Analytical credit rating agency (ACRA) affirms the rating of CCP NCC (hereinafter NCC) at AAA(RU), outlook Stable, says an official statement issued by ACRA.
“Such high credit rating assigned by ACRA indicates that NCC is on the right track of its development and transformation into a reliable and efficient company performing central counterparty functions within the Moscow Exchange Group,”- said Eddi Astanin, Chairman of NCC’s Executive Board.
As said in the statement, the credit rating of NCC reflects its strong and stable business profile, exceptional liquidity position and high capital adequacy, which compensate for the risk profile. According to the methodology of the Bank of Russia, NCC is a systemically important central counterparty, and it serves as a clearing organization for the Russian financial market.
In ACRA’s opinion the high likelihood of extraordinary support to NCC from the state is based on NCC's importance and exclusive role in the financial services market of the Russian Federation. The Agency believes that in case of a need, financial support to NCC in the form of capital or additional liquidity can be promptly provided by the state directly or through Moscow Exchange, whose activities are significantly influenced by the state.
The Agency’s experts note the strong business profile is associated with NCC’s exclusive role as a clearing organization and central counterparty, which ensures the majority of transactions in the key segments of the Russian financial market and guarantees the fulfillment of obligations under them. ACRA positively assesses the high corporate governance and risk management standards at NCC, which enable it to accept the minimum risk relative to the scope of transactions.
ACRA notes that NCC’s capital adequacy ratio (134% as of September 1, 2021) is at comfortable level that allows to cover central counterparty risks, as well as the risks of potential impairment of NCC’s own balance sheet assets.
“The counterparty risk is mitigated by NCC through its rigid eligibility criteria for market participants and a strict margining policy (with prompt marked-to-market reevaluations)”, - as ACRA says. The structure of central counterparty protection levels combined with a set of measures to be taken in case of default of clearing participants have a positive impact on ACRA’s assessment of NCC's risk profile. The Agency also takes a positive view of the fact that in order to reduce the possibility of losses amid crisis phenomena in the economy in 2020, NCC has strengthened its risk procedures.
The assessment of NCC’s risk profile is constrained by a significant amount of assets exposed to market risk (over 300% of common capital), as well as by materialization of operational risks in 2018 and 2019. According to ACRA, the liquidity position is assessed as strong given the specifics of NCC’s operations.
Notes for editors:
Central Counterparty National Clearing Center (CCP NCC), part of Moscow Exchange Group, was established in May 2006. It operates as a clearing house and central counterparty on the Russian financial market. The Bank of Russia has assigned CCP NCC the status of a qualifying central counterparty and recognized it as the systemically important central counterparty. The primary function of CCP NCC is to ensure stability of the financial market in its authority using innovative risk management which meets international standards and provide participants with effective clearing services. The company’s equity capital amounted to RUB 74,38 billion as of October 1, 2021.