Clearstream introduces DVP settlement solution in Russia


Clearstream introduces DVP settlement solution in Russia

http://www.atmonitor.co.uk/news/newsview.aspx?title=clearstream-introduces-dvp-settlement-solution-in-russia

Published on   May 30, 2013

As momentum continues in the reform of Russia’s capital markets, Clearstream is keeping pace and is supporting the set-up of an effective settlement framework by delivering its improved settlement solution and introducing municipal bonds via its direct link to the new Russian Central Securities Depository (CSD), the National Settlement Depository (NSD).

This week, Clearstream goes live with its new delivery versus payment (DVP) settlement solution – the market’s preferred settlement choice since it is more efficient, more secure and offers more real time settlement compared to the free of payment (FOP) option. For DVP settlement, a clear link is established between a securities transfer system and a funds transfer system that ensures delivery occurs only as and when payment occurs. This move by Clearstream is helping to pioneer a shift within the market from its current system of settling in cash batches, to a system which is closer to real-time settlement. The extent to which real-time securities settlement becomes a real possibility will still depend on the decision by Russian market participants to move away from the batch system for local cash transfers.

Clearstream this week also introduces Russian municipal and regional bonds for settlement via the NSD and extends settlement deadlines for its free of payment (FOP) settlement service by several hours (from 13:55 to 17:20 CET summer time). These steps reflect good pace in Clearstream’s – and the wider market’s – settlement and custody services development since the establishment of the NSD as CSD for Russia at the end of last year. As a next milestone, Clearstream plans to introduce settlement for Russian corporate bonds and to enhance its access model for Russian equities as soon as local legislation allows for this.

Jeffrey Tessler, Chief Executive Officer of Clearstream, said: “I am delighted we keep developing and enhancing our settlement and custody services in the Russian market. Our new delivery versus payment settlement solution is an exciting milestone as it helps pave the way for the Russian market to move more towards a real time settlement environment, keeping up with other capital markets around the world as part of Russia’s capital market reform.”

Eddie Astanin, Chairman of the Executive Board, National Settlement Depository, commented: “Switching to delivery versus payment (DVP) using the link between the National Settlement Depository and Clearstream will create additional opportunities for foreign investors who conduct transactions with Russian fixed income instruments. We are happy to see a high rate of technological development of Clearstream’s link, which in turn is contributing to the development of the national infrastructure and, as a consequence, makes the Russian financial market more attractive and competitive.”

Clearstream’s services in Russia

Clearstream offers a comprehensive service taking full advantage of the new Russian securities law and market infrastructures refocus, including custody and settlement for the following instruments:

Equities – held in omnibus form via Clearstream’s local agent bank Deutsche Bank Moscow’s link with the NSD and deliverable free of payment (FOP) in the local market;

OFZ bonds and municipal bonds – held in omnibus form via Clearstream’s own direct link with the NSD;

Delivery versus payment (DVP) multicurrency settlement against all Clearstream Banking Luxembourg and Clearstream Banking Frankfurt international central securities depository customers;

Delivery versus payment (DVP) settlement against all NSD counterparties in Russian rubles for OFZ bonds and municipal bonds.

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