DVP settlement
in NSD
DVP* settlement
as defined by G10 workgroup**
:
2
* - delivery versus payment
: a link between a securities transfer system and a funds transfer system that
ensures that delivery occurs if, and only if, payment occurs.
Transfer instructions for both securities and funds are settled on a trade by trade
basis, with final transfer of the securities from the seller to the buyer (delivery)
occurring at the same time as final transfer of the funds from the buyer to the seller
(payment).
DVP 1:
Securities transfer instructions are settled on a gross basis, with final transfer of
securities from the seller to the buyer (delivery) occurring throughout the processing
cycle, but funds transfer instructions are settled on a net basis, with final transfer of
funds from the buyer to the seller (payment) occurring at the end of the processing
cycle.
DVP 2:
Transfer instructions for both securities and funds are settled on a net basis, with final
transfers of both securities and funds occurring at the end of the processing cycle.
DVP 3:
DVP settlement with NSD
DVP-1, DVP-2, DVP-3 settlement models
Tolerance principle
Account binding
Workflow is done by SWIFT and “Luch” software
Deals are made using RTS exchange
DCC
NSD
1.DCC, on the ground of Client’s Power of Attorney, transfers funds from Client “B” account, opened in foreign bank.
1.Clients (participating in clearing) send DVP instructions to NSD. 2.NSD executes netting of liabilities in pool of matched instructions.
3.NSD, on the ground of Client’s Power of Attorney, transfers funds from Client “B” account, opened in foreign bank.
4.NSD transfers funds from its account to Client’s bank / clearing account opened with NSD.
5.NSD, internally settles both fund and securities parts of the operation at the same time.
6.In case if NSD manages Client’s account in foreign bank, a payment instruction is sent by NSD to J.P. Morgan Chase / Citibank for transferring funds to the seller of securities. 7.NSD receives from foreign bank a confirmation that funds are received on seller’s
account in foreign bank. 8.NSD settles securities
Client “A”
Client “B”
Client “A” securities account
Client “B” securities account
Foreign bank 1 J.P. Morgan & Co
NY / Citibank, NY Foreign bank 2
Client “B” account (client of Client “B”
account)
NSD Account
Client “A” account (client of Client “A”
account) 1 1 Special technical clearing account (securities) 8 8 Client “A” account for clearing results Client “B” account for clearing results Client “A” bank account Client “B” bank account Special technical clearing account (foreign currency) 2 3 3 6 7
NSD clearing system
4DVP settlement schemes
Using Clients’ bank accounts in foreign banks
Using Clients’ bank accounts opened with NSD
1.Clients (participating in clearing) send DVP instructions to NSD. 2.NSD executes netting of liabilities in pool of matched instructions.
3.NSD, on the ground of Client’s Power of Attorney, transfers funds from Client “B” account, opened in foreign bank.
4.NSD transfers funds from its account to Client’s bank to clearing account opened with NSD.
5.NSD sends payment instruction from corresponding account opened with J.P. Morgan Chase / Citibank to transfer funds to seller’s account.
6.NSD receives from foreign bank a confirmation that funds are received on seller’s account in foreign bank.
7.NSD settles securities .
1.Clients (participating in clearing) send DVP instructions to NSD and provide that there are sufficient fund deposited with their bank accounts opened with NSD
2.NSD executes netting of liabilities in pool of matched instructions. 3.NSD simultaneously settles funds and securities.
