15th International Rouble Settlement Forum (IRSF) 13 th May 2014 ICAP Office London

Transcription

1 15th International Rouble Settlement Forum (IRSF) 13 th May 2014 ICAP Office London The 15th IRSF to discuss the progress of solutions relating to the settlement of the Russian rouble was held in ICAPs London office and was attended by 56 attendees from a total of 34 different organisations including Central Bank of Russia, SWIFT, MICEX, CLS and NFEA. Attendees also included participants from 11 banks and overseas representation from Vienna and Moscow. Opening Remarks from the chair. Darryl Hooker EBS Head of Strategic Currency Initiatives. Darryl welcomed the group to the forum and reminded the group that the forum had evolved over the years and now had two main objectives: 1. The BESP payment system to be fully adopted and utilised as the Real Time Gross Settlement for settling the rouble 2. For the Russian rouble to become a CLS eligible currency. It was acknowledged that much work had been done by the Central Bank of Russia, CLS and SWIFT to meet these objectives and thus internationalise the rouble and that the market expected a surge of interest, further investment and increased trading opportunities once the rouble was CLS eligible. It was hoped though that these positives were not negated by the current political unrest that exists between Russia and Ukraine. Darryl advised that Global FX trading volumes had been impacted by a number of regulatory initiatives, rate rigging investigations and banks looking to reduce costs due to internalisation of flow. The ecology of the market though is changing and market participants would continue to look at growth opportunities in developing regions that have effective and efficient support systems that offer safe and secure returns on their investments and fiscal exposures. Darryl introduced our guest speaker Mr Danny Corrigan who gave a keynote speech to the group. Danny Corrigan CEO European Trade Repository at CME. Danny gave an overview of the financial markets which was based on where were we, where are we now, and what do we need to do next? He acknowledged that there were challenges out there in business with particular undercurrents in emerging markets, the commodity markets being in trouble and the troubles in Eastern Europe. Danny explained that back in 1992 temporary Prime Minister Gaida brought in his so called Gaida Reforms and a lot of work went on between Russian institutions and the West which led to the foundations we have now. These foundations were built around cooperation with the Bundesbank, Bank of England and the US State Department leading to cross movement by pioneers in the industry moving from West to East and vice versa. The cornerstones of the financial markets in Russia were built around this time between 1992 and Markets in Russia slowly recovered around early 2000 and the current reform process was started by President Putin around 2006 when he reformed the ability for international investors to buy Gazprom shares which at the time was considered to be Russia s Jewel in the Crown! His reforms also liberated the money markets and overseas banks could open rouble accounts which then allowed overseas banks to trade spot foreign exchange. This all started well but after a number of settlement failures work then began on a Real Time Gross Settlement System which is when the IRSF came into existence. 1

2 Danny believes that this is such a success story that Russia is truly an international financial centre and when the question is asked When will Russia become an international financial centre? his answer would be that it is already across a range of financial products. Looking at Russia compared to any other emerging/developing market there is no other market that has developed as much as Russia has both externally and within Russia itself the Financial Market in Russia is a true success story! Going onto where are we now with the current troubles Danny s personal view is that it is a struggle to understand what is going on as there are too many different information sets across the community. All we can do is continue to do business with Russia based on what we know now which is OK based on current business but when trying to do new things it does become more difficult. There are a number of key developments that must happen by the year end so channels of communication must be kept open to organisations such as Central Bank, National Settlement Depository, Moscow Exchange and NFEA. It s important therefore that even though credit lines might be pulled from Russian banks and Prime Banks might cut back on prime operations that these channels are kept open. This can only happen though if our respective governments allow us to and with most institutions now being so global orientated this could prove more difficult going forward. End of year key deliverables are Haven t completed netting for derivatives in Russia. Crucially for Russia and for everyone Basel III states that as of 1 st January 2015 (within the European Union 15 th December) all clearing houses around the world will need to be what s called deemed equivalent so that people can continue to trade effectively through their clearing houses. Key events in the near future that people should attend to ensure support of Russia at this time are 22 nd to 24 th May - International Economic Forum in St Petersburg. Week of 26 th May - World Federation of Exchanges in Moscow. 29 th May - ACI Russia Annual meeting sponsored by 8 firms 30 th June 1 st July - Current Lord Mayor of London is due to go to Moscow which is a regular occurrence to promote business between London and Moscow. Danny concluded that currently the political situation is being managed with business continuing and events remaining scheduled. There is a concern we are not far from people saying you can t do that anymore. However, we are guided by our government s advice and will support Russia until such a time we are advised otherwise. Dmitry Piskulov Chairman of the Board NFEA Last Trends of Russian rouble trading domestically and abroad. Dmitry gave a presentation on information and statistics as it related to the rouble in the last year the main points based on the following sub headings Trends in rouble markets Rouble trading volumes statistics Rouble Exchange Rate regime Ukraine Crisis and threat to Russian globalisation Initiatives to promote rouble settlements for export. Trends in rouble Markets in last year o Rouble depreciated during 2013 by 20% and so far in 2014 by 10% which is in line with or smaller than other EM currencies. This can be down to the following. 2

