DVP SETTLEMENT · ensure that the final (i.e. irrevocable and unconditional) settlement of...

DVP SETTLEMENT IN NSD

DVP (Delivery versus payment) links the delivery and payment obligations in such a way as to ensure that the final (i.e. irrevocable and unconditional) settlement of securities occurs if and only if the final settlement of the corresponding payment occurs. NSD offers its clients DVP settlement using three DVP models:

DVP SETTLEMENT

2

• Settlement occurs on a trade by trade basis DVP 1:

• Securities are settled on a gross basis, but cash is settled on a net basis

DVP 2:

• Net settlement of both securities and cash DVP 3:

Accounts Custody account with NSD

DVP model Currency

Cash account with NSD DVP 1, 2, 3 RUB, USD, EUR, CNY

Cash account with Citibank N.A., NY, JP Morgan Chase Bank N.A., NY, Deutsche Bank Trust Company Americas, NY

DVP 1, 2, 3 USD

DVP settlement may be effected via cash accounts with NSD or with the foreign banks:

1. Clearing participants (Seller and Buyer) send DVP instructions to NSD;

2. NSD executes netting of liabilities in pool of matched instructions;

3. Securities blocking;

4. NSD on the basis of Power of Attorney sends instruction to debit Buyer’s/ Buyer’s client cash account opened with the foreign Bank.

5. Citibank N.A., New York/ JP Morgan Chase Bank N.A., New York/ Deutsche Bank Trust Company Americas, New York transfers funds from the Buyer’s/ Buyer’s client cash account to the account of NSD;

6. NSD sends instruction to transfer funds from the correspondence account opened with Citibank N.A., New York/ JP Morgan Chase Bank N.A., New York/ Deutsche Bank Trust Company Americas, New York to the account of Seller/Seller’s client;

7. NSD receives confirmation that the account of Seller/ Seller’s client has been credited;

8. NSD settles securities.

DVP: SETTLEMENT VIA ACCOUNTS WITH FOREIGN BANKS

* For DVP-2 and DVP-3 settlements. DVP-1 settlements are conducted without Aggregate clearing account.

Clearing participant (Seller)

Clearing participant (Buyer)

Seller’s trading securities account

Buyer's trading securities account

Account of Buyer/Buyer’s client

Citibank N.A., NY/ JP Morgan Chase Bank N.A., NY/ Deutsche Bank Trust Company Americas, NY

Account of Seller/Seller’s client

Account of NSD

*Aggregate clearing account

for securities settlements

8 8

2

56

NSD

Cash Cash

11

7 4

3




4. NSD simultaneously settles funds and securities.

DVP: SETTLEMENT VIA ACCOUNTS WITH NSD

4




Trading securities account of Seller

Trading securities account of Buyer



4 4

2

NSD

11

Trading bank account of Seller/

Seller’s client

Trading bank account of Buyer/

Buyer’s client

Aggregate clearing account for cash

settlements

3

4 4

DVP: SETTLEMENT VIA ACCOUNT WITH A FOREIGN BANK AND ACCOUNT WITH NSD

5




Trading securities account of Seller

Trading securities account of Buyer

Account of Buyer/ Buyer’s client

Citibank N.A., NY/ JP Morgan Chase Bank N.A., NY/ Deutsche Bank Trust Company Americas, NY

Account of NSD



7 7

2

5

NSD

Cash

11

4

Trading bank account of Seller/

Seller’s client

6

3




4. NSD on the basis of Power of Attorney sends instruction to debit Buyer’s/ Buyer’s client cash account opened with the foreign Bank.

5. Citibank N.A., New York/ JP Morgan Chase Bank N.A., New York/ Deutsche Bank Trust Company Americas, New York transfers funds from the Buyer’s/ Buyer’s client cash account to the account of NSD;

6. NSD reflects funds transfer from correspondence account opened with Citibank N.A., New York/ JP Morgan Chase Bank N.A., New York/ Deutsche Bank Trust Company Americas, New York to trading bank account of Seller/ Seller’s client opened with NSD;

7. NSD settles securities.

• A clearing batch is based on matched instructions for which currency control documents have been received.

• A clearing batch may include obligations to be terminated and/or fulfilled using DVP

model 2 or DVP model 3.

During a business day, NSD runs 8 clearing batches:

CLEARING BATCHES

6

Cash accounts with NSD Cash accounts with the foreign banks

10:00, 12:00, 13:00, 15:00, 16:00, 18:00, 18:45, 19:40

10:00, 13:00, 15:00, 18:00, 18:45

Timeframes within which settlement of clearing batches with accounts with the foreign banks will be effected depends on foreign settlement banks’ efficiency of NSD’s instructions execution.

