Transcript Custody and depositors services of the bank

Russian Depository
System: modern theory,
practice and trends.
Adamova Karina
Ph.D.(Economics)
Finance Academy, Moscow
E-mail: [email protected]
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Contents:
1. Regulation basis and the structure
of the Russian depository system.
2. Custody services and depository
operations of the banks
3. The last trends on this market
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1. Regulation basis and the
structure of the Russian
Depository System.
Russian State Regulation of the Depository
System is based on:
• Civil Code
• Securities market Act
• Legal acts of the main state regulators of
the securities market
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Main Regulators on the
Depository Services Market
• Ministry of Finance
• Federal Financial Markets Service (previously it
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•
was Federal commission for securities market)
Central Bank of Russia
PARTAD (The Professional Association of
Registrars, Transfer Agents and Depositories)
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The Structure of the Russian
Depository System
Depository
1
Custodian
1st level
Custodian
1st level
Custodian
n level
Custodian
n level
Investor
Depository
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Depository
2
Investor
Custodian
1st level
Custodian
1st level
Custodian
n level
Custodian
n level
Investor
Investor
Custodian
1st level
Custodian
n level
Custodian
1st level
Custodian
n level
Investor
Investor
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The Main Functions of the
1st Level Depositories are:
• Theory:
Accounting and custody of securities
Securities settlements
Informational and administrative functions
in case of securities operations
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The Main Functions of the
1st Level Depositories are:
• World Practice:
 Accounting and custody of
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securities
Securities settlements
Paying dividends or other
incomes on securities
Monitoring the Issuers
corporate actions
Calculating the value of client’s
securities portfolio (optional)
Tax management (optional)
Informational services
Banking services
Crediting with securities
(optional)
Clearing (optional)
• Russian Practice:
 Accounting and custody of
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
securities
Securities settlements
Paying dividends or other
incomes on securities
Monitoring the Issuers
corporate actions
Informational services
Clearing (optional)
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•
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2. Custody services and
depository operations
of the banks
Basic services:
Holding the certificates of the
documentary securities and
accounting securities rights.
Intermediary services in paying all
kinds of securities incomes.
Informing clients in case of Issuers
corporate actions.
Global corporate operations in case
of Issuers corporate actions
Securities settlements.
• Accompanying services:
 Holding clients monetary accounts
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intended for settlements under the
securities operations and receiving
dividends and interests paid on
securities.
Checking the securities certificates for
authenticity, their collection and
transportation.
Acting in the name of the client on the
annual shareholders meetings.
Informational services on the securities
market.
Monitoring the Issuers corporate
actions, informing and supporting
clients.
Banking services
Calculating the value of client’s
securities portfolio
Other services based on securities
operations.
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Classification of the Depository
Operations of the Bank
Administrative
Opening accounts;
Closing accounts;
Changing clients
information;
Canceling clients
orders.
Inventory
Individual:
Posting securities
on the account;
Securities
withdrawal;
Securities transfers;
Securities moving;
Securities blocking.
Informational
Issuing account
statements
and client reports.
Global:
Split;
Consolidation;
Securities
conversion.
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Bank’s Depository Rules
Operational Depository Rules
Depository Agreement
Operational Rules
Clients Rules
Administrative Orders and Reports
Clients Orders and Reports
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Top 8 Safest Custodian Banks
as at 31.12.2004
Custodian
MarketVol
ume, mln.
USD
Capital,
mln. USD
Insurance
covering,
mln. USD
Safety
Rate,
%
1
Sberbank of
Russia
2 288
6 255
-
273,35
2
Alfa-Bank
1 370
880
25
66,08
3
Rosbank
1 336
480
0
35,99
4
ACB Soyuz
1 263
190
0
15,04
5
International
Moscow Bank
2 746
374
30
14,71
6
Citybank
4 604
336
-
7,3
7
Vnesheconombank
8 479
397
200
7,04
8
Gasprombank
32 616
1386
5
4,27
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3. The last trends on the
market
• Current situation on the market.
• Central Depository of Russia.
• Securities accounts of Global Custodians and
Settlement Organizations holding with Russian
Custodians.
• Integration processes between the post-soviet
countries.
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Market Statistics
• Total securities market capitalization as at
31.12.2004 was 212 200 mln. USD
• The number of depositories in Russia as at
31.12.2004 was more than 700
• 80% of the market volume of securities
were served by 10 largest depositories
(see below table)
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Top 10 Depositories which served the largest volume of
securities up to 31.12.2004
Depository
Status
Market Volume,
mln. USD
1
ING Bank (Eurasia)
Bank
47 993
2
National Depository Center
Depository
44 139
3
Gasprombank
Bank
32 616
4
Depository-Clearing Company
Depository
14 038
5
Settlement-Depository Company Depository
8 982
6
Vnesheconombank
Bank
8 479
7
Citybank
Bank
4 604
8
Garant SDK
Custodian/Special
Depository
3 296
9
Pekoinvest
Investment
company
3 294
10
Central Moscow Depository
(JSC)
Custodian/Special
Depository
3 097
Total volume
170 539
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Three main problems of
Russian Depository System:
• Wide diversity of depository technologies on the
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•
securities market without any unifications is the main
reason of non-effective corresponding relations,
Insufficient structure of Depository System: unlimited
number of levels of corresponding depositories
relationships is the main reason in troubles of
identification of the securities owner/real investor,
Securities regulation needs significant changes in case of
market demand and especially in case of integration in
international financial market.
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New Model of The Structure of
the Russian Depository System
1st level
Central Depository
2nd level Custodian
2nd level Custodian
2nd level Custodian
3rd level Custodian
3rd level Custodian
3rd level Custodian
Investor
Investor
Investor
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Integration processes between
the Depository Systems of
post-soviet countries
• 2000 – Establishment of the International Association of
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Exchanges of CIS Countries.
2001 – International Congress “Integration of Depositories
Systems – is the basis of the effective cooperation on the
international securities market”, Toshkent.
2002 – International Congress “Integration of Depositories
Systems – is the basis of the effective cooperation on the
international securities market”, Almaty.
2003 – International Congress “Integration of Depositories
Systems – is the basis of the effective cooperation on the
international securities market”, Baku.
2004 –International Congress “Integration of Depositories
Systems – is the basis of the effective cooperation on the
international securities market”, Moscow.
22nd December 2004 – First Conference of the Association of
Eurasia Central Depositories.
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Association of Eurasia Central
Depositories.
• Association – is a professional
organization which activity is
concentrated on the evolution of the
national financial markets, on the
unification of the legal regulation and
the principles of structuring national
depositories systems.
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• Members of the Association:
 State Central Securities Depository of the Republic
Uzbekistan,
 JSC “Depository-Clearing Company” (Russian
Federation),
 Non-for-profit Organization “National Depository
Center” (Russian Federation),
 PLC “Interregional stock union” (Ukraine),
 National Depository of Ukraine,
 National Securities Depository of Moldova,
 JSC “National Depository Center” (Azerbaijan),
 Republican Unitary Enterprise “Republican Central
Securities Depository” (Republic Belarus),
 PLC “Central Securities Depository of Georgia”
 JSC “Central Securities Depository” (Kazakhstan),
 JSC “Central Depository” (Republic Kyrgyzstan).
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Thank you
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