The National Settlement Depository (NSD), part of the Moscow
Exchange Group, is to increase the scope of its collateral
management system (CMS) to allow it to be used to process
over-the-counter (OTC) repos with counterparties other than the
Bank of Russia and Federal Treasury in March.
NSD and Bloomberg have been testing the new inter-dealer
facility since December 2016 and it is set to go live
commercially in March 2017.
Alina Akchurina, managing director for CMS development at
NSD, said: "The service for inter-dealer repo is being launched
in March 2017 and the tri-party repo volumes may be varied
"The volume depends on the major market players and the
inertia period while the participants are still working on the
bilateral basis. But at the first stage we are focusing on the
NSD CMS system doesn’t have any limitations and
can be used by any category of clients, therefore corporate
sector, banks, brokers and foreign participants use the new
services. The only requirement is that a market participant
need to open a direct account with NSD to operate with the CMS
The tri-party service will allow new OTC repos to be
processed with similar functionality to OTC repos currently
done with the Bank of Russia and the Federal Treasury.
"The NSD’s CMS platform means that client can
boost its operational efficiency using the CMS solutions for
both global lenders [the Federal Treasury and the Bank of
Russia] and OTC inter-dealer segments as well as outsourcing
post-trade activities to NSD," said Akchurina.
"The main idea is to outsource the collateral management
function to NSD. Hence the participants will be delivered with
the full range of post-trade services – allocation,
daily mark-to-market, margining, corporate actions processing
and reporting to a trade repository.
"As far as NSD provides clearing services, participants will
also benefit from using DVP settlement and multilateral netting
in the clearing batch."
Last year the Moscow Exchange Group focused on repos using
general collateral certificates (GCC) – a local
version of GG pooling. The NSD holds GC and basic assets and
automatically selects the clients’ securities for
the pool to be used as collateral on the basis of certain
parameters as well as margin calls.
The NSD CMS services mostly OTC trades but also on-exchange
repos with global collateral certificates.
"The advantage of the CMS platform that is universal. It has
an open architecture thus can be compatible not only with OTC
products, but also on-exchange ones," said Akchurina.
"NSD is also developing the valuation centre. All this makes
our platform attractive for the development of tri-party
services on the inter-dealer market. Moreover, we looking
forward for further perspectives for CMS use upon coming
mandatory margining of OTC derivatives legislation in
The NSD CMS is used by 192 market participants.
Russia repo trends
2016 was marked by excess liquidity on the money market,
since the Bank of Russia has transitioned from a policy of
providing liquidity to a policy of absorbing excessive
The value of OTC repo transactions with the Federal Treasury
performed with the use of the NSD CMS more than doubled
year-on-year from RUB15.5trn ($0.26trn) in 2015 to exceed
RUB37.4trn in 2016.