Taking a stand for investors

Tue, 04/10/2016

GSS Russia has had a busy summer advocating for the interest of investors. By Natalia Sidorova, Head of GSS Russia                                                                                  

With the summer holiday break over, we are glad to welcome everyone back recharged and ready to handle the new challenges coming our way in the months until Christmas. We at GSS Russia look back at a busy summer of lobbying activities to address the needs of our clients and to protect their interests. We continued to maintain our position at the forefront of market developments, thus leading the way in its evolution, as well as promoting best market practices and sharing best-in-class experiences.

As part of a conference on the evolution of the corporate actions reform in Russia organised by NSD, I was invited in my role as Head of UniCredit GSS Russia, together with other key representatives of the market infrastructure, to speak on a panel devoted to corporate actions processing. Local subcustodians and other infrastructure participants shared the experiences and discussed the gaps in the practical implementation of the reform. We also reflected on ways to improve market practices and interaction with the CSD, the issuers and the registrars. The conference enjoyed great interest and drew around 350 participants.

Discussions over the latest NSD initiatives

On that occasion NSD updated the participants on its further plans with regards to the enhancement of e-proxy voting services and electronic document interchange. We shared with NSD our concerns with respect to a number of delays related to AGM notifications and also discussed our proposal to improve NSD corporate actions formats so as to align with the best international standards and practices.

Need for transparent standards

UniCredit participated also in a meeting of the National Securities Association Council on Custody Activities, which was likewise attended by a representative of the Central Bank, to discuss the implementation of the new basic standards for custody activities as well as to clarify certain aspects of the new regulations. The new standards are common regulatory requirements for all self-regulating organisations, like the National Securities Association, and have to be adhered to by all local subcustodians.

Therefore, it is important for these standards to be transparent, to reflect the specifics of the new legislation and our standards of service while leaving sufficient flexibility to satisfy individual client needs. For this reason, we see it as our goal at UniCredit GSS Russia to provide a tangible contribution and vision to the wording of the new standards, on the basis of which we will have to introduce the respective changes to our terms and conditions for offering custody services.

Changing framework for custody providers

At the same time, as we have been keeping you updated, the custody regulatory landscape in Russia is undergoing a major transformation. Several legislative acts have already been adopted, a number of acts are to be rescinded and an important regulation on certain requirements to custody activities is expected to come into force. However, there are certain points that still require additional clarification and guidance from the regulator.

Over the course of a very positive discussion with the Central Bank representative, we managed to clarify a number of these open questions, which will be beneficial for the practical implementation of the new legislation in our internal processes and documentation workflow.

Late instruction fee

Lastly, UniCredit also took part in a meeting of NSD's Committee on settlement and custody activities and fees. Among the topics discussed, there is one that we believe is important to share with our clients - namely, the proposal of NSD to introduce a special fee for late instructions, i.e. instructions submitted after the contractual settlement date, in order to improve settlement discipline.

Together with other members of the Committee, we explained to the CSD that the introduction of such a fee (which will be re-invoiced to our clients) cannot be substantiated on the basis of the prevailing market practices and the settlement specifics in Russia. In particular, we endeavoured to clarify that the concept of a contractual settlement date is not recognised in Russia and that this is only an optional parameter. We explained as well that there are situations where instructions are submitted in advance for electronic pre-matching, but have to be re-submitted due to mismatches in certain fields, which in its turn leads to the necessity for manual investigation and can thus shift the settlement beyond the contractual date, triggering the new NSD fee. Unfortunately, the majority of the Committee's members still voted in favour of the proposal and the new fee is going to be introduced by NSD.

These are only some of the most important initiatives we at UniCredit GSS have been handling recently. We will of course continue to follow up on these and other developments so as to enable the local market to offer the best possible environment for investor activities to take place.