3 Decline of GDP growth from 3.4% in 2012 down to 1.3% in 2013 Revocation of banking licenses by the CBR from weak and or suspicious banks thus causing panic amongst depositors Net capital outflow reduced from its high in 2008 of $130 billion down to $65/70 billion in Q o Due to panic with certain banks the 1 st quarter 2014 saw the largest withdrawal of rouble deposits and conversion into foreign currencies from Russian banks since In an effort to protect the rouble the CBR twice increased the key rate from 5% to 7.5%. As of March 2014 the rate has now stabilised. No currency controls expected and the CBR has promised to support banks with extra cash if required. o There has been a decline in volumes of interbank secured deposits with a shift to secured REPOs In 1 st quarter 2014 there was a decline in Rouble stock indexes but in March this stabilised. Due to rouble depreciation there was a decline in imports but overall the foreign trade balance has improved. Volume statistics. o Rouble volumes on shore in the FX Market are stable with the share of Organised Trading facilities (Moscow Exchange) on the increase. o Latest figures available (April 2013) show that off shore volumes have decreased slightly but expected to increase in the years ahead. o As a share of the global FX market trading in all rouble represents 1.6% of the total (as at 2013) currently ranking the currency 12 th up from its position of 17 th in o In 2013 the largest on shore FX market was UK at 40.9% ($ 2726 billion) of global share and Russia domestic market was 0.9% (average daily turnover of $ 61 billion) ranking them 13 th globally. o Largest currency pair traded in Global FX is the EUR/USD (24.1% market share) and USD/RUB has 1.5% market share ranking the currency 11 th overall. o There has been a steady rise in domestic Fix market volumes since 2003 in all currencies and also USD/RUB domestic FX spot market volumes peaked at $104.2 billion, decreased considerably Oct 2009 down to $54.2 billion but there has been steady increase since this time and as at Q ADT is now approximately $68 billion. o Outside Russia FX instruments represent $25/27 Billion out of a total for all instruments of $30/33 billion so FX instruments far outweigh any other instruments off shore. o In London latest figures as at October 2013 shows $23.3 billion traded of which $10.7 billion was FX spot this has decreased from a previous high of $34.4 billion in April 2013 of which $14.3 billion was FX spot. Central Bank Policy re rouble exchange rate regime. o It is the intention that in 2015 the CBR will move from a Managed Floating Rate regime where the central bank intervenes regularly to manage the exchange rate to a Free Floating Rate regime as adopted by other major central banks where interventions are kept to a minimum. Letting the currency exchange rate freely change with the intention of bringing the number of official interventions down to zero. Due to the crisis in March when investors withdrew rouble from banks and converted into foreign currency the CBR increased the number of interventions to protect the rouble and avoid inflation risks, the situation is now stable. 3

