Russia’s National Settlement Depository (NSD), in partnership with Bloomberg, is preparing to launch a new collateral management service for over-the-counter repo transactions in March.
The platform, which began testing in December, promises to expand the number of users of NSD’s collateral service and allow new repo transactions to be processed “in a similar way to the functionality available for repos with the Bank of Russia and the Federal Treasury”.
NSD’s existing system currently services 192 participants.
The project, which began last year, is sponsored by the Moscow Exchange Group and has been in a testing phase since December 2016.
In a statement on the launch, NSD described its role as keeping general collateral certificates (GCCs) and basic assets, as well as providing collateral management services to automatically select clients’ securities for the pool on the basis of selected parameters and for margins calls.
The aggregate value of repo transactions serviced by the NSD increased nominally in 2016, to sit at RUB 47.3 trillion (USD 797.5 billion), up from RUB 46.3 trillion (USD 780.6 billion) in 2015.
The annual value of repo transactions with the Federal Treasury through NSD doubled between 2015 and 2016, to value more than RUB 37.4 trillion (USD 630.6 billion).
Transaction volumes also increased to more than 2,200, up from 1,200 the year before.
The value of repo transactions with the Bank of Russia fell steeply to RUB 9.9 trillion (USD 166.9 billion) in 2016, down from RUB 30.8 trillion (USD 519.3 billion).
Bloomberg recently launched the MARS Collateral Management solution and secured HSBC Private Bank and more than a dozen corporations and financial institutions as clients.
The MARS solution targets the new variation margin requirements for non-centrally cleared OTC derivatives for banks, investment firms and corporations, promising to facilitate the collateral management and reconciliation processes needed to adhere to these new requirements.
“These rules are intended to reduce systemic risk, but present costly operational challenges to investors who will need to calculate and post initial and variation margins for all non-cleared trades, classify eligible collateral to post and deal with an increase in margin calls and daily calculations,” said Bloomberg.
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