Russia finally gains central depository to open up bond market

Russia’s National Settlement Depository (NSD) has finally gained the status of Central Securities Depository.

This much awaited move opens up the local debt market to foreign investors. From now on, Russian federal, sub-federal, municipal and corporate bonds can be traded through Euroclear and other international clearing houses.

NSD, which is a subsidiary of the Moscow Exchange Group, was awaiting approval from Russia’s financial regulator, the Federal Financial Markets Service. The first set of documents was approves by the supervisory board on October 16.

The establishment of a central depository in Russia is a key development for its capital market. It is expected to increase transparency of securities ownership, improve efficiency and liquidity and lower settlement costs.

Foreign central depositories, such as Euroclear and Clearstream, will now be able to open nominee accounts with Russia’s central depository.

NSD is also expected to meet the requirements of the US Investment Company Act, which will allow US-based funds to invest directly in Russian securities.

Alexander Afanasiev, CEO of Moscow Exchange Group, commented: “The establishment of the CSD is a milestone event for Russia’s financial markets. It is one of the key elements of guaranteeing rights of both Russian and international market participants and providing comfort to all categories of investors.

“The creation of a CSD is one the most important reforms the Moscow Exchange is executing. Other key reforms include changes to the listing rules and creating a single family of indexes. These are the necessary elements of a modern, competitive exchange infrastructure.”

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