Forthcoming New Legislative Framework on Custody Activities

AO UniCredit Bank
Summary: 
A new legislative framework on custody activities enacted by the Central Bank of Russia, expected to improve the transparency and the reliability of the record keeping system in the Russian securities market, will come into force as of 5 April 2017
Tue, 16/08/2016

Central Bank of Russia Regulation No.542-P from 29 June 2016 will come into force on 5 April 2017 as part of the Central Bank's ongoing initiative to overhaul the outdated legislation regulating custody activities in the Russian securities market. This new legislation will replace FSMC Regulation No.36 from 16 October 1997, one of the key custody sets of rules in force currently.

The Central Bank’s Regulation will update the standards applicable to the depository record-keeping system, ensuring its integrity and safety as well as streamlining the technology of depository activity, including the below.

  • Establishment of new approach to unified custody records and documents keeping system, comprising:
    • records on depositors and securities
    • records on depository transactions reflected in journal of operations
    • registry of incoming and outgoing depository documents
  • Requirements for protection and custody record keeping procedures:
    • all records must be kept and stored in electronic databases
    • records have to be available as on each operational day
    • daily backup of records
    • records of documents must be retained for at least 10 years and other records for at least 5 years, from the date of securities account closure
  • The technical means for processing and storage of custody records as well as back up storages of information must be located on the territory of Russia
  • The depository must have Business Continuity Procedures in place.

Impact on investors: The new legislation will bring an important update to the legislation on depository activities in Russia.