Making Russia 'Euroclearable'

International investors faced a number of difficulties. Liquidity in Russia’s government debt (OFZ) market was low, with no possibility of trading OTC.

Trading in equities was fragmented between two main exchanges. Clearing and settlement were complicated by the lack of any functional central counterparty. With hundreds of securities depositaries and 48 different registrars, settlement finality could be a complex issue. To trade, foreign investors had to open beneficiary owner accounts. Corporate actions were all paper-based.

With the reform of corporate actions, which took effect in mid-2016, Russia became fully ‘Euroclearable’.

International investors can now choose between dealing through an international firm or direct through a segregated brokerage account on MOEX without complex account opening requirements and with the comfort of full asset protection through their Euroclear account. 

With the removal of withholding tax and the introduction of OTC trading, foreign holdings of OFZ have climbed from 3% to 25% of total issuance.

For investors in corporate bonds and equities, the ongoing management of positions is facilitated by the establishment of a central information source at the NSD and a unified approach to corporate actions processing that includes electronic voting.