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Russia Can Allow Euroclear and Clearstream on Federal Bonds Market Only

06.06.2012 11:18 / Interfax

The Russian authorities can allow immediate opening of nominee accounts in the Russian central depositary for international central depositaries such as Euroclear and Clearstream for federal bonds only, a source close to inter-regulatory debates told Interfax.

“The decision to give international central depositaries immediate access to the federal bonds market only. The plan is to time their access with the Russian central depositary becoming operational”, he said.

According to the source, the delays in passing necessary legislation may lead to the establishment of the Russian central depositary in August at the earliest.

The Central Depositary Act has been in effect since 1 January 2012. The sole contender for the role of the Russian central depositary is National Settlement Depositary (NSD, part of MICEX-RTS Group).

According to the law, starting 1 July, the CD may open foreign nominee accounts for international central depositaries and national central depositaries.

The two major international central depositaries are Euroclear and Clearstream.

The list of foreign companies entitled to accounts, must be determined by the Federal Financial Markets Service (FFMS).

Market participants, especially custodians, have voiced fears that nominee accounts for settlement providers Euroclear and Clearstream will lead to liquidity draining outside Russia.

This position is backed by MICEX-RTS integrated exchange, Head of MIFC Taskforce Alexander Voloshin and the National Stock Market Participants Association (NAUFOR).

Euroclear and Clearstream account opening is supported by the Central Bank, the Ministry of Finance, the National Stock Market Association (NFA) and the NSD itself. FFMS refuses to take sides in the dispute.

Euroclear has conducted a series of client meetings, pitching Russian securities settlement services.

Trading infrastructureProject Group №1Alexander Voloshin