Great news for investors in the Russian capital market: foreign investors no longer need to appoint a local operator to take care of their settlement and safekeeping tasks but can go directly through the GSS Operations Centre created by Raiffeisen Bank International (RBI).
For that purpose, RBI opened a foreign nominee securities account with the National Settlement Depository (NSD), the central securities depository of the Russian Federation. RBI group securities services (GSS) is proud to be the first foreign custodian in the history of this sizable market to entertain direct connectivity with the local central securities depository (CSD).
After an evolutionary process over three years, in close co-operation with the NSD, the new platform will be up and running in Q4 2019. Installing this new direct connection to Moscow was only possible after changes to the formerly strict domestic securities market legislation.
In his capacity as a member of the NSD’s International Consulting Committee, Attila Szalay-Berzeviczy, head of group securities services at RBI, has been advocating the necessary regulatory changes. On top of that, Raiffeisenbank Russia’s head of GSS, has recently joined the NSD’s Customer Committee, in which the main market participants have seat and vote on important questions related to custodial services.
From the clients’ perspective, this direct line to Moscow means not only less administrative steps and mitigated risk, but also shorter deadlines and minimised cost. The fee structure of the NSD allows users of the GSS Operations Centre to benefit from a group fee at preferred rates.
RBI will be the first foreign bank (non-international CSD) participant of the NSD, much to the benefit of its clients all over the world. This way, RBI will contribute to the inflow of capital to the Russian securities market.
Following the customer
Depending on client demand, RBI stands ready to enlarge its international network of direct settlement partners. The next obvious destinations of the GSS Operations Centre are located in Central Asia.
Direct connections to the local CSDs of Kazakhstan and Armenia are already up and running whereas first arrangements with Azerbaijan’s market infrastructure have already been made, and Uzbekistan may be following suit.
Entering the Azerbaijan capital market
This past summer, several important steps were made in this direction. On the occasion of the Improvement of Azerbaijan Capital Market Infrastructure gathering held at the Baku Boulevard Hotel, the Financial Markets Supervisory Authority of Azerbaijan (FIMSA) and RBI signed a memorandum of understanding. It is directed at the improvement of the capital market, particularly in the field of depository including clearing and settlement of transactions.
The document was signed by Ibrahim Alishov, acting chair of FIMSA’s executive board, and Szalay-Berzeviczy. In order to attract foreign investors to Azerbaijan, FIMSA and RBI intend to entertain nominal custody accounts to be mutually established by the National Depository Center (NDC), and RBI.
This link will enable foreign investors to remotely access the market via RBI’s nominal custodial accounts with the NDC and advanced clearing settlement systems.
As a result, foreign investment activity is expected to gain momentum, which can potentially reduce Azerbaijan’s dependence on oil and improve the balance of payments.
Going ahead in Uzbekistan
In June, Raiffeisen Bank International hosted the Bank Summit in Tashkent, which gathered representatives of more than 70 banks and financial markets organisations, including the Ministry of Finance and Capital Market Development Agency.
RBI speakers shared their experience in various banking products such as DCM, foreign exchange, trade finance, custody and brokerage. The most important topics were compliance and implementation of best practice in Uzbekistan.
GSS was represented by Evgenia Klimova, head of GSS Russia. In her meetings with Capital Market Development Agency and Uzbekistan Central Securities Depository (UCSD), she discussed the development of the financial market, attraction of issuers and access for foreign investors.
The UCSD presented its extensive development plan, which includes an expansion of the range of services including cash account opening and clearing services, the integration into the global financial infrastructure by establishing the links with top depositories and clearing companies as well as implementation of the ISO 20022 standard for interaction between market participants.
The GSS operations centre: An unparalleled functionality
The principle for users of all markets covered by the GSS Operations Center is simple: it is sufficient for clients to have one account at RBI in Vienna to be able to settle transactions in various financial instruments directly. While this shortcut is standardised and fast, clients will not miss the comfort of the services they are used to. Each market continues to be equipped with market experts, some of them true veterans, who will assist in individual cases. At the same time, the administrative centre in Vienna has been stocked up by international specialists, who take care of settlements and asset servicing for the entire region.
On top of all the advantages stemming from reduced bureaucracy and operational efficiency, clients fully benefit from RBI’s Austrian credit rating.
Setting a new standard
At the moment, the GSS Operations Centre covers Austria, Albania, Bulgaria, Czech Republic, Hungary, Poland, Romania, Slovakia, Slovenia. As much as the Russian market was positively surprised that RBI made its visionary idea of a direct link come true, the GSS Operations Centre has created new standards in all the markets it is operating in.
Acknowledging that covering the Central and Eastern European region, with its many different nations, legislations, languages etc. can be challenging and maybe even inefficient for global players, RBI GSS is spearheading a new, simplified approach.
This offer has been meeting strong interest by market users. Their feedback is overwhelming. It is good to know that we are on the right track. The fast one!
