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Euroclear Bank and NSD to advance Russian Financial Centre

Euroclear Bank and National Settlement Depository (NSD) announce today their plans to provide highly efficient cross-border services for all classes of Russian domestic securities. Pending regulatory approvals, settlement, custody and related services will be provided for stock exchange and OTC equity trades, government (OFZ) and corporate bond transactions – the most extensive range of services and Russian asset classes offered by a market infrastructure outside Russia.

The direct link between NSD and Euroclear Bank aims at providing the highest level of asset protection for clients using the service, which is scheduled for launch in the coming months. As a result, more than 1,300 of the world’s most active international 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.

Eddie Astanin, Chief Executive Officer of National Settlement Depository, commented: “Participants of NSD have been settling transactions and safekeeping international securities via NSD’s account with Euroclear Bank since 2007. A new law in Russia will recognise NSD as Russia’s central securities depository and allow NSD to open a ‘foreign nominee account’ for Euroclear Bank to develop the direct link. 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.”

Working with Euroclear Bank to provide local asset servicing expertise and intelligence on 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. The Russian ruble is already one of 52 settlement currencies in Euroclear Bank.

NSD has links with CSDs/ICSDs in seven countries.

Russian cash equity market capitalisation increased by 29% in 2011, reaching the equivalent of USD 954 billion. Total Russian debt outstanding is valued at USD 200 billion of which 60% is corporate and municipal bonds, with the remainder in government bonds. Foreign holdings are valued at approximately USD 200 billion in equities and USD 20 billion in bonds.

Euroclear and NSD (formerly known as The National Depository Center - NDC) signed a Memorandum of Understanding in 2007, laying the foundation for information sharing and potential future cooperative initiatives. Both organisations specifically agreed to explore collaborative opportunities in the fields of clearing and settlement in Russia.