4 Even after 2015 the CBR has promised to support the rouble via interventions if and when necessary. Ukraine Crisis o There are a number of threats relating to the current crisis between Russia and Ukraine. Possible trade sanctions on Russian exports Freeze by the US or EU of foreign USD assets of Russian individuals/corporations There is increased political tensions leading to travel and visa restrictions. The challenge for the CBR is to promote more settlements in rouble i.e. to make rouble more global! Initiatives to promote rouble settlements for export. o There are plans to increase rouble payments where possible to avoid use of USD in export contracts. o 5 th May Vladimir Putin adopted legislation that allowed Russian exporters to receive roubles rather than dollars as export proceeds, the legislation though did not prohibit the use of dollars. 7 th May Ministry of Finance met with large banks to discuss and analyse the readiness of the Russian Banking system to increase rouble payments in settlement of foreign trade. There are no technical or legal obstacles within the payment system to prevent this increase. This initiative might increase FX Market turnover. o Based on current currency share of market, % of Global GDP and % share of the IMFs COFER (Currency Composition of Official Foreign Exchange Reserves) Russia has higher scores than other currencies that are already reserve currencies so has very high potential to also become a reserve currency. Matthieu de Heering Head of Russia, CIS & Mongolia SWIFT Rouble Payment Trends - SWIFTS s perspective. Matthieu gave a very concise and informative presentation on the set up of SWIFT within Russia and statistics of the messages sent via SWIFT Main points as follows: SWIFT in Russia: Statistics: 1989 first bank connected Vneshencombank. Currently 600 users. Moscow office opened in 2009 now has 7 members of staff Main focus of the office is to support the messaging and servicing needs of the financial sector in Russia. Continues to support the project of Moscow becoming an International Financial Centre In the last 10 years sent and receive FIN messages have grown 6 fold. o SWIFT board of representation is based on users of the system. Therefore, based on current trend, in 2015 Russia are likely to be able to add a representative to the SWIFT board 4

5 Worldwide SWIFT has seen the best month ever in March with an increase of 9.2% over last year but the Russia, CIS and Mongolia region has seen three times that increase at approximately 28% thus ranking the region 15 th globally in message traffic. Payment messages show growth worldwide since 2007 of 44% but payment traffic growth in this region is 7 times larger than that at approximately 300% Comparing rouble to other BRIC countries o Yuan growing much faster than the rouble and South African Rand both by value and number of transactions. o Rouble as a non CLS currency is in the Top 5 growing currencies ranked no 2 in MT 300 confirmation messages (RUB, INR, CNY, BRL, MYR) SWIFT Index OECD o This is a measure based on a countries MT payment messages and aims to predict a countries GDP in Russia growth is predicted to be approximately 2.1 in Q London s growth predicted to be 2.7% in Q Matthieu concluded that it s a great story as far as SWIFT usage by the commercial banks in Russia is concerned and with its imminent inclusion as a CLS currency traffic in rouble is expected to increase further. Sergey Romanchuk Head of FX & MM Metallinvestbank and President of ACI Russia. Update on Russian financial markets regulation. Sergey gave a brief summary on results of meetings that ACI had on the subject of Dodd Frank, EMIR regulations and advised that the full update could be found on the ACI website based on the research and analysis performed on the subject of regulation for the buy side. How the new regulations impact Russia: Reporting It is already mandatory from November 2013 that FX SWAPS and REPOs are reported, forwards though currently are not required to be reported. Mandatory reporting for all derivatives including all FX and OTC products was due to be 2014 but this is now likely to be January Some international banks have stopped operations already but the Central Bank of Russia advises that reporting for non-residents/foreign participants is NOT mandatory. Central Clearing The National Clearing Centre (NCC) is the central counterparty of Moscow Exchange and was launched in 2013 on commercial terms. o The CBR have plans to make OTC clearing mandatory in June 2015 thus meeting international requirements but volumes at the moment are not significant. Execution Until now the foreign exchange market in the Moscow Exchange was regulated through tariffs and penalties. However, recently a Working Group of the Exchange council was created to discuss more formal regulations especially for High Frequency Trading. The intention is to regulate along the same lines as other international venues. FX Fixing Scandals 5

