National Settlement Depository (Russia)

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The National Settlement Depository (NSD) – is a Russian non-bank financial institution, central securities depository, and professional securities market participant engaged in depository business. NSD is a member of the Moscow Exchange Group and provides depository, settlement (bank account), and related services to financial market players. NSD is the central securities depository (CSD) of the Russian Federation, whose services cover both securities listed in Russian Federal Law No. 414-FZ dated 7 December 2011 "On the Central Securities Depository", and other Russian and foreign equity and debt securities. NSD was assigned the CSD status by the Russian Federal Financial Markets Service by Order No. 12-2761/pz-i dated 6 November 2012. NSD is the largest securities depository in Russia by market value of equity and debt securities held in custody.[1] NSD is headquartered in Moscow.


On 27 June 1996, MICEX Settlement House was incorporated, which was a credit organization that provided settlement (bank account) services, including cash settlement services for trades in the financial market. MICEX Settlement House's primary business was to provide settlement services in the stock exchange markets operated by the MICEX Group.

National Depository Center (NDC) was incorporated on 21 January 1997. NDC was established to serve as the principal securities depository in the government securities market, and started acting in such capacity late in March 1998. The same year, NDC started providing services for corporate, sub-federal, and municipal securities. NDC gained the leading position in the Russian debt securities market, and then started dynamically growing the scope of transactions with shares, investment units, and Eurobonds. As a result, NDC became the largest Russian settlement depository by value of assets in custody, and the only Russian settlement depository that covered all types of Russian equity and debt securities.

On 3 November 2010, an entry was made in the Unified State Register of Legal Entities concerning the reorganization of MICEX Settlement House through merger with NDC, which resulted in the establishment of National Settlement Depository (NSD), a unique organization for Russia.

On 6 November 2012, NSD was assigned the CSD status by Russian Federal Financial Markets Service's Order No. 12-2761/pz-i dated 6 November 2012.[2] In accordance with Article 22 (paragraph 5) of the Russian CSD Law, the CSD status may be granted to one organization only.

On 1 October 2013, NSD started acting as a trade repository for all trade types.

In 2014, following the analysis of all financial market infrastructure organizations operating in Russia, the Bank of Russia recognized NSD as a systemically important central securities depository, systemically important settlement depository, and systemically important trade repository.[3] On 25 December 2012, the NSD Payment System was recognized by the Bank of Russia as a systemically important payment system, and on 16 July 2012 – as a nationally important payment system.[4]

Ownership and management[edit]

NSD's majority shareholder is Moscow Exchange holding a 99.997% interest in NSD's share capital. The remaining shares are owned by a number of banks and securities market participants.[5] On 30 June 2011, the Shareholders Agreement with respect to NSD was signed, which secured for NSD's customers the right to participate in managing NSD and ensured a balance between the interests of NSD's majority and minority shareholders. Under the Shareholders Agreement, up to five major customers of NSD may become its shareholders every year, thus becoming entitled to participate in managing the company.[6]

The Chairman of NSD's Executive Board is Eddie Astanin.[7] The Chairperson of NSD's Supervisory Board is Bella Zlatkis.[8]


Central Securities Depository[edit]

NSD is the central securities depository in the Russian stock market and provides services with respect to securities both in the capacity of the CSD under Russian Federal Law No. 414-FZ dated 7 December 2011 "On the Central Securities Depository", and in the capacity of a nominee holder of other Russian and foreign equity or debt securities.

NSD provides services for the safekeeping of global certificates and depository recordkeeping of 100% of Russian federal loan bond (OFZ) issues and 99% of Russian corporate and regional (sub-federal or municipal) bond issues.

In 2014, the largest international securities depositories, Euroclear and Clearstream, gained full access to the Russian securities market, thus providing foreign companies and investment funds with greater investment opportunities. In 2014, in compliance with the FATCA requirements, NSD was registered with the U.S. Internal Revenue Service and was assigned a Global Intermediary Identification Number.[9]

NSD meets all of the requirements to "eligible securities depositories" and satisfies the criteria set out by Rule 17f-7 of the U.S. Investment Company Act of 1940.[10]

Withholding agent[edit]

Since 2014, in accordance with the Russian Tax Code, NSD has been acting as a withholding agent when paying out income on Russian equity or debt securities.

