Learning Center
Plans & pricing Sign in
Sign Out



									Bank “National Clearing Centre“

                National Clearing Centre (NCC)

       NCC was established on October
        24, 2005, as a closed joint-stock
       NCC’s shareholders are:
    Moscow Interbank
        Currency Exchange, 99.729%
    National Depository Center, 0.271%
       The shareholders’ equity:
         – The shareholders’ equity is 1,735
             billion rubles (~ EUR 49 million).
         – The shareholders’ equity plus
             retained earnings as of March 1,
             2009, are 2,311 billion rubles.

                  NCC in the MICEX Group

                                                • Organization of trade: foreign currency, government securities,
           MICEX                                  bonds, derivatives.
                                                • Clearing in government securities markets, stock and futures
                                                • Technological project support and development of new IT
           NCC                                                                      National Mercantile
                  • Clearing operations and trade                • Government intervention in
                    results settlements                            the grain market
                                                                 • Trade: petroleum products, grain

                                                         MICEX Stock                            MICEX
                                                          Exchange                              Settlement
     NDC                                                                                        House
                                  • Organization of trade in stocks, corporate and
         • Depository               municipal bonds,                                               • Funds transfer
           operations               units in mutual funds, futures

Regional currency
and stock exchanges
3                       Saint Petersburg Yekaterinburg       Samara     Nizhni    Novosibirsk    Rostov-on-   Vladivostok
                                                                       Novgorod                     Don
                NCC’s Operating Principles

       NCC operates as the central counterparty
       control of executed transactions collateralization
       control of fulfillment of obligations based on PVP
       ongoing maintenance of NCC’s liquidity, including
        liquidity suppliers engagement
       NCC takes risks associated with possible failure
        by clearing participants to fulfill their obligations

    Basic Elements of NCC’s Risk Management

       Limitation of traded instrument price fluctuations
       Preliminary depositing of participants` funds
       Availability of guarantee funds
       Fixing of various types of limits
       Setting requirements for the clearing participants` financial
        standing and control over it
       Mechanism for the substitution of an unfair participant by the
        Bank of Russia
       MICEX’s 2.6 billion ruble guarantees
       NCC’s capital

           From December 10, 2007,
National Clearing Centre operates as the central
     counterparty in the MICEX FX market
                              NCC TODAY

       NCC’s total balance as of March 1, 2009, is 707,3 billion rubles
       USD- and EUR-denominated account balance as of March 1, 2009, in
        the ruble equivalent exceeds 239,3 billion rubles
       The total number of clearing participants is 429
        239 banks participate in the USD 4,7 million Risk Covering Fund
       The shareholders’ equity plus retained earnings are 2,311 billion rubles,
        including 1,735 billion rubles of the shareholders’ equity
       licensed to provide clearing services for securities market transactions
       licensed for banking operations

    Correspondent Banks

       JPMorgan Chase Bank, New York
       The Bank of New York, New York
       Deutsche Bank Trust Company Americas,
        New York
       JPMorgan AG, Frankfurt/Main
       Deutsche Bank, Frankfurt/Main
       VTB (Germany), Frankfurt/Main

    NCC’s Regional Settlement Diagram

                                Nizhni Novgorod
             Saint Petersburg                Novosibirsk




    Rostov-on-Don            Yekaterinburg

         Development of NCC’s Clearing

        Introduction of the central counterparty in the
         REPO government securities market
        Upgrading of risk management system
        Broadening the range of services provided
        Extension of clearing to other financial market

         NCC in the REPO Government Securities

     •    NCC operates as the central counterparty
     •    Deals are concluded under the following terms:
            • full or partial preliminary collateralization for the first part of repo;
            • partial preliminary collateralization for the second part of repo;
     •    Repo deals are concluded upon matching of dealers` requests and
          confirmations from NCC
     •    The first and second parts of repo deals are settled upon transaction
          settlement requests received from dealers and NCC

     Improvement of Risk Management
     System in the FX Market

        Setting of the exchange rate fluctuation limits and preliminary depositing
         standards depending on the external market situation adjusted for the current
         composition of two-currency basket:
         - symmetric increase of the exchange rate fluctuation limits with respect to the
         central rate of the current trading day and a proportionate increase in preliminary
         depositing standards;
         - non-symmetric setting of the exchange rate fluctuation limits with respect to the
         central rate of the current trading day towards the external market trend without
         changing preliminary depositing standards.
        Increase of the Risk Covering Fund amount
        Setting of various modes of operations performed by trade participants
         depending on the assessment of the current market volatility and the status of
         their open positions
        Insurance of the NCC operational risks
        Extension of Risk Management System to various financial market segments
        Establishing of the Risk Committee and arranging of its functioning