6 The fixing scandals that have plagued the industry recently have been discussed during ACI Russia s meetings. In Russia it is under consideration to change the fixings for EUR/RUB and USD/RUB but no decision made at the moment. Future proposals for Russia. The CBR have put a proposal forward to set up a Self-Regulated Organisation (SRO) to manage not only the securities markets but derivative markets and FX as well. The plan is to merge together NFEA and NFA to perform this task. OTC clearing is scheduled for 2015 but decision on exempting FX delivery is still to be made in line with US and EU regulation. On exchanges margin requirements will soon be netted, due in June 2014 when Futures/spot and forwards will be netted via special transactions. Trading rules for Algo Trading will need to be discussed by the Moscow Exchange working group in particular rules around possible manipulation will need to be addressed. Due to current political situation there will need to be more focus put on alternatives to trading EUR/USD possibly more trading in Chinese Yuan, Gold and possible settlement of export contracts in rouble. The CBR need to continue their commitment to increasing rouble usage and the settlement of rouble and particular commitment to rouble becoming CLS eligible. It is important to note that CLS eligibility is NOT under risk and continues to be on schedule. Adam Levine CLS Director of Corporate Development CLS Rouble Update The main focus of Adams presentation was centred on where the project for rouble becoming a CLS eligible currency was in the on boarding process, further details on the background of CLS and the FX trade life cycle can be found in the full presentation. Project History Adam showed a slide with some of the milestones on discussions between CLS and Bank of Russia, the major highlights being: Nov 2011 Inaugural engagement with Bank of Russia July 2012 Bank of Russia signs letter of intent Sept 2013 CLS meeting with First Deputy Chairman Luntovskiy and Deputy Chairwoman Chugunova Approval from the CLS board that the rouble can progress into the implementation stage. Mar 2014 Advance discussions with Bank of Russia on amendments to Russian legislation. Adam reiterated that one of the most important aspects in a currencys on boarding process is the commitment/dedication of the Central Bank and in Russia this this has been shown all the way through the process. Adam reminded the group of the three phases that a currency has to go through in the on boarding process i.e. Engagement Phase 6

7 o Where CLS works with the Central Bank and the Banking community to explain fully how CLS works, benefits to risk mitigation, liquidity management etc. Once a letter of intent has been completed by the Central Bank the process moves into the Diligence phase Diligence Phase o Works with the local banks, CBR, legal advisers to find where there are gaps between the local jurisdiction and the specific criteria laid down by CLS that a currency has to meet before a currency can go live. If the currency meets this criteria or is likely to meet this criteria then the process moves into the implementation phase. Implementation phase o This is the phase where the gaps identified in the diligence phase are rectified and CLS works with the local banks, settlement members to go through a testing and trialling process. At the conclusion of the implementation phase and the satisfactory completion of all of the eligibility factors then the currency can go live subject to CLS board and regulatory approval. The rouble is in the implementation phase during which system testing, integration testing, Settlement member/ Nostro testing and acceptance testing is taking place. After a successful completion of the testing and then after operational approval trialing it is expected (subject to board and regulatory approval) that the rouble can go live in November 2014! When the rouble goes live just as any new currency it will go live with Zero position limit 100% haircuts As a result of the above all rouble pay-ins be made and transactions settled between and CET. Testing. Testing has been taking place since July 2013 starting with System testing, connectivity testing, integration testing, Nostro testing (end to end testing between 2 members and Nostros) and we are now in the Member and Testing Phase. This will be followed in July by Internal User Acceptance Testing (July 2014) and Operational testing from September 2014 Member and Testing Phase The objective of this key testing is to prove the integration of the CLS System components with the RTGS system including Nostro and Member testing. Free testing is currently open and the two scripted phases one ran from 22 nd April till 8 th May and the other is due to run between 16 th June and 27th June. Each Nostro must complete a scripted testing phase and in order for a Bank to hit its go live target date it must work with a Nostro that can successfully complete one of two scripted testing phases provided by CLS and the CBR. If Nostro successfully completes scripted testing phase then they and all settlement members must then participate in Trialing in Production (September 2014) in order to meet the target go live date November Some of the 40 settlement members will be fast followers and CLS are currently trying to determine which of these will be ready for day 1 and which ready to settle early Key Remaining Milestones for 2014 Q1 testing to continue between Settlement Members and Nostros Q3 Anticipated legislative requirements need to be implemented some of which have already been agreed by the State Duma which is very encouraging as this is an area that has delayed previous currency s implementation. Q4 Complete testing and Trialing with Settlement members and Nostros 7

