The Moscow Exchange has begun the settlement of securities on a T+2 basis, bringing its procedures in line with international best practices.
Starting Monday, March 25, trading members of the Moscow Exchange require only partial collateral to execute trades. Full settlement and delivery of securities will take on T+2 settlement. Previously 100% advance depositing of both cash and securities was required, known as T+0.
The move to T+2 settlement for the more than 1780 securities listed on the Exchange will be executed in stages. From March 25 to June 30, 2013, settlement in T+2 will be available for the fifteen (15) most liquid stocks and all issues of government bonds. They will concurrently continue to be available on a T+0 basis.
Beginning July 1, 2013, the Exchange will extend the list of T+2 eligible securities and settlement for these names in T+0 will end. From January 1, 2014 all securities listed on the Moscow Exchange”s securities market will be settled on the T+2 basis.
“The system of pre-payment for trades played a positive role as the Russian securities market was getting off the ground. Trading in Russia is now integrated into the global financial markets and our issuers expect the latest in settlement and risk management tools. The globally recognized T+ settlement model lowers costs for market participants, increases efficiency of deployed capital and will lead to higher trading volumes. This system is already in place on Moscow Exchange’s foreign exchange market; now has come the time for it to be implemented on the equities market,” said Alexander Afanasiev, CEO of the Moscow Exchange.
The plan to migrate to T+2 settlement was first announced a year ago. Since then the Exchange and its members have adjusted their IT systems and converted back office procedures in preparation for the new settlement regime. At this time more than 90 investment banks and brokers are able to settle in the new regime. It is expected that all trading members of the Exchange will be able to trade in T+2 by July 2013.
The reform of the settlement cycle is part of a larger program to upgrade Russias capital markets and ensure that Moscow is the primary platform for trading across Russian asset classes.
Meanwhile, the National Settlement Depository (NSD), Russias CSD, approved a road map for the mass transfer of assets from the accounts of the custodians to the CSD for safekeeping.
The road map, which follows consultation with custodians in the local market, is focused on the completion of transfer of client assets to the CSDs accounts in the first quarter of 2013 to support forthcoming placements of securities of privatized Russian companies on the Moscow Exchange.The company plans to complete securities transfers from the registers to the NSD in March 2013. In addition to asset safekeeping, foreign investors consider NSD as eligible securities depository in compliance with the SEC Rule 17f-7, said NSD.
(JDC)