Whenever required, NSD calculates, withholds, and pays corporate or personal income taxes to the budget of the Russian Federation in accordance with the Russian Tax Code, as well as under international double taxation treaties. As a securities depository, NSD acts as a withholding agent when paying out income on securities to foreign organizations or foreign nominee holders, as well as when paying out dividends to Russian organizations on shares held in owner securities accounts.

Trade repository[edit]

On 1 October 2013, NSD started acting as a trade repository for all trade types (such as repo contracts, OTC derivative contracts, and other contract types entered into under a master agreement, as defined in Article 51.5 (paragraph 6) of the Russian Federal Law "On the Securities Market".[11]

NSD's Trade Repository:

  • Gathers and registers information on derivative and repo contracts entered into under master agreements. As part of the first phase of the Trade Repository launch, NSD registers repo and currency swap contracts;
  • Keeps the register of registered contracts;
  • Provides confirmations of registered contracts to clients or the regulator; and
  • Ensures the integrity and security of information.

By the end of 2014, the number of Trade Repository’s clients reached 1,130 market participants who registered, in aggregate, more than 138,000 reports on master agreements and trades.

Payment system[edit]

As a systemically important payment system, the NSD Payment System was assessed by the Bank of Russia[12] for observance of the international standards, namely the Principles for Financial Market Infrastructures issued by the Committee on Payment and Settlement Systems of the Bank for International Settlements and the International Organization of Securities Commissions (CPMI-IOSCO) and recommended by the Bank of Russia for observance by Russian important payment systems. The assessment showed the high level of NSD Payment System's compliance with the Principles for Financial Market Infrastructures, and it was found that there were no principles that NSD did not observe.

In 2014, the number of cash transfers to or from clients' bank accounts held with NSD was 998.39 thousand; the total amount of RUB cash transfers to or from clients' bank accounts held with NSD was RUB 298.06 trillion; and the total amount of foreign currency cash transfers to or from clients' bank accounts held with NSD was equivalent to RUB 9.62 trillion.

Corporate actions and corporate information[edit]

NSD is one of the initiators of the corporate actions reform in Russia. The objective of the reform is to establish a contemporary mechanism for corporate actions processing that would meet the best international standards. In particular, the reform involves:

  • Establishment, under the auspices of the central securities depository, of an information center that would serve as a source of reliable information on corporate actions. It will be required to provide such information center with structured information necessary for corporate actions;
  • Legalization of e-voting and e-proxy voting at general meetings of holders of shares, investment units, mortgage participation certificates, or bonds;
  • Establishment of a corporate information distribution system and processing of all corporate actions in a centralized manner, through securities depositories or registrars.

In August 2014, NSD launched the e-proxy voting service, which allows professional investors to submit their voting instructions in electronic format through their respective banks. By the end of 2014, more than 220 general meetings of shareholders were held using the e-proxy voting service.

NSD, together with the Russian National Securities Market Association (NSMA), is developing the Valuation Center that calculates fair market prices of bonds, including mortgage bonds in accordance with the methodology agreed upon with the Russian Agency for Housing Mortgage Lending (AHML).

On 2 April 2015, NSD and Interfax signed an agreement of intent to coordinate their efforts for the development of a system designed to assess the fair value of financial instruments (a pricing center).[13] The key objective of cooperation between NSD and Interfax in the field of corporate information is to create a reference database containing all available data about Russian issuers and their financial instruments. The system will bring together official data from the recordkeeping system of Russia's central securities depository, information disclosed by issuers via Interfax as an agency authorized to disclose information to the stock market, and up-to-date information about issuers and securities collected by Interfax.

