SAINT-PETERSBURG EXCHANGE REPOSITORY Andrey Salaschenko, Vice-President RTS NP 29/11/2013 European Bank for Reconstruction and Development (EBRD)
NP RTS – INTEGRATOR OF RUSSIAN FINANCIAL MARKET We accumulate ideas, needs and resources of financial markets in Russia and implement projects 115 members – Support for the main decision- aimed at their development. creation of new makers of the services and market products to We create new products, technologies and increase customer activity opportunities. Group RTS: NONPROFIT PARTNERSHIP Reducing costs and improving the efficiency of the participants in the financial markets 02 Saint-Petersburg Exchange Repository
NP RTS: DESTINED TO CREATE REPOSITORY Experienced in relevant technology 2001-2013: creation of platform for Moscow Exchange (previously RTS Stock Exchange) organized derivatives market (leading market through all the years, up to 99%+ of the whole organized derivatives market in Russia); 2006: creation of platform for OTC reporting of Spot securities trades (covered around 99% of overall reporting in 2007-2013); 2010-2011: creation of platform for state procurement including web-services, data storage and encryption issues (18% of Russia state procurement uses that technology*). Experienced in derivative products We are the team that created organized derivatives market in Russia (FORTS market, currently operated by Moscow Exchange); We are in partnership with team that created Russian ISDA Master Agreement Regulations. Experienced in information security Stored data on around 400 000 electronic auctions*: no cases of information leakages; More than 350 000 organizations including state and municipal authorities trusting their information to our group*; Own certifying center (creating electronic digital signatures). 03 * As of 1/10/2013, source - http://zakupki.gov.ru/
NP RTS: REPLYING TO DEMAND Creating repository as a reply to the demand for: Fair pricing of repository services in Russia; Costs saving in connection to repositories; Flexible solutions for different categories of market participants; Flexible legal repository framework; Back- up repository for banks and other participants preferring “state” repository as a primary option. 04 Saint-Petersburg Exchange Repository
IT SOLUTIONS Key pillars: Crypto keys suitable for all categories of market participants: Qualified digital signature; Encryption provider Microsoft CSP; Advanced nonqualified certificate (RSA). Two models of interaction: statuses of reports available on request and callback mechanism. As the main format of interaction is used a limited subset of the FpML format (v. 5.4). We are committed to a common format for all Russian repositories. Connectivity: WEB-Service WEB Interface – free of charge, bilingual File Bridge – free of charge, developed for connection via WEB-Service, bilingual FLEX (FpML Exchange) – free of charge, bilingual SWIFT File act – is being launched by the end of December 2013 in the full operating mode Hard copies 05 Saint-Petersburg Exchange Repository
FORMATS OF INTERACTION Set-up process takes*: Full integration 2 weeks System software relates to the WEB-services of Repository and implements the full functionality of interaction. Partial integration The system can generate the necessary reports in FpML format 7 days and analyze the response messages, but the transport functions and control of EDS are operated by a separate software. Minimal integration The system is source of visual data only. Message generation and 20 min interaction with the Repository is performed by a separate software. 06 * Taking into account work of a small group of 3 – 4 employees
PREPARED SOLUTIONS File Bridge - solution for partial integration Worked out for the interaction with the Repository by file-sharing, the gateway will save a customer from having system-level elaboration. Its bilingualism and opportunity to support RSA-certificate allows it to be used by non-residents. Flexible system of configuration allows to attune it for optimal interaction. The Repository user’s interface FLEX (FpML Exchange) - solution for minimal integration Worked out to create a message by entering the data into a graphical interface. The elaboration has the ability to construct messages in FpML blocks format. The elaboration has the ability to visualize the message structure based on customizable templates and mapping rules. In conjunction with the file gateway relieves the client from necessity to rework systems. 07 Saint-Petersburg Exchange Repository
