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. Last Updated: 07/27/2016

Unexim Signs Depository Pact




CORRECTION


The Moscow Stock Exchange's registry fee should have been given as 0.001 to 0.05 percent of transactions.








Russia's two biggest stock depositories -- Uneximbank and the Depository Settlement Union -- signed a pact Tuesday expected to establish Uneximbank as the dominant force for clearing stock trades.


Traders hailed the development as instrumental to increasing liquidity and volumes in the market.


The deal, which was signed in conjunction with the Moscow Stock Exchange, will give Uneximbank and DSU clients access to each other's exchanges without going through the expensive process of re-registering shares.


"This infrastructure allows market participants, independent of whose client they are, Unexim depository or DSU, to be served at any trading place without additional expenses," said Mikhail Alexeyev, deputy chairman of the board at Uneximbank.


Under the current system, the 450 clients of Uneximbank, which services the Moscow International Currency Exchange, or MICEX, and the Russian Trading System, or RTS, must re-register their shares with DSU if they wish to trade on the Moscow Stock Exchange, paying a significant 0.24 percent of the transaction in fees. DSU's 440 clients must do the same to trade on the MICEX or RTS exchanges.


The new system will allow clients of both to avoid the re-registration procedure and could save investors up to $40 million next year, Alexeyev said.


Uneximbank holds securities worth $9.5 billion, with $6.3 billion in corporate shares, Alexeyev said. He denied reports that Uneximbank pads its depository volume with veksels, Russian corporate IOUs. The DSU maintains about $2 billion in shares, he added.


He said the agreement doesn't represent a merger of the two depositories; they will continue to work as separate companies and maintain their own client bases. "This agreement is complimentary for DSU," Alexeyev said. "We're maintaining their business."


DSU, which is mandated by presidential decree to hold all Gazprom shares, will still be the only depository to serve Gazprom shareholders.


Traders said Uneximbank's depository will become the preferred clearing house for market participants because it will offer access to Russia's three main trading places -- MICEX, RTS and the Moscow Stock Exchange.


"Many will want to keep their shares in such a depository," said Samit Yakovlev, head trader at United City Bank. "I think we will keep shares in Unexim depository."


The agreement effectively leaves the Depository Clearing Co., the market's other aspiring depository, out in the cold, Alexeyev said. Uneximbank did not consider a similar deal with DCC because, with just $200 million worth of shares in custody, it is a relatively small depository.


"I'm ready to get together with anyone whose size is appropriate," Alexeyev said. "For now, DCC is not very developed. I would wait until they grow up."