Sibos TV: Post-trade services have recently come to the forefront as a means for financial companies to diversify their revenue streams. Post-trade processing allows the buyer and seller of securities to root out and rectify any errors. It is an innovation that is making an impact globally. Maria Krasnova, the Deputy Chairman of the Executive Board of Russia's National Settlement Depository, is here to tell us more about that, and specifically the future of the securities industry in Russia and the wider CIS region.
Sibos TV: We know that NSD is one of the largest Central Securities Depositories in the CIS region, so given that, how do you see the infrastructure for the securities market developing there and could you see something similar to the ECB's project – the T2S platform – happening anytime soon and, more importantly, is there a need for that?
Maria Krasnova: It is quite a complex and interesting question, thank you. The CSD community is really diverse. There are more than 135 CSDs all over the world, and each of them is unique. The profile of each CSD is defined by many factors: by the needs of the particular market, by the local legislation, by the level of inclusion into the international securities settlement space, and other factors. If we speak about the CIS area, the former republics of the Soviet Union, I should note that all the CSDs from that area are relatively young. Most of them appeared relatively recently, in early 90-ies, which made them able to adopt the most modern technologies that existed back then. So we all had an opportunity to learn from the developed market and not to make the same mistakes or to skip some phases of development that were obsolete back then. For example, we do not deal with paper-based securities at all, we are fully digitalized and we only maintain electronic interchange with all kinds of counterparts we are dealing with. So each CSD in the region is unique. Some of them have recently emerged, like the CSD in Tajikistan, for example. Some of them, like NSD I am representing today, are very well developed institutions in terms of technology and business processes. It is difficult to generalize but what we have in common is that we all fulfil systemically important functions in our markets, and we all consider ourselves as institutions performing socially important functions that create public good, impact the financial stability, provide access to financial services, and ensure that the population of our countries would get access to the financial services they might need.
Sibos TV: Another goal of your strategy is ‘Infrastructure Internet’ – what does this mean in practical terms?
Maria Krasnova: That is an expression which our CEO Eddie Astanin used when he was laying out his vision for NSD’s business model in the future. I may try to give you two interpretations. First of all, NSD has developed quite an extensive electronic communication network. We communicate with our counterparts electronically and we work on the formats and standards, we ensure that all our customers have fair access to our electronic services. The ecosystem that we are part of includes the CCP, the exchange, the information services provider, even the regulator, and all of them maintain electronic interchange with us. It is a kind of a community that is using our electronic services for the purposes of communication, not necessarily related to NSD. We provide services that go beyond the needs of NSD itself. That could be an analogy to the Internet like a means of communication for the participants of the ecostructure. Another one is that NSD as an organization collects processes, sensitive information, and provides access to this information to the interested party. NSD is seen as a trusted provider and we can get access to the information about financial instruments, issuers, market participants, corporate actions, and other kinds of sensitive information. Therefore, by applying to NSD you can get whatever you need – informationally wise. That would be the second analogy, and my understanding of Eddie’s ideas of ‘Infrastructure Internet’ in the Russian Financial Market.
Sibos TV: You have got a lot going on Maria. You are early adopters or ‘pilots’ of solutions working with SWIFT, so could you summarize the ones that you are particularly active in and the plans you have for them?
Maria Krasnova: I am glad to say that we have a long-term fruitful cooperation with SWIFT. We maintain contacts with ROSSWIFT which is a community of SWIFT users in Moscow that are gathering together to work on the solutions that SWIFT can help us all with, and we agree on how we work together to implement the best solution possible in the market. NSD was an early adopter of ISO 20022 standards in both securities corporate actions related area and payments area. I am proud to announce that our internal systems are fully based on ISO 20022 and we conducted a corporate actions reform that led to the implementation of this format in the entire market, so we have been successfully using it for 3 years already. We are able to convert ISO 20022 into ISO 15022 for all our international clients who are operating in Russia but still have not adopted the ISO 20022 standard. NSD is also an early gpi adopter. As I was told, we were the first CSD to adopt the gpi. It is an important instrument, from our point of view, allowing to increase operational efficiency and transparency, so we expect our clients to use this service and appreciate the opportunities it presents. We also have a joint project with SWIFT: we are exploring together which opportunities API presents in the securities settlement area. It is actually at an early stage but we are hoping that jointly we can decide on what the prospects of this future technology are for the industry in Russia.
Sibos TV: It certainly sounds like you have your hands full and we look forward to hearing more on how this develops in the future. Maria Krasnova, Deputy Chairman of Russia's National Settlement Depository, thank you very much for joining us.