Euroclear Links with NSD to Open Russia to Further Foreign Investment

Euroclear Bank has expanded its post-trade services with Russia’s central securities depository, National Settlement Depository (NSD), by settling and allowing clients to deposit Russian corporate and municipal bonds beginning January 30, 2014.

Corporate and municipal bonds issued in 2012 and later are eligible for the service. The service extends the relationship between Euroclear and NSD, as Euroclear Bank has been settling Russian government bonds, known as OFZs, since February 2013.

Euroclear is also working on extending its relationship with NSD to settle equities, pending approval by Russian authorities to open a Euroclear Bank nominee account at NSD. This service is scheduled to go live in July 2014, but if Euroclear gets the opportunity to start sooner it would.

“Following on from the success of our OFZ service, we are delighted to now offer services for municipal and corporate assets. The growing appetite shown by investors to mitigate risks while ensuring a solid return on their diverse portfolio of assets is now further enhanced with access to many of Russia’s companies. Furthermore, foreign firms can also be important stakeholders in the development of key municipal infrastructure programs,” says Frederic Hannequart, chairman of Euroclear Bank.

“The launch of new post-trade services for Russian corporate and municipal bonds has been made possible by recent changes in Russian law and, in particular, the Tax Code, the Law ‘On the Securities Market’ and the Law ‘On Joint Stock Companies.’ These regulatory changes were achieved through NSD’s active participation. We are confident that the development of post-trade technologies, one of which is the link between Euroclear Bank and NSD, and improved regulation will stimulate investors’ additional interest in Russian issuers’ securities,” says Eddie Astanin, chairman of the executive board of the NSD.

The corporate and municipal securities held by Euroclear Bank will also be eligible as collateral, as are OFZs, for securitized transactions where Euroclear Bank is the triparty collateral management agent.