ACCOUNT LINKING OPTIONS

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1.1 Cash account and securities account belong to one entity

ICSD, CSD or Russian Custodian/Broker


Non-resident ResidentResident


1.3 (A) Several cash accounts, opened in the name of the Clients of ICSD, CSD or Russian Custodian/Broker are linked with omnibus securities account

Clearing participant X


Clearing participant/ The Client

1.5 Cash account is linked with several securities accounts, belonging to the same Clearing participant

Clearing participant/ The Client

1.4 Cash account is linked with segregated securities account.


Subaccount for Client A

Subaccount for Client B

Trading cash account opened with NSD or with the foreign bank

Trading securities account opened for NSD clearing

1.2 Cash account belongs to the Client of ICSD, CSD or Russian Custodian/Broker

The Client


Client A

1.3 (B) Several cash accounts, opened in the name of the Clients of ICSD, CSD or Russian Custodian/

Broker are linked with segregated securities account


Subaccount for Client A

Subaccount for Client B

Subaccount for Client C

Client В Client C

Clearing participant – ICSD, CSD or Russian Custodian/Broker.

Tolerance principle makes it possible to match and settle instructions if the

trade amounts specified in matching instructions by the Clearing Participants

differ insignificantly.

• Tolerance value is determined by each Clearing Participant and is stipulated

in process of registration of bank account details.

• Maximum tolerance value* - USD 25 or RUB 800;

• Tolerance currency must be the same as the account currency. Otherwise

tolerance principle can not be applied.

*If tolerance value is indicated in another currencies, it can not exceed equivalent of USD 25 at the exchange rate

of the Bank of Russia which is prevailing at the date prior to the date of execution of instruction to register bank

account details.

TOLERANCE PRINCIPLE

8

Necessary to provide currency control documents

Not necessary to provide currency control documents

By residents (not credit organisations) going to effect settlement in a foreign currency*

By non-resident clients

By credit organisations

CURRENCY CONTROL

9

*Transaction basement documents for DVP settlement via cash accounts with NSD should

be submitted simultaneously with the DVP settlement instructions or in advance of the settlement date. For DVP settlement via cash accounts with foreign banks the client has to provide NSD only with a brokerage service agreement/agency agreement/accession agreement/ etc., confirming legal relationship between the foreign bank and the client only once in process of cash account details registration.

1. Reporting on potential counterparty

instruction (subscription to Electronic

matching required)

• MT548;

2. Sending reports on the results of

clearing instructions matching:

• MT548, MT578, MT537;

3. Reporting on instruction execution:

• MT545, MT547;

4. Reporting on clearing batch settlement

results:

• MT575*;

5. Report on all unsettled deals with

reason description:

• MT537;

6. Report on securities transfer

based on clearing results:

• MT544, MT546;

7. Cash account statements:

• MT950 or via “bank-client

system”;

8. Reporting on instruction failure

(expiration):

• MT548

9. Report on instruction

cancellation:

• MT541/MT543;

10. Transfer of cash from accounts

with the foreign banks:

• MT900.

REPORT TYPES SENT TO CLIENTS VIA SWIFT

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*To receive MT575 it is necessary to register in Message User Group (MUG). Registration can be made on web-site www.swift.com section Ordering > Order products and services > Message User Group, register to.

https://www.nsd.ru/en/services/matching/

https://www.nsd.ru/en/services/matching/

http://www.swift.com/

1. Why is it necessary to provide NSD with debit authority in respect of cash accounts opened with

NSD?

- For DVP deals via cash accounts with NSD as well as via cash accounts with foreign banks, the Client has to

provide NSD with an authority to debit his accounts. As of internal DVP, NSD being Clearing institution

conducting DVP netting has debit authority in respect of clients’ trading cash/securities accounts, but at the

same time NSD’s debiting authority is limited by carrying out only these functions. The client always has the

right to submit instruction and debit his account if cash or particular securities (as for securities account) are

not involved in current DVP settlement liabilities of the client. If the customer already has cash accounts with

the Foreign Banks, he will need to complete and send the relevant documents to the Foreign Bank

authorising NSD to operate the customer's account with the bank.

2. When should the client credit his accounts (cash and securities) with necessary amount of cash

and securities?

- At the time a deal is concluded, there is no need to have sufficient securities and/or cash in the accounts.

The securities and cash needed to settle the deal must be available in the accounts on the settlement date

stated in the instruction, 15 minutes in advance of the clearing session.

3. When DVP instructions will be executed?

- Instructions will be executed on the settlement date specified in the instruction or on the date the pairs of

instructions are matched, where one of the instructions is missing on the settlement date. Execution period

for DVP instructions is 30 days from the settlement date.

4. Is it possible to avoid transliteration in DVP reports?

- For DVP settlement NSD already does not require clients for transliteration and does not send reports with

transliteration.

QUESTIONS & ANSWERS

11

NSD Hotline:

Tel.: +7 (495) 234-48-27

Client Services Division:

Tel.: +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 str.,

Moscow, 105066, Russia

CONTACTS

mailto:[email protected]










http://www.nsd.ru/

http://www.isin.ru/

THANK YOU!

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

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