8 o Go Live November 2014 subject to CLS Board and Regulatory Approval Adam then opened the floor to questions one of which related to whether the current political situation between Russia and Ukraine would impact the timelines. He advised that CLS were closely monitoring the situation and that at this time there was no impact. However if the situation worsened and further sanctions were implemented by governments that prevented CLS from working with certain institutions in Russia then that could be a challenge. He obviously hopes that will not be the case. He did confirm that CLS would be bound by any sanctions imposed by relevant governments, whether before or even after the go live date! Vladimir Kulipanov Head of Monitoring & Control Centre Central Bank of Russia Anticipated changes in Russian National Payment system 2014/2015 Vladimir advised that there were a number of changes to the Payment Systems due to be implemented in the coming months in particular relating to the Russian RTGS system BESP and changes required for roubles inclusion as a CLS eligible currency. BESP Opening Hours From 30 th June it is intended that BESP will open 2 hours earlier than now at 7.00 am Moscow time. This is due in part to meet CLS requirement that the RTGS system must be open for the start of the CLS settlement window. By opening BESP 2 hours early this means there is at least two or even three hour overlap with the CLS settlement window. In a worst case scenario if the Russian government decide to move the clocks back in the summer BESP would still be open one hour before CLS requirement. Real Time Settlement Due to complaints that customers were not receiving good value and as a result of many discussions between the CBR and the commercial banks it has been decided that from 30 th June the ultimate beneficiary account of a transaction originating via the BESP payment system will be credited in real time. Due to potential costs of this functionality to the commercial banks this will only apply between the hours of 09.00am and 05.00pm. New Payment Formats As of 30 th June the new interbank payment formats will be supported by BESP and message ED107 will be fully compatible with SWIFT MT 202, initially though this functionality will only be available for CLS Bank International, its settlement members, nostros and self-clearers. Infrastructures Service Providers. From 30 th June the National Payment System Act that describes the service providers who can facilitate the payment message exchange between participants of the national payment system was amended so that the CBR can hire infrastructure service providers such as SWIFT. So effectively if contracted by the CBR then SWIFT may become part of the National Payment system. CLS Project Vladimir confirmed the time line that Adam had already presented to the group and that it was hoped that in November 2014 rouble would be live on CLS. There was still a lot of work to do but in particular the most difficult challenge for the CBR was the number of Russian National Laws that needed to be amended to meet the CLS inclusion criteria. After a series of consultations a number of amendments to the National Payment Act and Bankruptcy Act was agreed 8

