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. Last Updated: 07/27/2016

Registry Set to Boost Equities Confidence

MOSCOW -- The Bank of New York announced Friday the formation of a long-awaited share registry designed to restore confidence in the Russian equity marketplace.


The institution, known as the National Registry Co., or NRC, will operate under the guidance of the Russian Commission on Securities and Exchanges, the equivalent of the U.S. Securities and Exchange Commission, said John Yancey, president of NRC, at a press conference.


Referring to recent scandals in the securities market, Yancey said: "In the West, registration risk is seen as the greatest risk when conducting securities operations in Russia. The NRC was formed to change this perception and to alleviate such risks."


He called the registry, initially planned for April and now due to become operational in September, "a critical building block" for the country's equity market.


Bank of New York officials said the new registry, which has a charter capital of $10 million, is co-funded by two Russian institutions, Uneximbank and NIKoil, which is the registrar for the oil giant LUKoil. In addition, two international institutions, the European Bank for Reconstruction and Development and the International Finance Corporation, an arm of the World Bank, are taking part.


"The NRC is a separate distinct entity not under the control of share issuers" which should be a selling point to build confidence among clients and encourage existing registrars to be absorbed, Yancey said.


The agency plans to provide large- and medium-size Russian companies access to both American Depositary Receipts programs and share registration services.


ADRs, certificates issued in dollars representing the shares of non-U.S. companies, are available for hundreds of stocks from numerous countries, and are in the advanced planning stages for a number of Russian equities. They entitle shareholders to all dividends and capital gains paid in dollars, allowing Russian companies to collect investment money directly from abroad.


"The introduction of ADRs is the result of foreign investors' pressure for an ADR structure to be in place because they have realized the great possibilities of Russia's markets," Yancey said.


"ADRs are supposed to make it easier for investors to buy shares in parts of the world where this process is hardly possible or extremely difficult," said Chris Kearns, NRC vice president for ADR programs. But he cautioned that not all companies are suitable for such investment.


Yvonne Rodgers, vice president of Chase Manhattan Moscow, welcomed the development, saying the institution should be "a good role model to show how a registrar normally operates in a developed securities market."


Another NRC vice president, Thomas Mantz, said the fee structure has yet to be established, but plans call for payments by both the purchaser and the share issuer.


Mantz added that the NRC plans to absorb NIKoil's registry and eventually others, since its computer system will be able to process 10 million accounts.