Clearstream to build link with Russia’s newly established central depository by year end
Clearstream plans to open a direct account with Russia’s new central securities depository (CSD) by year end, following the creation of the entity earlier this week.
On November 6, Russia’s National Securities Depository (NSD) was granted CSD status by Russia’s Federal Financial Markets Service (FFMS).
This development has been awaited by market participants all year and significantly simplifies the access to Russia’s debt market for foreign investors.
Clearsteam thinks this event is crucial part of the overall reconstruction of the securities market infrastructure in Russia and expects it to significantly contribute to Moscow’s aim to become an international financial centre by 2020.
Mark Gem, head of business management at Clearstream, congratulated the NSD on achieving this “landmark appointment,” which he sees as “crucial for delivering a safer, more efficient and liquid market.”
He said: “We fully support this development which is part of a broader plan to increase the appeal of the market to non-resident investors.”
Clearsteam has been strengthening its cooperation with Russian market authorities and its sub-custodian in Moscow ever since the new CSD law came into effect on January 1.
FFMS has included Clearstream in its list of authorised foreign nominee holders, which also includes Euroclear. Euroclear was approved to service Russian debt by the FFMS last month.
Clearstream says the new account at NSD will deliver an efficient and secure means for foreign investors to hold local fixed income assets, namely government debt instruments, municipal and corporate bonds.
Gem says Clearstream plans to work with its partners on any future initiatives that provide non-resident investors the opportunity to hold a greater breadth of instruments in Russia within a legally safe and operationally efficient environment.
Clearstream was the first international CSD to develop a sub-custody link with Russia in 2006 through Deutsche Bank in Moscow.
It pioneered the establishment of the ruble as a settlement currency, using the sub-custodian as its cash correspondent bank, following the introduction of the Currency Regulation Law in Russia on January 1, 2007.
It was also the first to offer settlement and custody services for Russia’s federal loan obligations (or government bonds) from 1 January this year.
Headquartered in Luxembourg, Clearstream has the largest international settlement network covering 53 domestic markets. This includes all Eurozone countries and major emerging economies, such as Brazil, Russia, China and South Africa.
Talks are already under way on access to the Indian market to complete the coverage of the BRIC region.
International CSDs were first set up in the 1970s to provide settlement and custody services for Eurobonds. In recent years they have established links to various local markets. Today, settlements of trades in domestic securities – primarily European government bonds – account for a significant portion of their revenues.
Clearstream has evolved from being a pure Eurobond house to holding equity, funds, structured products and commodities.