debited upon completion of the clearing batch, basing on NSD s a payment instruction (MT103) sent to the Foreign Bank, specifying NSD's correspondent account with the Foreign Bank as the receiver of the funds. 4.6 Crediting of Clearing Participant's account upon completion of clearing batch Trading cash accounts opened with NSD are credited by NSD automatically upon completion of a clearing batch. Cash accounts opened with the Foreign Banks and operated by NSD are credited upon completion of the clearing batch, basing on NSD s payment instruction sent to the Foreign Bank for debit of NSD's correspondent account with that Foreign Bank and further credit of the Clearing Participant's account with the Foreign Bank. 4.6 Transfer of securities between securities accounts After either the receiver's trading cash account with NSD has been credited, or NSD received from the Foreign Bank a confirmation of credit of the receiver's account with that the Foreign Bank, NSD transfers securities between the trading securities accounts concerned.
5. Documents Provided by NSD to Clearing Participants Upon completion of clearing processing, NSD will circulate reports to Clearing Participants. The reports are sent via the Louch system or SWIFT. Hard copy clearing reports will be issued to Clearing Participants on the next business day from 9:30 to 17:00 MSK. Reporting on potential counterparty instruction (subscription to Electronic matching required) Sending reports on the results of clearing instructions matching Reporting on instruction execution Reporting on instruction failure Reporting on clearing batch settlement results Report on all unsettled deals with reason description Reporting on instruction cancellation Report on securities transfer based on clearing results Cash account statements: Transfer of cash from accounts with the foreign banks: MT900. Via Louch system (GS036), via SWIFT (МТ 548) Via Louch system (GS116, GS036), via SWIFT (МТ 548, MT 578, MT537) Via Louch system (MS190), via SWIFT (МТ 545, МТ 547,) Via Louch system (GS001), via SWIFT (MT548) Via Louch system (MS009), via SWIFT (МТ575 3 ) Via Louch system (MS007), via SWIFT (MT537) Via Louch system (GF070), via SWIFT (MT541/MT543) Via Louch system (MS102), via SWIFT (MT544, MT546) Via Bank-client system or via SWIFT (MT590) Via Louch system (MS199), via SWIFT (MT900) 3 To receive MT575 it is necessary to register in Message User Group (MUG). Registration can be made on web-site www.swift.com section Ordering > Order products and services > Message User Group, register to.
6. Fees п.п. 1. Fee schedule for clearing services of National Settlement Depository Operation name Operation fee Notes Fees for execution of delivery versus payment obligations in the clearing pool (except REPO) Without securities and cash netting (real time deal-after-deal settlement) With cash netting and without 1.1. 160 RUB per each operation 1.2. 480 RUB per each securities netting operation 1.3. With securities and cash netting 500 RUB per each transaction Fee is paid by both counterparties Fee is paid by both counterparties Fee is charged from both counterparties