DVP settlement in NSD

Transcription

1 DVP settlement in NSD

2 DVP* settlement as defined by G10 workgroup**: DVP 1: Transfer instructions for both securities and funds are settled on a trade by trade basis, with final transfer of the securities from the seller to the buyer (delivery) occurring at the same time as final transfer of the funds from the buyer to the seller (payment). DVP 2: Securities transfer instructions are settled on a gross basis, with final transfer of securities from the seller to the buyer (delivery) occurring throughout the processing cycle, but funds transfer instructions are settled on a net basis, with final transfer of funds from the buyer to the seller (payment) occurring at the end of the processing cycle. DVP : Transfer instructions for both securities and funds are settled on a net basis, with final transfers of both securities and funds occurring at the end of the processing cycle. * - delivery versus payment: a link between a securities transfer system and a funds transfer system that ensures that delivery occurs if, and only if, payment occurs. ** - Published by Committee on Payment and Settlement Systems workgroup of G10 banks, September

3 DVP settlement with NSD DVP-1, DVP-2, DVP- settlement models Workflow is done by SWIFT and Luch software Deals are made using RTS exchange Central electronic treaty system (CETS RTS) Account binding Tolerance principle

4 DCC NSD Foreign bank 2 J.P. Morgan & Co NY / Citibank, NY Foreign bank 1 account (client of account) 6 NSD Account account (client of account) DCC, on the ground of Client s Power of Attorney, transfers funds from account, opened in foreign bank. bank account account for clearing results 5 securities account 8 Special technical clearing account (securities) Special technical clearing account (foreign currency) NSD clearing system securities account 1.Clients (participating in clearing) send DVP instructions to NSD. 2.NSD executes netting of liabilities in pool of matched instructions..nsd, on the ground of Client s Power of Attorney, transfers funds from account, opened in foreign bank. 4.NSD transfers funds from its account to Client s bank / clearing account opened with NSD. 5.NSD, internally settles both fund and securities parts of the operation at the same time. 6.In case if NSD manages Client s account in foreign bank, a payment instruction is sent by NSD to J.P. Morgan Chase / Citibank for transferring funds to the seller of securities. 7.NSD receives from foreign bank a confirmation that funds are received on seller s account in foreign bank. 8.NSD settles securities 1 bank account account for clearing results 4

5 DVP settlement schemes Using Clients bank accounts in foreign banks Foreign bank 2 account (client of account) 6 clearing account securities account 5 1 J.P. Morgan & Co NY / Citibank, NY NSD Account 4 NSD clearing system Special technical 7 clearing account 7 (foreign currency) 2 Special technical 7 clearing account (securities) 7 Foreign bank 1 account (client of account) securities account 1.Clients (participating in clearing) send DVP instructions to NSD. 2.NSD executes netting of liabilities in pool of matched instructions..nsd, on the ground of Client s Power of Attorney, transfers funds from account, opened in foreign bank. 4.NSD transfers funds from its account to Client s bank to clearing account opened with NSD. 5.NSD sends payment instruction from corresponding account opened with J.P. Morgan Chase / Citibank to transfer funds to seller s account. 6.NSD receives from foreign bank a confirmation that funds are received on seller s account in foreign bank. 7.NSD settles securities. 1 clearing account Using Clients bank accounts opened with NSD bank account securities account NSD clearing system 2 Special technical clearing account (securities) 1 Special technical clearing account (foreign currency) securities account 1.Clients (participating in clearing) send DVP instructions to NSD and provide that there are sufficient fund deposited with their bank accounts opened with NSD 2.NSD executes netting of liabilities in pool of matched instructions..nsd simultaneously settles funds and securities. 1 bank account 5

6 Connecting to DVP 1 / 2 / settlement with netting of liabilities of clearing participants or their clients To become a Client one shall: 1. Sign with NSD an Agreement on clearing services. 2. Open a bank account with NSD (in case there is none opened) in Russian rubles (RUB) or foreign currency and provide NSD with relevant for account type documents.. Sign an additional agreement to bank account agreement (in RUB or foreign currency) on settlement after clearing results. 4. Open owner / nominee holder or asset manager type of securities account (in case there is none opened) with NSD and provide the latter with relevant for securities account type documents. 5. Register bank account details (which will be used for DVP settlement) opened with NSD by providing an AF005 instruction in paper or electronic form with attached GF088 notification (operation code 07, with bank account details set as 14 for clearing ). In case if NSD, as a clearing organization, is responsible by laws of the Russian Federation to act as a currency control agent, Clients are obliged to provide NSD with custody / asset manager agreement or brokerage contract. 6

7 DVP instructions types Sent via Luch software Sent via SWIFT Clearing instruction type: MF190 Clearing instruction types: MT541, MT54 7

8 Variant of accounts linkage 1. A single bank account could be linked with several bank accounts, opened by a single clearing participant: 2. A single bank account of the clearing participant could be linked with several securities accounts: 8

9 Report types sent to Clients by Luch software and SWIFT 1. Report on deals, settled after clearing: via Luch : MS009; via SWIFT: MT545, MT547; 2. Report on all settled deals (via Luch MS190 or SWIFT MT56). Report on all unsettled deals: via Luch : MS007; via SWIFT: MT Report on matching issues with description of the issue: via Luch : GS06; via SWIFT: MT548, MT Account statement: via bank-client system ; via SWIFT: MT950. 9