Client “A”
Client “B”
Client “A” securities account Client “B” securities account 1 1 Special technical clearing account (securities) 3 3 Client “A” bank account Client “B” bank account Special technical clearing account (foreign currency) 2
NSD clearing system
3 3
Client “A”
Client “B”
Client “A” securities account
Client “B” securities account
Foreign bank 1 J.P. Morgan & Co
NY / Citibank, NY Foreign bank 2
Client “B” account (client of Client “B”
account) NSD Account
Client “A” account (client of Client “A”
account) 1 1 Special technical clearing account (securities) 7 7 Client “A” clearing account Client “B” clearing account Special technical clearing account (foreign currency) 2 3 3 5 6
NSD clearing system
47 7
Connecting to DVP – 1 / 2 / 3 settlement with netting
of liabilities of clearing participants or their clients
To become a Client one shall:
1. Sign with NSD an Agreement on clearing services.
2. Open a bank account with NSD (in case there is none opened) in Russian rubles (RUB)
or foreign currency and provide NSD with relevant for account type documents.
3. Sign an additional agreement to bank account agreement (in RUB or foreign currency)
on settlement after clearing results.
4. Open owner / nominee holder or asset manager type of securities account (in case
there is none opened) with NSD and provide the latter with relevant for securities
account type documents.
5. Register bank account details (which will be used for DVP settlement) opened with
NSD by providing an AF005 instruction – in paper or electronic form – with attached
GF088 notification (operation code “07”, with bank account details set as “14” – “for
clearing”).
In case if NSD, as a clearing organization, is responsible by laws of the Russian
Federation to act as a currency control agent, Clients are obliged to provide NSD with
custody / asset manager agreement or brokerage contract.
DVP instructions types
Sent via “Luch”
software
Sent via SWIFT
Clearing instruction
type:
MF190
Clearing instruction types:
Variant of accounts linkage
8
1. A
single bank account
could be linked with
several bank accounts
, opened by a
single
clearing participant:
2. A
single bank account
of the clearing participant could be linked with
several securities
accounts:
Report types sent to Clients by “Luch” software
and SWIFT
1. Report on deals, settled after clearing:
via “Luch”: MS009;
via SWIFT: MT545, MT547;
2. Report on all settled deals (
via “Luch” MS190 or SWIFT MT536
)
3. Report on all unsettled deals:
via “Luch”: MS007;
via SWIFT: MT537.
4. Report on matching issues with description of the issue:
via “Luch”: GS036;
via SWIFT: MT548, MT578.
5. Account statement:
via “bank-client system”;
Distinctions of DVP services, provided by NSD
Accont linkage is made in accordance with new Regulations on clearing activity (p.7.2):
“Funds, securities and/or other property belonging to different clearing participants (or clients of
participants) must be kept separately from other clearing participants. Funds, securities and/or other
property of clearing participants is kept on segregated registers or sections of that registers belonging to
the mentioned participants”.
The following clearing sessions are used:
10:00 , 12:00, 13:00, 15:00, 16:00, 17:00, 19:40.
Sessions at
12:00, 16:00
and
19:40
are intended for bank accounts, opened with NSD for on-exchange
operations.
Sessions at
10:00, 13:00, 15:00
and
17:00
are intended for bank accounts opened with NSD or with
foreign banks.
If
fund transfer
is made from Client’s account, opened with foreign bank, mentioned funds should be
transferred via NSD account opened in foreign bank.
This rule is applied to both DVP-1 and DVP-2
options.
Bank account details
are set in instruction for funds withdrawal (with a 1 year validity period). Compare to
DCC application form for accounts correspondence.
Tolerance
is set at USD 25 (twenty five) or 800 (eight hundred) RUB. Tolerance currency should match
account type currency. If transaction currency is set as “USD” and account type as “RUB”, tolerance is not
applicable.
Instruction validity period
is 30 (thirty) days and it starts from settlement date stipulated by clearing
participant in instruction.
Currency control
. If clearing participant is a legal entity registered in accordance with Russian law, it is
obliged to provide NSD with currency control documents.
Foreign currency control confirmation documents
for DVP settlement
1.
Confirmation documents for foreign currency control (FCC) are required for clearing participants – legal
entities, that
are not
registered as banks. Confirmation documents are provided at the same time as
instructions for DVP settlement.
