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MICEX SH & NDC – on the way to merge

MICEX SH & NDC – on the way to merge. By: Sergey A. Sukhinin Chairman of the Board Executive, CEO MICEX Settlement House. MICEX Settlement House is. The biggest Russian non-banking credit institution

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MICEX SH & NDC – on the way to merge

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  1. MICEX SH & NDC – on the way to merge By: Sergey A. Sukhinin Chairman of the Board Executive, CEO MICEX Settlement House

  2. MICEX Settlement House is • The biggest Russian non-banking credit institution • Effecting settlements in all MICEX markets: for government and corporate securities, foreign exchange, derivatives and commodities • Effecting settlements in OTC markets: DVP transactions of NDC participants, REPO deals with the Bank of Russia, deposit and loan transactions of the Bank of Russia • Providing full range of settlement services to more than 880 financial institutions all over Russia including the biggest ones • Authorized Settlement Center in Organized Securities Market nominated by the Bank of Russia • Ranking among 30 biggest Russian credit institutions

  3. “The National Depository Center” (Closed Joint Stock Company) is • The leader of the Russian securities settlement infrastructure with a public CSD Rating of AA– issued by Thomas Murray (Stable outlook) • The settlement depository of the MICEX Group • The Russia`s sole settlement depository servicing all types of securities and ensuring settlements of 100% of trades on the government bond market, more than 99% of trades on the corporate bond and municipal bond markets, majority of transactions with equities traded on the stock market, as well as transactions with UIT units and Eurobonds • The National Numbering Agency for Russia, responsible for assignment of ISINs and CFI codes to Russian financial instruments and the Substitute Numbering Agency for CIS countries

  4. MICEX SH & NDC regional network MICEX SH Head office (Moscow ) NizhegorodskyBranch (Nizhniy Novgorod) Samarskiy Branch (Samara) Uralskiy Branch (Ekaterinburg) Rostovskiy Branch (Rostov-on-Don) Sibirskiy Branch (Novosibirsk) Primorskiy Branch (Vladivostok)

  5. MICEX SH’s basic financials as of 01 January, 2010 (in millions) • Average assets – RUB 160 000 (USD 5 300) • Average Equity – RUB 3 700 (USD 123) • Average Funds with the Bank of Russia and in correspondent accounts with prime foreign banks – RUB 1 002 000 (USD 33 195) • Daily average turnover through customers’ accounts – RUB 1 206 000 (USD 39 953) • Daily average turnover through correspondent account with the Bank of Russia – RUB 878 700(USD 29110) • Net profit for the year – RUB 1 791 (USD 59)

  6. NDC’s basic financials as of 01 January, 2010(in millions) • Equity – RUB 2 174 (USD 72) • Net profit for 2009* – RUB 481 (USD 16) • Revenue for 2009*: – RUB 1 275(USD 42) • Total value of securities held - RUB 6 270 000 (USD 207 718) * - In connection with the reorganization of NDC from Not-for-Profit Partnership into Closed Joint Stock Company in 2009 and for purposes of comparability with the data for the same period of the previous year, for 2009 the cumulative results of operations were presented according to financial statements for the relevant periods.

  7. MICEX Settlement House`s & NDC’s customer base as of 01 January 2010 Total 892 NDC participants Total 885 customers of MICEX SH ~ 50%

  8. Functional organization of settlements within MICEX Group Bank of Russia Moscow region electronic settlement system Interregional electronic settlement system Client-Bank remote access facilities MICEX SH RTGS system (“BESP”) Foreign bank S.W.I.F.T. S.W.I.F.T. RussianClients S.W.I.F.T. Foreign bank Telex Internet Intranet Data exchange with MICEX depository-trading system MICEX communication system MICEX NDC NCC 8 8

  9. Basic features of settlements Securities are held with and settled through the NDC Cash is deposited with and settled through the MICEX SH DVP settlement using accounts with NDC and MICEX SH for almost 100% of on-exchange trades No credit risks on NDC and MICEX SH Need to fulfill certain legal requirements on currency regulation On-exchange trades 100% pre-depositing of cash and securities assets - T+0 (same day) exchange trade settlements Partial pre-depositing of cash and securities assets - T+n exchange trade settlements Settlement currency is Russian ruble for most of trades Own funds have to be transferring from current accounts to trading accounts on daily basis - if they are not allocated yet For OTC trades FOP settlement in ruble and foreign currencyand DVP OTC REPOs collaterized by corporate Eurobonds.

  10. Safety and reliability of settlements • MICEX SH maintains minimum obligatory liquidity ratio at 100%, does not effect any investment activity thus does not carry any credit risks • Back-up procedures are in place for all data • E-documents exchange is protected by certified encryption mechanism • Alternative communications channels are provided • Settlement procedures are fully automated

  11. Real time book transfer of funds settled between MICEX SH’s customers Real time settlements through the Bank of Russia’s BESP system – MICEX SH is a direct participant of BESP Extended operational deadlines for payments in Russian ruble and foreign currencies: RUB – 20:30 USD – 20:30 EUR – 16:00 CHF – 14:00 Upcoming implementation of new RUB payment documents formats by the Bank of Russia will simplify input of payment instructions in RUB, in particular for non-Russian customers, and allow STP for such payments Operational efficiency & beneficial conditions of settlement services * For non-resident customers the deadlines are shifted back for 30 min, required for currency control purposes

  12. MICEX SH & NDC merging: benefits Creation of full-fledged Russian CSD providing full range of settlement services Improvement of existing services – simplification of DVP models Introduction of new services like securities lending & borrowing and settlements with participation of CCP Raising capitalization of NDC Improving perception of the Russian financial infrastructure globally

  13. Contacts MICEX SH 1/13, stroenie 8, Sredniy Kislovskiy Pereulok, Moscow 125009, Russia Administrative +7 495 705 9619 Correspondent Banking +7 495 745 8987 Fax: +7 495 745 8122 SWIFT: MICURUMM Теlex: 485391, 485393 MICU RU http://www.micex.ru/group/settlementhouse/portrait NDC 1/13, stroenie 4, Sredniy Kislovskiy Pereulok, Moscow 125009, Russia Service Development & Client Relations : +7 495 232 05 14 Customer Services : +7 495 956 2789 Corporate Actions and Issuer Relations: +7 495 232 5253 Public Affairs: +7 495 232 0910 Fax: +7 495 745 8122 http://www.ndc.ru, http://isin.ru

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