9 between the CBR and CLS and submitted to the Russian Ministry of Finance for agreement by the State Duma. The Ministry of Finance has been directly instructed by the Prime Minister of Russia Mr Medvedev to do everything in its power to ensure that all changes required to the National Laws by the CLS project be passed through the State Duma on time. This shows the high level of commitment from the top down to this project. Vladimir concluded with a word of caution that whilst everything possible was being done on both the CBR and CLS side to meet a November 2014 live date the recent political tensions between Russia the EU and US was an extra risk that nobody would have considered a year ago. The recent decrease of the Russian sovereign rating to - BBB leaves it just a half point above CLS minimum requirement so this is a concern! Daniel Horgan SVP Citigroup and Chairman IRSF Board of Approval for BESP Usage. IRSF Board of Approval B.E.S.P Dan gave an overview of why the Board of Approval was set up, current situation and proposed next steps. Purpose Set up by the IRSF to try and promote amongst the rouble clearing banks the active adoption of Real Time Gross Settlements and the BESP system. Plan was to try and assess these banks based on a number of different criteria o Their use of RTGS system o Their level of electronic processing capability o Whether they consistently give good value in the 4 th or 5 th cycle as this differs considerably amongst the correspondent banks. Give rouble correspondent banks an accreditation/ranking based on the assessment criteria and publish accordingly. Feedback Based on feedback from a number of the IRSF meetings and market counterparties the board was set up to discuss the following Off shore banks had concerns around the cash settlement in the batch cycle. There was a lot of inconsistency between correspondent banks in terms of how they apply good value and manage their liquidity. It was apparent that trading strategies were being impacted due to the lack of certainty of settlements so offshore banks couldn t increase trading, knowing that settlements may well be delayed. Some banks were clearly more SWIFT compliant than others. Based on this feedback the following assessment criteria were suggested as an important means of trying to accredit or rank correspondent banks. One of the key identifiers is the level of a banks cash flow routing via BESP. What is the profile of a banks usage of the payment systems as a % between BESP and the batch system. How consistent was the Bank in applying good value in the 4 th or 5 th cycle. 9

10 What level of manual intervention was in place, is there good STP and how SWIFT compliant was the Bank? What is a banks level of commitment to join CLS? Board of Approval Is made up of two key distinct groups Bank or Institution with a rouble Nostro account including Citibank, Barclays, Standard Bank and RSC Raiffeisen. Other Advisory members including ICAP and SWIFT. The aim is to accredit or rank a correspondent based on its criteria for BESP participation, settlement efficiency, batch cycle settlement protocols and CLS commitment. These banks would then be ranked according to this assessment and the rankings published so that offshore banks in particular could see where their rouble correspondent ranked in relation to others! Group has met a number of times in London and also in Moscow (with invaluable assistance from Barclays and ING Moscow) to finalise the assessment criteria and to produce a survey to determine the answers to the assessment questions. This survey has been sent out to rouble agents that Daniel estimated cover around 85% of rouble payments overseas and Dan requested that any settlement banks attending the forum reach out to their rouble correspondent and request they complete and return the survey. Next Steps We need information to leverage correspondent Bank relationships and request the rouble correspondents to complete the survey so we can move onto a) Accreditation b) Review and Publish findings 10

11 Panel Discussion. The forum was concluded this year with a panel discussion on the Future of the rouble. Moderator Panellists Danny Corrigan CEO European Trade Repository CME Vladimir Kulipanov. Head of Monitoring & Control Centre of CBR Dmitry Piskulov. Chairman of the management Board NFEA Sergey Romanchuk Head of FX/MM Metallinvest Bank. Chairman ACI Russia Steven Weller. Head of FX Trading, Managing Director SBER Bank CIB Danny advised the audience that not all panellists would be answering all the questions. First Question Do you anticipate new Rouble lows (below 3 rd March) if there is a further escalation in activity between Russia and Ukraine? If so what do you think the CBRs capacity is to stabilise the currency? The rouble exchange rate should be allowed to float but the central bank would intervene if situation got serious. Exchange rate volatility more linked to oil price than anything political but if oil prices were to increase substantially then this would be a shock to the economy and cause short term volatility in the exchange rate. Current exchange rate already has the bad news priced in. There was a shift in assets in March and April out of Russia and cannot see this intensifying further or in fact reversing any time soon. There could be a third or fourth round of sanctions so will have to see if this happens and what that impact will be. Is Ruble likely to become a two tiered currency (offshore NDF versus on shore rouble)? Too far down the route now of free flow to return to a two tier market. Unless there are any dramatic shocks relating to the current political situation Russia is unlikely to go back to a two tier market though the possibility does still exist albeit temporarily. What do you think is the long term impact of the current crisis on Moscow becoming an International Finance Centre? The cost of any further sanctions would be so high that politically the Russian government would not allow the situation to get so bad as to impact Moscow s financial future. Further sanctions could be disastrous so political governors would not put the current strength of the rouble at risk. Central Bank will continue to protect financial infrastructure as much as possible. The time for bold actions has now gone away and neither the EU/US nor Russia are likely to want to escalate this crisis any further. Do you have confidence in rouble becoming a CLS currency in November 2014 given the current political back drop? Everybody is working towards this date and there is tremendous momentum and manpower being put behind the project to ensure this happens. There are still risks 11