REPOSITORY: PRICING MODEL Main incentives of Repository creating: Non-profit infrastructure project; Take into account objective of covering costs of project; Creating special benefits for the market by market competition between Repositories existing. Tariff principles: Regressive model; Limitation of fees (upper cap); Mass marketing proposals; Commission is charged only for messages transferred to the Repository. Initial Grace Period Small Quantity Grace Period Free of charge repository service till 30 messages per month are free of charge 01.01.2014. at least till 31.12.2014. 08 Saint-Petersburg Exchange Repository
REPOSITORY: SCHEDULE OF FEES – FIGURES Commission will be charged only for messages transferred to the register. Messages sent during set-up process will be free of charge. They are: Message on repository agreement, Reporting Party Form etc. Number of registered Tariff rate, RUB/USD Number of short repo Tariff rate, RUB/USD standard messages messages*** (USD/RUB rate 32,00)* (USD/RUB rate 32,00)* 1 - 30 0** (for each message) 45/1.41 1 - 111 (for each message) 31 - 500 45/1.41 (for each message) 5 000/156.25 112 - 1 000 501 - 1 000 35/1.09 (for each message) (for all messages) 1 001 < 25/0.78 (for each message) 15 000/468.75 1 001 - 10 000 (for all messages) Number of registered Tariff rate, RUB/USD standard messages in paper 25 000/781.25 (USD/RUB rate 32,00)* 10 001 - 25 000 form (for all messages) 3 000/93.75 (for each 35 000/1 093.75 Any 25 000 < message) (for all messages) If the amount of fee exceeds 75 000 RUB (2 344 USD) the client will be charged fee equal to 75 000 RUB. * Exchange rate is taken for the date of billing from the Bank of Russia Website ** Grace Period for 31.12.2014 09 *** The repo agreements under which the fulfillment of obligations under the second part of the repo agreement is made on the next business day after the fulfillment of obligations under the first part of a repo agreement
ANNEX 10 Saint-Petersburg Exchange Repository
LEGISLATION FRAMEWORK: OVERVIEW Law: according to the article 51.5 of the Russian Federal Law “On Securities Market”, “parties to the REPO contract, contract which is a derivative financial instrument concluded OTC as well as parties to the contract of another type concluded under general agreement, must provide information on such contracts to a self- regulatory organization of professional participants of the securities market, clearing house or stock exchange. The Self-regulatory organization of professional participants of the securities market, clearing house and stock exchange maintain the registers of contracts and submit them to the Central Bank of Russia” . Parties obliged to report to Russian repositories: Russian legal entities and natural persons which are parties of OTC trade made under master agreement as well as non-residents who made trades with Russian counterparties. Who can perform repository functions: self-regulatory organization of professional participants of the securities market, clearing house or stock exchange. What must be reported: master agreements (general agreement) and trades made under general agreement (general agreement) as well as amendments to them. Reporting time frame: reporting must be done within 3 working days . Trades which duration is less than 4 working days must be reported once a quarter in the form of special report (except repo transactions). 11 Saint-Petersburg Exchange Repository
LEGISLATION FRAMEWORK: REPORTING MOTIVATION Administrative requirement Close-out netting is defined in is applicable only for Administrative code, trades registered by violation of reporting repository within set terms set by the Central timeframe Bank of Russia is a subject (3 working days). to fines – for legal entities it’s 300k – 500k RUB ($9 155 - $15 258)*. 12 * As of 26/11/2013
LEGISLATION FRAMEWORK: INCURRENCE OF REPORTING LIABILITY TIMEFRAME Voluntary reporting period for OTC REPO Obligatory reporting of OTC REPO and and CCY SWAPs CCY SWAPs since 05.11.2013 9 months 05.02.2013 24.09.2013 05.11.2013 24.06.2014 9 months Voluntary reporting period for other types Obligatory reporting of other types of of derivatives derivatives since 01.07.2014 13 Saint-Petersburg Exchange Repository
REPOSITORY: DOCUMENTATION AND LEGAL FRAMEWORK Regulations of Repository Services of OJSC “SAINT PETERSBURG EXCHANGE” shall establish the procedure for, and terms and conditions of, providing of repository services in accordance with Russian securities market law. Repository Services Agreement is the Schedule No. 1 of the Regulations of the Repository Services. The signing of the Agreement between the Repository and a client means an accede of the client to the Regulations. Clients can be residents or non-residents, natural persons or legal entities. Schedule of fees is published on the WEB Site of the Repository. 14 Saint-Petersburg Exchange Repository
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