Clearstream, the international central securities depository (ICSD) headquartered in Luxembourg and Frankfurt-based central securities depository (CSD), is opening up settlement to Russian corporate bonds with immediate effect via its direct link to the Russian CSD, the National Settlement Depository (NSD).
In addition, Clearstream will work with its ICSD counterpart to ensure an effective linkage – known as the Bridge – between the two ICSDs. The Bridge enables customers to easily settle transactions between accounts at the two ICSDs and will help increase liquidity flow in the Russian market.
Clearstream added that the introduction of settlement for corporate Russian bonds, coupled with a firm commitment to establish the Bridge between the ICSDs in the Russian market, will help further develop the market infrastructure needed to offer investors and issuers an enhanced offering in the Russian capital market.
Illustrating the increased foreign investor appetite in the Russian market, the share of foreign investment in Obligatsyi Federal’novo Zaima (OFZ) government bonds has risen by about 25%, according to the Bank of Russia, since the establishment of new financial market infrastructure in Moscow.
Clearstream will next look to offer settlement for equities via its direct link to the NSD, due for summer 2014, in line with expected changes to Russian legislation. Meanwhile, the group continues to settle equities in Russia via its indirect link to the NSD, through Clearstream’s local agent bank, Deutsche Bank Moscow.
“Access to the corporate bonds market granted to Clearstream is a great event for the Russian market,” said Sergey Shvetsov, first deputy governor of the Bank of Russia, head of the Bank of Russia Financial Markets Service.
“Entry of international clearing and settlement organizations to the OFZ market already provided a positive impact by decreasing the cost of borrowings for the government. Now we continue our commitment to open access to the stock market for ICSDs on 1 July 2014. We are considering Clearstream’s access to the corporate bonds market as an indicator of our successful work in collaboration with NSD and international infrastructural organisations.”
Alexander Afanasyev, chief executive officer (CEO) of Moscow Exchange, added:
“We are gradually opening the Russian market to international clearing organisations. This is an important milestone in the continued development of the Moscow Financial Centre initiative.
“Last year Clearstream received access to the Russian government bond market which resulted in a significant increase in market volumes, as well as in the number of market participants. This year Clearstream has started to provide post-trade services on Russian corporate bonds. This move is a reflection of the interest of international investors in Russian corporate rouble-denominated debt. As was the case with government bonds, the arrival of international clearing organisations into the corporate bond market should provide for greater liquidity and reduced cost of borrowing. This will benefit both market participants and issuers alike.”
Clearstream first launched services in the Russian market to customers in 2006, adding government bonds (OFZ) in January 2012 via its indirect link to the Russian CSD.
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