The Central Bank of Russia has prepared a draft of law that regulates the audit procedure for financial institutions performing CCP functions.
The draft law establishes criteria for the operational audit and the requirements for auditors and issued reports.
The Law no.7-FZ on clearing, clearing activity and the central counterparty imposes an obligation on the CCP to pass through operational inspections at least once every two years. In Russia, the National Clearing Centre provides clearing for on-exchange trading to market participants across all Moscow Exchange markets and acts as the official Central Counterparty in Russia wherein the Settlement and Depository Company acts as a clearing house on the exchange commodity market.
The draft law proposes that the auditor of CCP can be a company with a good reputation that provides consulting services in the field of risk management in financial markets or in the field of information technology for at least five years and has no conflict of interest with the CCP. The auditor shall assess all components of CCP activity including internal regulations and operational processes against the established parameters.
In addition, the risk management system, assessment of model accuracy, risks stress testing, definition of allocated capital so-called ‘skin in the game’, as well as the restoring of financial stability of CCP are subject to audit review.
Contact
Yuliya Shibukova
Relationship Manager, Global Securities Services Russia