Clearing and collateral management[edit]

NSD offers collateral management services for tri-party repo transactions with the Bank of Russia or the Russian Federal Treasury. NSD's collateral management system is the first of its kind in the Russian market, which was launched to service Bank of Russia's repo transactions with a basket of securities.

NSD's tri-party services offer flexibility in asset management and trade settlements. Trades are entered not with an individual security, but rather with a basket of securities. The core elements of Bank of Russia's repo transactions are NSD's collateral management and clearing systems that, throughout the life cycle of a repo transaction, allow for automatic selection of securities as a collateral, collateral replacement, daily collateral revaluation, margin collection, clearing, and settlements.

To clear trades, NSD applies a variety of settlement models, including DVP-1, DVP-2, and DVP-3.

Delivery versus payment or DVP is a form of settlement for securities that involves simultaneous delivery of securities by the seller to the buyer and cash by the buyer to the seller.

The service is based on NSD's new clearing platform that allows for making DVP transactions in more than one clearing session, with securities being settled on a gross basis and cash being settled on a net basis (DVP-2); or with net settlement of both securities and cash (DVP-3); or outside clearing sessions with settlement on a trade by trade basis (DVP-1). The DVP settlement mechanism allows clients to use a single instruction both for securities and cash, settle trades both in Russian rubles and foreign currencies (USD or Euro), and prioritize execution of instructions.

To make settlements more flexible and reliable, NSD offers the opportunity to settle trades on a DVP basis using correspondent accounts with the Bank of Russia via the Real Time Gross Settlement System (BESP).[14]

With the launch of the electronic matching service, NSD's clients were provided with the opportunity to receive information on the availability of potentially matching instructions, i.e., unmatched instructions that differ from each in one data field.[15] The Hold & Release functionality offered by NSD contributes to greater reliability of settlements and their control by clients.[16]

The number of Bank of Russia's repo transactions with a basket of securities was 3,727 in 2013 and 8,858 in 2014.

The value of Bank of Russia's repo transactions with a basket of securities amounted to RUB 14.04 trillion in 2013 and RUB 57.22 trillion in 2014.

Numbering Agency and pre-LOU[edit]

NSD acts as the National Numbering Agency (NNA) for Russia and the Substitute Numbering Agency (SNA) for the CIS countries and as such assigns ISINs and CFIs to securities or other financial instruments issued or registered in Russia or other CIS countries. In addition, NSD is a pre-Local Operating Unit (pre-LOU). Pre-LEI codes assigned by NSD are published on the web site of the Global Legal Entity Identifier Foundation authorized by the Regulatory Oversight Committee (ROC) to maintain the global LEI database, and are globally accepted by regulators, market participants, and pre-LOUs of other countries.

The Regulatory Oversight Committee (ROC), the organization responsible for upholding the governance principles of the Global LEI System (GLEIS) and overseeing it, has decided to integrate NSD into the GLEIS as a globally endorsed pre-LOU, thus recognizing that NSD complies with all the principles to be complied with by pre-LOUs.

In 2014, a representative of NSD was, for the third time, elected to the Association of National Numbering Agencies (ANNA) Service Bureau Technical Committee.

As a pre-LOU, NSD assigned 186 pre-LEIs. NSD has also obtained its own pre-LEI code that is now used to identify NSD in its daily reports on pre-LEIs assigned. In September 2014, a dedicated pre-LEI portal ( was launched.

International cooperation[edit]

Integration into the global financial infrastructure[edit]