12 o One of the most important being any potential downgrading of Russia s sovereign risk rating which is currently -BBB with a negative forecast. If this happens it is beyond the control of the CBR and the CLS. o Drafted amendments to National Laws still need to be approved by the State Duma, though a risk every effort is being made to get these changes passed as soon as possible. There is a concern that one of the ultimate sanctions would be switching off the ability of Russian banks to clear and settle the US$ this would destroy the settlement infrastructure within Russia. There is greater chance than not that rouble will go live in CLS this year one panellist putting the probability at 70% that it will be live. Darryl Hooker IRSF Chairman Closing Remarks and Wrap up Darryl closed the forum with a brief synopsis of the morning s presentations: Danny Corrigan Gave an abridged history of the Russian financial market. Argued that Moscow is already an IFC. Different information sets circulating globally re political situation in Russia o Warned that we should consider the unintended consequences of retaliation Dmitry Piskulov Rouble depreciated 20% in 2013 but in line or slightly better than other EM currencies. Onshore market volume stable but offshore slightly down Rouble volumes heading back up to 2008 levels CBR promised to intervene after 2015 by FX intervention if required. Prospects for rouble to become a reserve currency still good Matthieu de Heering There has been growth of 600% in Russian financial traffic in the last 10 years and there are now 600 users in Russia. Growth in Russian payments is 7 times more than the worldwide trend Based on the number of messages Russia currently ranks 15 th globally Average daily number of messages shows year on year growth of 28% which means Russia is growing 3 times faster than the world average. Sergey Romanchuk In Russia reporting is mandatory from 5 th November for FX SWAPS and REPO s Reporting due to mandatory for all FX and OTC products in 2014/2015 o Some International banks have already stopped operations o CBR propose that foreign participants reporting to a Russian repository is NOT MANDATORY. No sign of state regulation for HFT trading. NFEA and NFA to merge. CBR focused to facilitate international rouble usage and settlements and are committed to the CLS project. Adam Levine Confirmed that rouble now in implementation stage and an expected live date of November

13 Reiterated a number of times that final approval for go live had to be obtained from the regulators and CLS board. So far political situation is not impacting the time lines for CLS eligibility but word of warning that CLS had to be governed by any future possible sanctions against Russia. Vladimir Kulipanov CBR will do everything in its power to complete CLS project on time. BESP will open two hours earlier daily to ensure overlap with CLS settlement window banks executing payments received via BESP must apply real time value to accounts between 09.00am and 17.00pm. New mapping between Russian payment system and SWIFT completed Changes to the National Laws surrounding payments have been agreed between CBR and CLS and have been submitted to the State Duma. This is a risk all be it slight that may delay CLS project. Russia s decreasing sovereign debt rating currently at -BBB with a negative outlook is just half a point above CLS minimum so any further degradation will impact CLS project but is obviously out of CLS and CBR control. Daniel Horgan Board of approval set up to assess and accredit rouble correspondent banks on their usage of BESP, level of STP and CLS intention. Meetings held in London and Russia to determine criteria and to produce survey for completion by the Russian correspondent banks. Dan requested international banks in the audience assistance in prompting their correspondent banks to complete and return survey. Finally Darryl thanked the presenters plus the members of the panel and invited as many as possible to attend what was hoped and likely to be the final IRSF in Moscow in October/November