OREANDA-NEWS. October 29, 2012. Non-banking financial organizations which are clients of National Settlement Depository (NSD), Russia's only settlement depository servicing the full range of debt and equity securities of Russian issuers, can now conduct foreign currency settlement operations in the organized securities market. Previously, these organizations, such asasset management companies, brokerages, investment funds etc., with accounts opened with NSD could only conduct foreign currency operations in the OTC market.

The move is a response to Russian securities market demand. In particular, over the most recent three years, several Russian corporations have issued bonds denominated in dollars. In February 2012, Vnesheconombank for the first time placed USD-denominated Eurobonds on the domestic market. Demand for the bonds with USD 500 million nominal value was three times higher, at USD 1.5 billion. Some 32 Russian and foreign investors participated.

Vnesheconombank and Moscow Exchange began lifting restrictions on the participation of non-banking financial organizations in foreign currency bond settlements. Suggestions on this issue were sent to NSD and the Bank of Russia. Now any participant in the debt market may conduct operations with bonds denominated in foreign currency.

This change is very important with regard to the forthcoming assignment of central securities depository status to NSD and further steps towards liberalization of access to the Russian market. It opens up new possibilities for implementing investment initiatives in Russia’s securities market for both issuers and investors.

Total value of foreign currency bond issues registered in the Russian market stands at USD 4.36 billion.

Andrei Shlyappo, Vice President, Operating Director, NSD, said: “To develop client services we have been focusing on non-banking financial organization's needs in conducting foreign currency operations with external securities in exchange market. Providing this service is a very important step towards improving the organized securities market. Of course, this will have a positive impact on the Moscow Exchange Group’s development and increases its competitiveness.”

Alexander Ivanov, Deputy Chairman of Vnesheconombank, added: “We totally support this decision which is one more step in the development of the Russian securities market. Lifting restrictions on trading this instrument for non-banking financial organizations is clearly a positive fact. Foreign currency bonds, jointly with currency swap instruments developed in the Russian market, represent new opportunities for all types of investors in the Russian securities market.”

Yekaterina Novokreschenykh, Managing Director for Primary Market Formation, Moscow Exchange, emphasized: “Today’s situation requires development of new financing instruments and enhancing existing ones. Moscow Exchange as a core infrastructure organization should meet the market’s requirements and open new opportunities for debt market participants. We think that we will attract Russian investors’ attention to foreign currency bonds and generate a liquid secondary market.”