On 18 October 2013, the Central Bank of the Russian Federation made a decision to recognize satisfactory quality of governance at CJSC JSCB National Clearing Centre, which performs central counterparty functions. Thus, NCC currently is the first and only one qualifying central counterparty in the Russian Federation.
Mr. Alexey Khavin, Chairman of the Board of CJSC JSCB National Clearing Centre, commented on the decision by the Bank of Russia as follows:“Completion of state accreditation of a credit institution combining the central counterparty functions and bank operations is an exceptionally important event for the Russian financial market and its participants.First, it means that Russia now has an infrastructural entity – NCC – whose governance quality conforms to the state regulators' requirements and the international operating standards adopted in this field. Second, the assignment of such qualification to our Bank fundamentally improves the market conditions for the participants, enabling them to use their own funds more efficiently. Third, it secures additional assurances not only for the Russian, but for foreign clients as well, as regards reliability of the Russian stock exchange infrastructure.”
The assignment of the status of qualifying central counterparty to NCC also means that the financial mega regulator has recognized the Bank as organization with acceptable and controllable risk level. Along with high reputation value of this event, demonstrating transparency of the financial market to the Russian and foreign participants, the assignment to the CJSC JSCB National Clearing Centre of the qualification of the Bank of Russia enables the Russian clearing participants – credit institutions to decrease capital requirements both for the trades with NCC and for the collateral posted on the accounts opened with NCC.
The decrease of the collateral burden on the trades with NCC as qualifying central counterparty is a direct reflection of the international capital adequacy initiatives for credit institutions (Basel III).
Pursuant to the effective regulation of the Bank of Russia, when calculating the capital adequacy ratio (N1), the Russian banks are now able to apply decreased risk weights to their requirements to the central counterparty, because the NCC governance quality was recognized as satisfactory by the Bank of Russia. The banks’ trade exposures to qualifying CCP and collateral held in the qualifying CCP are assigned risk weight of 5% instead of 20% or 100% relative to other counterparties.
The assessment of NCC’s governance quality was performed by the Bank of Russia in accordance with the Instruction dated 03 December 2012 No. 2919-U “On assessment of the quality of governance of a central counterparty credit institution”, registered by the RF Ministry of Justice on 21 December 2012 under the number 26273 (News Bulletin of the Bank of Russia dated 28 December 2012, No. 77). The requirements of this Instruction reflect the international principles for infrastructures of the BIS Committee for Payment and Settlement Systems and the Technical Committee of the International Organization of Securities Commissions.
The information on recognition of NCC’s satisfactory governance quality has been placed at the website of the Bank of Russia in the special section: http://cbr.ru/credit/cicc.asp.
Information for editors:
CJSC JSCB National Clearing Centre, member of Moscow Exchange Group, was established in October 2005. NCC renders clearing services and acts as central counterparty in the financial market. The bank’s sole shareholder is OJSC Moscow Exchange MICEX-RTS (100%).
Since November 2009, NCC has been the member of the European Association of Clearing Houses – Central Counterparties (EACH), and since September 2011 – member of the Global Association of Central Counterparties – CCP12.
NCC holds a license of the Bank of Russia for banking operations with rouble and foreign currency funds, and a license of professional securities market participant, issued by the Federal Service for Financial Markets (FSFR). As of 01 October 2013, the bank’s equity amounts to 18 bln roubles, including the authorized capital of 6 bln 170 mln roubles.