Legal entity, registered in Russia, provides NSD with the following documents:
•
Document that confirms the fact of entering into agreement on deal (ticket, purchase and sale agreement
(PSA)) – provided for each deal.
In case a deal was made via negotiations by phone, clearing participant (NSD Client) provides NSD with
deal summary, signed by participant, that contains main deal details: trade and settlement date,
amount (or principal value) of securities, amount of transaction in foreign currency, counterparty name
and account number.
Broker’s (clearing participant’s) report, that includes details on made deals, could be provided as
confirmation document.
In case clearing participants’ instruction includes bank details for funds transfer, NSD is provided with
brokerage / agency / asset manager /custody agreement. Mentioned document is provided only once.
•
Certificate of identity on operations with foreign currency is filled up by NSD in accordance with additional
agreement between NSD and clearing participant.
2.
In case if deal is made by client of clearing participant, the latter is responsible for providing NSD with
documents required for FCC.
3.
Clients’ instructions without confirmation documents are excluded from clearing pool. If NSD receives
confirmation documents, instruction is included into next clearing pool.
4.
Confirmation documents for FCC are sent via “Luch” software as unstandardized documents or in paper
form singed by legal entity representatives.
Contacts
•
NSD Hotline:
+7 (495) 234-48-27
•
Client Services Division:
Тел.: +7 (495) 956-27-90/91/92/93; (495) 956-09-40;
(495) 745-81-45; (495) 234-48-65
E-mail:
[email protected]
•
Client Relations Development Department:
Tel.: +7 (495) 234 9960
E-mail:
[email protected]
•
Web-sites:
www.nsd.ru
,
www.isin.ru
,
•
Address:
12, Spartakovskaya St.,
Moscow, 105066, Russia
Disclaimer
• This presentation has been prepared and issued by NSD (the “Company”). Unless otherwise stated, the Company is the source for all data contained in this document. Such data is provided as at the date of this document and is subject to change without notice.
• This document does not constitute or form part of, and should not be construed as, an offer or invitation for the sale or subscription of, or a solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any offer, contract, commitment or investment decision relating thereto, nor does it constitute a
recommendation regarding the securities of the Company.
• The information in this document has not been independently verified. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information or opinions contained herein. None of the Company, or any of its subsidiaries or affiliates or any of such person's directors, officers or employees, advisers or other representatives, accepts any liability whatsoever (whether in negligence or otherwise) arising, directly or indirectly, from the use of this document or otherwise arising in connection therewith.
• This presentation includes forward-looking statements. All statements other than statements of historical fact included in this presentation, including, without limitation, those regarding our financial position, business strategy, management plans and objectives for future
operations are forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance, achievements or industry results to be materially different from those expressed or implied by these forward-looking statements. These forward-looking statements are based on numerous assumptions regarding our present and future business strategies and the environment in which we expect to operate in the future. Important factors that could cause our actual results, performance, achievements or industry results to differ materially from those in the forward-looking statements include, among other factors:
• perception of market services offered by the Company and its subsidiaries;
• volatility (a) of the Russian economy and the securities market and (b) sectors with a high level of competition that the Company and its subsidiaries operate;
• changes in (a) domestic and international legislation and tax regulation and (b) state policies related to financial markets and securities markets;
• competition increase from new players on the Russian market;
• the ability to keep pace with rapid changes in science and technology environment, including the ability to use advanced features that are popular with the Company's and its subsidiaries' customers;
• the ability to maintain continuity of the process of introduction of new competitive products and services, while keeping the competitiveness;
• the ability to attract new customers on the domestic market and in foreign jurisdictions;
• the ability to increase the offer of products in foreign jurisdictions.
• Forward-looking statements speak only as of the date of this presentation and we expressly disclaim any obligation or undertaking to release any update of, or revisions to, any forward-looking statements in this presentation as a result of any change in our expectations or any change in events, conditions or circumstances on which these forward-looking statements are based.
