“The draft has been forwarded to the Ministry of Finance”, he said.

The Securities Market Act, in force since August 2011, stipulates that REPO and OTC derivatives contract parties, shall submit the deal for registration to the licensed securities market participants SRO, clearing house or stock exchange.

OTC trades registration allows the regulator to evaluate the risks of the Russian financial system, while trading participants can perform close-out netting (if one of the parties bankrupts).

According to Chistyukhin, the Central Bank proposes to not limit OTC trade registration to the Master Agreement, allowing the registered trades to reflect the entire market depth. “Just as the Central Bank, we also have access to stock exchange REPO trade details, and lack OTC REPO details to evaluate market risk and individual participants risk”, he said.

Head of Merrill Lynch Russia Konstantin Korishenko, also present at the event, spoke against the Central Bank proposal. He said that a wider range of registered trades will lead to a simple currency provision being construed as an OTC derivative trade. Besides, he said, global practice favors registration of standard OTC trades.

The FFMS has already approved the list of foreign Master Agreements, as well as standard REPO terms, drafted by the National Stock Market Association (NFA), and standard futures terms drafted by the National Association of Stock Market Participants (NAUFOR).

The FFMS also drafted the Master Agreement Trade Registrar directive, currently submitted the Ministry of Justice for registration.

According to the FFMS draft, the OTC REPO and derivative trades registrar will be services by a repository - an SRO of licensed stock market participants, a clearing house or stock exchange. No repository license is required.

To register a trade, trade details will be submitted to the repository within three days of the trade date, cancellation date or settlement date.

If the settlement period is less than four days, all trade details can be submitted to the repository in a batch quarterly.

According to Chistyukhin, the repository is supposed to forward the trade list to the FFMS on a daily basis. He says that the Central Bank proposes to stipulate that the registrar shall be forwarded to the Central Bank as well. “Naturally, we have a information exchange agreement with the FFMS. However, we would like to have trade details submitted to the Central Bank as stipulated by the law”, he said.

Chistyukhin also said that certain unresolved issues remain: the number of trade repositories in Russia, their status and accreditation procedure. Today, the National Settlement Depositary (NRD, part of MICEX-RTS) is the only capable repository, as well as the sole contender for the Central Depositary function. “There is only one candidate with questionable readiness, in my opinion”, said Chistyukhin.

He also noted the lack of legislative requirements for the repository, including confidentiality and continuity of operation.

Project Group №1, Vladimir Chistyukhin