10 Distinctions of DVP services, provided by NSD Accont linkage is made in accordance with new Regulations on clearing activity (p.7.2): Funds, securities and/or other property belonging to different clearing participants (or clients of participants) must be kept separately from other clearing participants. Funds, securities and/or other property of clearing participants is kept on segregated registers or sections of that registers belonging to the mentioned participants. The following clearing sessions are used: 10:00, 12:00, 1:00, 15:00, 16:00, 17:00, 19:40. Sessions at 12:00, 16:00 and 19:40 are intended for bank accounts, opened with NSD for on-exchange operations. Sessions at 10:00, 1:00, 15:00 and 17:00 are intended for bank accounts opened with NSD or with foreign banks. If fund transfer is made from Client s account, opened with foreign bank, mentioned funds should be transferred via NSD account opened in foreign bank. This rule is applied to both DVP-1 and DVP-2 options. Bank account details are set in instruction for funds withdrawal (with a 1 year validity period). Compare to DCC application form for accounts correspondence. Tolerance is set at USD 25 (twenty five) or 800 (eight hundred) RUB. Tolerance currency should match account type currency. If transaction currency is set as USD and account type as RUB, tolerance is not applicable. Instruction validity period is 0 (thirty) days and it starts from settlement date stipulated by clearing participant in instruction. Currency control. If clearing participant is a legal entity registered in accordance with Russian law, it is obliged to provide NSD with currency control documents. 10

11 Foreign currency control confirmation documents for DVP settlement 1. Confirmation documents for foreign currency control (FCC) are required for clearing participants legal entities, that are not registered as banks. Confirmation documents are provided at the same time as instructions for DVP settlement. Legal entity, registered in Russia, provides NSD with the following documents: Document that confirms the fact of entering into agreement on deal (ticket, purchase and sale agreement (PSA)) provided for each deal. In case a deal was made via negotiations by phone, clearing participant (NSD Client) provides NSD with deal summary, signed by participant, that contains main deal details: trade and settlement date, amount (or principal value) of securities, amount of transaction in foreign currency, counterparty name and account number. Broker s (clearing participant s) report, that includes details on made deals, could be provided as confirmation document. In case clearing participants instruction includes bank details for funds transfer, NSD is provided with brokerage / agency / asset manager /custody agreement. Mentioned document is provided only once. Certificate of identity on operations with foreign currency is filled up by NSD in accordance with additional agreement between NSD and clearing participant. 2. In case if deal is made by client of clearing participant, the latter is responsible for providing NSD with documents required for FCC.. Clients instructions without confirmation documents are excluded from clearing pool. If NSD receives confirmation documents, instruction is included into next clearing pool. 4. Confirmation documents for FCC are sent via Luch software as unstandardized documents or in paper form singed by legal entity representatives. 11

12 Contacts NSD Hotline: +7 (495) Client Services Division: Тел.: +7 (495) /91/92/9; (495) ; (495) ; (495) Client Relations Development Department: Tel.: +7 (495) Web-sites: Address: 12, Spartakovskaya St., Moscow, , Russia 12

13 Disclaimer This presentation has been prepared and issued by NSD (the Company ). Unless otherwise stated, the Company is the source for all data contained in this document. Such data is provided as at the date of this document and is subject to change without notice. This document does not constitute or form part of, and should not be construed as, an offer or invitation for the sale or subscription of, or a solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any offer, contract, commitment or investment decision relating thereto, nor does it constitute a recommendation regarding the securities of the Company. The information in this document has not been independently verified. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information or opinions contained herein. None of the Company, or any of its subsidiaries or affiliates or any of such person's directors, officers or employees, advisers or other representatives, accepts any liability whatsoever (whether in negligence or otherwise) arising, directly or indirectly, from the use of this document or otherwise arising in connection therewith. This presentation includes forward-looking statements. All statements other than statements of historical fact included in this presentation, including, without limitation, those regarding our financial position, business strategy, management plans and objectives for future operations are forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance, achievements or industry results to be materially different from those expressed or implied by these forward-looking statements. These forward-looking statements are based on numerous assumptions regarding our present and future business strategies and the environment in which we expect to operate in the future. Important factors that could cause our actual results, performance, achievements or industry results to differ materially from those in the forward-looking statements include, among other factors: perception of market services offered by the Company and its subsidiaries; volatility (a) of the Russian economy and the securities market and (b) sectors with a high level of competition that the Company and its subsidiaries operate; changes in (a) domestic and international legislation and tax regulation and (b) state policies related to financial markets and securities markets; competition increase from new players on the Russian market; the ability to keep pace with rapid changes in science and technology environment, including the ability to use advanced features that are popular with the Company's and its subsidiaries' customers; the ability to maintain continuity of the process of introduction of new competitive products and services, while keeping the competitiveness; the ability to attract new customers on the domestic market and in foreign jurisdictions; the ability to increase the offer of products in foreign jurisdictions. Forward-looking statements speak only as of the date of this presentation and we expressly disclaim any obligation or undertaking to release any update of, or revisions to, any forward-looking statements in this presentation as a result of any change in our expectations or any change in events, conditions or circumstances on which these forward-looking statements are based. 1