National Clearing Centre

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National Clearing Centre
2008
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National Clearing Centre (NCC)

• NCC was incorporated on October 24, 2005, as a
  closed joint-stock company
• NCCs shareholders are
• Moscow InterbankCurrency Exchange, 99.329
• National Depository Center, 0.671
• Authorized capital
• in 2008, the authorized capital will increase to
  1.735 million roubles ( EUR 49 million).
• today, the equity is 824,4 million roubles,
  including the authorized capital of 700 million
  roubles.

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NCC in the MICEX Group
MICEX

• Organization of trade foreign currency,
  government securities, bonds, standard contracts.
• Clearing in government securities markets (stock
  and futures markets)
• Engineering project support and development of
  new IT products

NCC
National Mercantile Exchange

• Government intervention inthe grain market
• Trade petroleum products, grain

• Clearing operations and trade settlements

MICEX Settlement House
MICEX Stock Exchange
NDC

• Organization of trade in stock, corporate
  andmunicipal bonds,units in mutual funds, stock
  index futures

• Cash settlements

• Depository operations

Regional currency and stock exchanges
Saint Petersburg
Yekaterinburg
Samara
Nizhni Novgorod
Novosibirsk
Rostov-on-Don
Vladivostok
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NCCs Operating Principles

• NCC is the central counterparty
• control of collateralization of executed
  transactions
• control of performance of obligations based on
  PVP and DVP principles
• ongoing maintenance of NCCs liquidity,
  specifically through the retention of liquidity
  suppliers
• NCC takes risks associated with possible
  non-performance of clearing obligations by
  clearing members

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Basic Elements of NCCs Risk Management System

• Limitation of traded instrument price
  fluctuations
• Preliminary depositing of participants funds
• Availability of guarantee funds
• Fixing of various types of limits
• Setting requirements for the clearing
  participants financial standing and control over
  it
• Mechanism for the substitution of an unfair
  participant by the Bank of Russia
• MICEXs of 2.6 billion rubles guarantees
• NCCs capital

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From December 10, 2007,National Clearing Centre
operates as central counterparty in the MICEX FX
market
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NCC TODAY

• NCCs total balance as of April 1, 2008, is 37,8
  billion roubles
• Total balance of derivative transactions as of
  April 1, 2008, is 167.8 billion roubles
• USD- and EUR-denominated account balance as of
  April 1,2008, in the rouble equivalent exceeds 10
  billion rouble
• The total number of banks-clearing participants
  is 464, including 338 Moscow banks and 126
  regional banks
• 228 banks participate in the USD 4,6 million Risk
  Covering Fund
• The equity is 824,4 million roubles, including
  700 million roubles of the authorized capital
• Daily turnover of FX trade in March reached USD 7
  billion

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Volumes of Trade in the Foreign Exchange Market
Involving the Central Counterparty
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Correspondent Banks

• JPMorgan Chase Bank, New York
• The Bank of New York, New York
• Deutsche Bank, Frankfurt/Main
• VTB Germany, Frankfurt/Main
• BELVNESHECONOMBANK, Minsk
• PRIVATBANK, Dnepropetrovsk
• Bank TuranAlem, Almaty

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NCCs Regional Settlement Model
Nizhny Novgorod
Saint Petersburg
Novosibirsk
Vladivostok
Moscow
Samara
Yekaterinburg
Rostov-on-Don
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Development of NCCs Clearing Operations

• Introduction of the central counterparty in the
  REPO government securities market
• Upgrading of risk management system
• Broadening the range of services provided
• Extension of clearing to other financial market
  segments

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Improvement of Risk Management System in the
Currency Market

• Setting of the exchange rate fluctuation limits
  and preliminary depositing standards depending on
  the external market situation adjusted for the
  current composition of two-currency basket
• - symmetric increase of the exchange rate
  fluctuation limits with respect to the central
  rate of the current trading day and a
  proportionate increase in preliminary depositing
  standards
• - non-symmetric setting of the exchange
  rate fluctuation limits with respect to the
  central rate of the current trading day towards
  the external market trend without changing
  preliminary depositing standards.
• Increase of the Risk Covering Fund
• Setting of various modes of operations performed
  by trade participants depending on the assessment
  of the current market volatility and the status
  of their open positions
• Insurance of the NCC operational risks
• Extension of Risk Management System to various
  financial market segments
• Establishing of the Risk Committee and arranging
  of its functioning

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Modes of Operations
Participant will have the opportunity to operate
depending on the assessment of the current market
volatility and the status of his open market
positions Basic mode the participants
operations are not limited, for collateral fully
covers potential exchange rate risk associated
with his positions Restricted mode with the
scale of the participants potential losses
reaches the amount of collateral, the participant
will have the opportunity to operate only for
closing the existing positions Position
close-out mode if the participant fails to
allocate collateral or its amount is not
sufficient, the participants operations are put
on hold and his position is closed out during the
trading session.
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NCCs Services Development

• Setting the limits of EUR-denominated net
  operations
• Currency band regulation
• Online matching of clearing participants
  positions
• Intraday crediting of clearing participants to
  facilitate their obligations settlement
• Maintaining a single ruble-denominated position
  of participants in exchange markets
• Offering clearing participants an opportunity
  to settle securities transactions in foreign
  currency
• Offering participants an opportunity to execute
  transactions in the stock market with partial
  preliminary collateral
• Creating a single clearing participants
  portfolio to settle operations in various
  financial market segments
• Beginning of operation in the interbank credit
  market

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National Clearing Centre

• Thank you for your attention!

Our address Russia, 125009, Moscow,
Bolshoy Kislovsky Pereulok,
13 Telephone [phone] E-mail
info_at_nkcbank.ru Internet
www.nkcbank.ru