     Modes of Operations

        A participant will have the opportunity to operate depending on the
         assessment of the current market volatility and the status of his open
         market positions:
     -   Basic mode: the participant’s operations are not limited, for collateral
         fully covers potential exchange rate risks associated with his positions;
     -   Limited mode: with the scale of the participant’s potential losses
         reaches the amount of collateral, the participant will have the
         opportunity to operate only for closing the existing positions;
     -   Position close-out mode: if the participant fails to allocate collateral
         or its amount is not sufficient, the participant’s operations are put on
         hold and his position is closed out during the trading session.

              NCC’s Services Development

        Setting the limits of EUR-denominated net operations
        Currency band regulation
        Online matching of clearing participants’ positions
        Intraday crediting of clearing participants to facilitate their obligations’ settlement
        Maintaining a single ruble-denominated position of participants in exchange
        Offering clearing participants an opportunity to settle securities transactions in
         foreign currency
        Offering participants an opportunity to execute transactions in the stock market
         with partial preliminary collateral
        Creating a single clearing participant’s “portfolio” to settle operations in various
         financial market segments
        Beginning of operation in the interbank credit market

     Today’s Regulatory Framework for
     Clearing Operations

        Clearing operations are governed by:
         - Federal Law No. 39-FZ of April 22, 1996 “On the Securities
          Market”, which defines clearing and clearing operations only in the
          securities market;
         - Resolution of the Federal Commission for the Securities Market No.
          32-ps of August 14, 2002, which only defines ordinary, multilateral
          and centralized clearing in the execution of securities transactions;
          - Regulations of the Central Bank of the Russian Federation No.
         219-P of March 25, 2003 and No. 220-P of March 25, 2003, which
         govern clearing in the government securities market.
        Standards applied to clearing in the
         securities market are used for clearing in the
         currency and government securities
16       markets.
     Improvement of Clearing Laws in

       The central counterparty’s (CCP) legal status defining will allow to introduce the
     CCP in the financial market as an independent infrastructural entity which concludes
     transactions for clearing purposes without being a trade participant and is rewarded
     for rendering clearing services.
      Determination of the legal status of deposited and blocked funds (property) of
     clearing participants for securing their obligations will allow to reduce the risk they
     litigate the use of the above-mentioned funds by the CCP.
      Introduction of separate legal status and usage mode for clearing accounts to
     prevent them from being used in the bank account mode envisioned by the Civil Code
     of the Russian Federation, including unconditional cash debiting upon the clearing
     participant’s request. The clearing institution needs to have the right to withhold
     the clearing participant’s funds until its obligations are fully fulfilled.

     Improvement of Clearing Laws in Russia

        Amendment to the Laws “On Joint-Stock Companies” and “On Limited Liability
         Companies” stating that the standard for major and related-party transactions
         will not apply to transactions concluded in the course of organized trade, which
         will reduce the risk of litigation of the above-mentioned transactions by market
         participants, including transactions with the CCP.
        Establishing the possibility and procedure for using assets of the Risk Covering
         Fund and guarantee funds in full volume.
        Introduction of the procedure for the fulfillment of obligations by the clearing
         participant in case of his bankruptcy or license withdrawal will allow to terminate
         the obligations of such participant only after their fulfillment.
        Establishing legal grounds and procedures for the cancellation of clearing
         service agreement will allow to cancel such agreement by mutual consent
         between the parties rather than at any time as provided for by Chapter 39 of the
         Civil Code of the Russian Federation.

     Improvement of Clearing Laws in Russia

        Establishment by law of the procedure and new way for termination of
         obligations in the course of clearing will allow a clearing institution to define and
         terminate the obligations of clearing participants.
         None of the ways for termination of obligations currently envisioned by the Civil
         Code of the Russian Federation allows the clearing institution which is not a
         party in the transaction to terminate the clearing participant’s obligations. This
         does not allow to conduct ordinary or multilateral clearing operations. Clearing
         with the CCP is not envisioned by laws of the Russian Federation.
         Centralized clearing operations can only be performed using the assignment of
         rights which requires the consent from the other party in the transaction. The
         clearing centre has to track the rights and obligations of the party so as not to
         become the all-in-one debtor and creditor in the result of assignment.

                 National Clearing Centre

            Thank you for your attention!
     Our address: Russia, 125009, Moscow,
                   Bolshoy Kislovsky Pereulok, 13
     Telephone:    +7 (495) 782 97 94


To top