Russian depositories and registrars test automated corporate actions

Source: National Settlement Depository

National Settlement Depository (NSD), Russia’s central securities depository, together with other depositories and registrars, have conducted a test of the full information and files exchange during a shareholder-requested purchase (buyout) of company shares (BIDS) using EDI and electronic communications channels.

The test participants included NSD depositors (VTB Bank, Credit Swiss, Sberbank, ROSBANK, UniCredit Bank, Aton, SEB Bank), registrars (SR-DRAGA) and Eldis-Soft, a registrar software developer. The test was conducted as part of the new system of corporate actions processing which will require shareholders to send their instructions to registrars through their depository.

In future, NSD plans to continue testing other corporate actions in anticipation of 1 July 2016 changes arising from corporate actions reform. For instance, in February market participants will be able to test a feature supporting the mandatory vs. voluntary offer to repurchase shares. The schedule of all tests is described in detail in the Corporate Actions Reform Roadmap.

On 1 July 2016, the new provisions of Federal Laws “On Joint Stock Companies” and "On the Securities Market” will come into effect as part of corporate actions reform. In accordance with these changes, shareholders with securities accounted in the depository system will be able to participate in most corporate actions only through their depository. The current tests allow market participants to prevent errors during corporate action processing and guarantee the reliability of the new technology to the securities holders.

NSD and market participants gave a positive assessment of the first test results and confirmed their intention to continue joint work on improving interactions associated with corporate actions processing. The participants thoroughly analyze the results of the test. Main conclusions based on the test will be published in Q&A section of the reform’s website. That will include the assessment of the interaction approaches, formats, and operational reliability of the communication links. The registrars and deponents of NSD that didn’t take part in the test will have a chance to join the repeated test of the technology (BIDS). The time-frame is fixed in the Corporate Actions Reform Roadmap.

Corporate actions reform

In 2013, the corporate actions reform was initiated in Russia. It includes a number of measures aimed at improving regulations and technologies for the collection and distribution of corporate information as well as corporate actions processing. In summer 2015, the federal law that established the reform’s key parameters was adopted. It changed the approach to drawing up lists of securities holders, introduced a new order of corporate actions processing in a centralized way via the record keeping system’s institutions, presented new ways of participating in shareholder meetings and created a corporate information center on the basis of the central securities depository. The new provisions will come into force on 1 July 2016.

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