On a central counterparty status assigned to the central counterparty (non-bank credit institution) National Clearing Centre Joint Stock Company

The Bank of Russia, pursuant to Article 27.1 of Federal Law No. 7-FZ, decided to assign a central counterparty status to the non-bank credit institution / central counterparty — JSC Bank National Clearing Centre (hereinafter referred to as the NCI), effective 28 November 2017, which is the date its banking licence was issued and clearing licence was reissued.

The Bank of Russia’s decision to assign a central counterparty status to the NCC is part of the regulatory reform the Bank of Russia is enacting in the field of central counterparty operations. As part of this reform, amendments were made to Federal Law No. 7-FZ, dated 7 February 2011 ‘On Clearing, Clearing Activities and the Central Counterparty’ aimed at better regulation of central counterparty operations based on their global operating standards as well as the central counterparty’s risk profile. Under the newly introduced special regulatory regime for the central counterparty institute as a non-bank credit institution, the current supervisory regime applicable to such institutions will be unchanged including in terms of intensity.

JSC Bank National Clearing Centre (hereinafter referred to as the Bank NCC) was the first credit institution to apply to the Bank of Russia for a central counterparty status. The application was submitted in September this year.

In accordance with the law, legal entities which are non-credit institutions acting as a central counterparty, in order to continue with their central counterparty operations, must submit the relevant documents to the Bank of Russia before the end of October 2020.

Following the Bank NCC’s status change to become a non-bank credit institution and its assignment of a central counterparty status, its management quality is invariably found to be satisfactory, according to Bank of Russia Ordinance No.2919-U, dated 3 December 2012, ‘On the Assessment of the Management Quality of a Credit Institution Acting as a Central Counterparty’.

When management quality is found to be satisfactory, NCC clearing participant (clients) can continue to apply reduced risk ratios to calculate required ratios.

Thanks to the Bank NCC’s status change to become a non-bank credit institution and its newly assigned central counterparty status, the NCC has the right to continue servicing its customers to the full extent. In order to secure uninterrupted access to the financial markets serviced by the NCC, clearing participants are recommended to update their in-house regulations if necessary.

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