Securities lending concept introduced into Russian Federal Law

AO UniCredit Bank
Tue, 31/03/2020

Custodians will be permitted to undertake securities lending transactions on the Russian market                     

According to the amendments which went into effect at the beginning of this year, the Russian Federal Law “On the Securities Market” was supplemented with a clause stipulating that securities lending transactions may be handled by custodians representing different parties in such transactions.

This is a first step towards the broad introduction of securities lending in Russia. It was a long-awaited move which had been discussed within the local securities market community for many years. It is expected that investors will benefit from the full-fledged implementation of the securities lending product which will provide additional tools for managing securities positions and improve securities settlement flexibility.

The law, apart from a general provision, does not elaborate on any practical aspects of the securities lending operational flows, rights and obligations of the counterparties, specifics of the custodians’ intermediary role, and so on. Therefore, in order to promote the implementation of this product by Russian custodians, additional guidelines and regulations still need to be developed and introduced through separate by-laws.

Artemy Khaustov

Relationship Manager, Global Securities Services Russia