  • In 2014, the largest international securities depositories, Euroclear and Clearstream, gained full access to the Russian securities market, thus providing foreign companies and investment funds with greater investment opportunities.[17]
  • Euroclear and Clearstream gained access to the Russian securities market step-by-step. First, in spring 2013, they started settling trades with Russian federal loan bonds (OFZ), before accessing the Russian corporate bonds market on 30 January 2014.[18] On 1 July 2014, the international securities depositories were granted the right to deal in Russian shares.
  • In September 2013, CSD.Austria, the Austrian central securities depository operated by OeKB, and NSD launched an international direct link to the Russian securities market. As a result, Austrian and international custodians holding securities accounts with CSD.Austria obtained the opportunity to make direct settlement of Russian securities and hold them using CSD.Austrias's foreign nominee account opened with NSD.[19]
  • In December 2013, NSD and BNY Mellon joined forces to help Russian-based investors trade depositary receipts.[20] Russian-based investors and brokers are now able to issue and cancel depositary receipts (DRs) in Russian companies thanks to a ground-breaking agreement between NSD and BNY Mellon. The two companies have developed an innovative structure that allows DRs to trade on the secondary market, settle and be used as collateral in repurchase agreements (repos) by Russian market participants in their own time zone.
  • In 2014, NSD and Merkezi Kayıt Kuruluşu A.Ş. (MKK), Turkish central securities depository, signed a Memorandum of Understanding, pursuant to which the parties agreed to exchange information and cooperate in the field of e-voting services in the course of corporate actions.

Eurasian Integration[edit]

Compliance with international standards[edit]

Thomas Murray Data Services, the specialist custody rating, risk management and research firm, has maintained the CSD rating for NSD at AA-, which translates as 'very low Overall Risk', with 'Stable' outlook.[22]

In 2014, NSD was included in the TABB/Alacra international ranking of the TOP 14 pre-LEI providers.

In November 2013, the Internal Revenue Service, the agency of the United States federal government, responsible for tax collection and tax law enforcement, signed an agreement with NSD recognizing its role as a Qualified Intermediary (QI). NSD was assigned Qualified Intermediary's identification number (QI-EIN) 98-0242512.[23] NSD is the first Russian company to receive the QI status for U.S. securities.

FTSE Global Markets named NSD among 20 most influential financial market players in 2013.[24]

International Consulting Committee[edit]

Early in 2012, NSD established the International Consulting Committee. The ICC members include representatives of eight largest foreign global custodians and investment banks. The ICC's principal goal is to promote the use by NSD of international best practices for the purpose of improving the Russian securities market infrastructure and services offered by NSD as the central securities depository.

Memorandums of understanding[edit]

Country Organization Signature Date
China China Central Depository and Clearing Co., Ltd. 24 June 2015
Turkey Merkezi Kayıt Kuruluşu A.Ş. (MKK), Turkish CSD 7 November 2014
Armenia Central Depository of Armenia 10 January 2014
Kyrgyzstan Central Depository of the Kyrgyz Republic 12 September 2013
Romania Depozitarul Central S.A. 30 May 2013
Mongolia Mongolian Securities Clearing House and Central Depository 28 May 2013
Luxembourg REGIS-TR, the European Trade Repository 22 May 2013
Poland Krajowy Depozyt Papierów Wartościowych S.A. 15 May 2013
Belarus The Republican Unitary Enterprise "Republican Central Securities Depository" 4 April 2013
Austria Oesterreichische Kontrollbank Aktiengesellschaft (OeKB) 18 March 2013
South Korea Korea Securities Depository 2 May 2012
Ukraine National Depository of Ukraine 22 February 2012
Japan Japan Securities Depository Center, Incorporated 18 September 2011
Hong Kong Hong Kong Securities Clearing Company Limited (HKSCC) 17 September 2009
India Central Depository Services Limited (CDSL) 8 April 2008
India National Securities Depository Limited (NSDL) 8 April 2008
Azerbaijan The National Depository Center of the Republic of Azerbaijan 7 September 2007
Uzbekistan Central Securities Depository of the Republic of Uzbekistan 9 February 2006

Membership in Other Organizations[edit]

  • European Central Securities Depository Association (ECSDA)
  • Association of National Numbering Agencies (ANNA)
  • Association of Eurasian Central Securities Depositories (AECDS)
  • National Securities Market Association (NSMA)
  • Russian National SWIFT Association (ROSSWIFT)
  • Association for Banking Information Security Standards (ABISS)
  • World Forum of CSDs (WFC)
  • International Securities Services Association (ISSA)
  • SWIFT SCRL (Society for Worldwide Interbank Financial Telecommunication)

Performance results[edit]

In 2014, NSD's net income under IFRS amounted to RUB 3.31 bln, and NSD's revenues under IFRS reached RUB 6.62 bln. As at 31 December 2014, the value of securities held in securities accounts with NSD was RUB 24.94 trillion, which is 14% higher than as at 31 December 2013 (RUB 21.8 trillion). The value of foreign securities held in NSD's clients' securities accounts exceeded RUB 2.7 trillion.[25]

Risk management[edit]

The main purpose of risk management at NSD is to ensure the operational reliability and steady development of NSD as the central securities depository, tri-party services provider, payment system operator, trade repository, and information center.

  • Thomas Murray has maintained the CSD rating for NSD at AA-, which translates as 'very low Overall Risk', with 'Stable' outlook.
  • PricewaterhouseCoopers conducted an ISAE 3402 operational audit of NSD. The auditors analyzed the internal controls being used by NSD when providing depository, clearing, and repository services.
  • In 2014, NSD was independently assessed for observance of the CPMI-IOSCO Principles for Financial Market Infrastructures. The analysis showed that NSD was broadly observant overall of the CPMI-IOSCO Principles, and that there were no Principles that NSD did not observe.
  • The Bank of Russia has assessed the NSD Payment System for compliance with the CPMI-IOSCO Principles for Financial Market Infrastructures. The assessment showed the high level of NSD Payment System's compliance with the Principles.
  • KPMG has audited NSD's business continuity system. The auditors estimated the maturity of the business continuity system and proposed a roadmap for its development.


  1. ^ "TOP-30 of Russian securities depositories by market value of clients' securities held in custody as at 31 December 2010".
  2. ^ Federal Financial Markets Service (6 November 2012). "Russian Federal Financial Markets Service's Order No. 12-2761/pz-i dated 6 November 2012".
  3. ^ "Bank of Russia's Communication on Recognition of Financial Market Infrastructure Organizations as Systemically Important Organizations".
  4. ^ "Bank of Russia's Communication on the National Importance of the NSD Payment System".
  5. ^ "NSD's Shareholders".
  6. ^ "Shareholders Agreement with respect to NSD".
  7. ^ "NSD's Executive Board and the Chairman of the Executive Board".
  8. ^ "NSD's Supervisory Board".
  9. ^ "NSD is Registered in Accordance with the FATCA Requirements".
  10. ^ "Rule 17f-7 of the U.S. Investment Company Act of 1940".
  11. ^ "On 1 October 2013, NSD will start acting as a trade repository for all trade types" (PDF).
  12. ^ "Bank of Russia's Communication on the Assessment of the NSD Payment System".
  13. ^ "National Settlement Depository, Interfax join forces to develop a reference source of corporate data and pricing center".
  14. ^ "DVP Settlement via RTGS".
  15. ^ "Electronic matching".
  16. ^ "Hold & Release".
  17. ^ "Bonds with Every Convenience". Kommersant. 23 January 2014.
  18. ^ "Clearstream is to Grant Foreign Investors Access to Russian Corporate Bonds Today". Vedomosti. 30 January 2014.
  19. ^ "CSD.Austria, Austrian Central Securities Depository Operated by OeKB, and NSD, Russia's Central Securities Depository, Launched an International Direct Link to the Russian Securities Market". Vesti Finance. 18 September 2013.
  20. ^ "NSD and BNY Mellon join forces to help Russian-based investors trade DRs". The Wall Street Journal. 17 December 2013.
  21. ^ "Russian NSD and Central Depository of Armenia strengthen mutual cooperation". The Asian Banker. 16 January 2014.
  22. ^ Thomas Murray. "Public CSD Rating Report" (PDF).
  23. ^ "U.S. Tax Authorities Assigned the Qualified Intermediary status to NSD". Vedomosti. 7 November 2013.
  24. ^ "NSD is Named among 20 Most Influential Financial Market Players". Bankir.Ru. 7 February 2014.
  25. ^ "NSD Reports Q4 2014 Results".


External links[edit]