Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 1

Securities Systems* have a primary responsibility to their users** and other stakeholders. They must provide effective low cost processing. Services should be priced equitably.

* Securities Systems = depositories, settlement and clearing systems
** Users = customers of the securities system, and all other parties to whom the securities system owes a duty of care

1.	Is the board that governs the depository answerable to its users?	Depository Clearing Company (DCC) - yes. In accordance with the Charter the Board of Directors is responsible for losses caused by misleading action or inaction of its members. The Board consists of 11 members including largest brokers on Russian Market, foreign investment banks and authorised market organiser - RTS. The members of the Board are elected by the Annual General Meeting. National Depository Company (NDC) - it is established in the form of the non-commercial partnership. The main executive body of the Partnership is the General Meeting of NDC Founders and the Director of the Partnership. The Director acts as an executive body of the Partnership and is responsible for all its actions to the General Meeting of the Founders, which is convened once a year. Vneshtorgbank (VTB) - is an open joint stock company. In accordance with the Charter the Board of Directors is responsible for losses caused by misleading action or inaction of its members. The members of the Board are elected by the AGM.
2.	Does any single organisation, or sector (e.g. brokers, custodians, Stock Exchange) have a large voting position at the board of the depository?	DCC - among its major shareholders - members of the Board are Russian Trading System (RTS) with 11.11% of the votes, Interros Group - 26%, The Bank of Foreign Trade (VTB) 2.22% and several largest brokers, each having 2.22% of the votes. NDC is represented by: 1. Central Bank of Russia 2. Chase Manhattan Bank International 3. Vneshtorgbank 4. Eurofinance Bank 5. The bank of Moscow 6. Moscow International Bank 7. Sberbank of Russia 8. Bank Russian Credit 9. Bank Russian Standard 10. Moscow Interbank Currency Exchange 2,550 votes 50 votes 50 votes 50 votes 50 votes 50 votes 25 votes 25 votes 25 votes 5,100 votes 29,32% 1,15% 1,15% 1,15% 1,15% 1,15% 1,57% 0,57% 0,57% 63,22% VTB - the largest shareholder is the Central Bank of the Russian Federation which controls 99.9% of the share capital. Among the other 18 shareholders are Sberbank, Gazexport, Energomashexport, Ingosstrakh, Chamber of Commerce and Industry of the Russian Federation.
3.	Is there cross subsidisation of products (e.g. international services subsidised by local ones or transaction costs subsidised by asset servicing charges)?	DCC and VTB are organised in the form of the Closed Joint Stock Company. Their profits are generated through transactions fees, custody fees and other services, which they provide. All out of pocket expenses are covered by the clients. Therefore the services are not cross subsidised. NDC is a non-profit partnership. Revenues are formed by the custody, transaction fees as well as the membership fees paid by the Founders of the Partnership. All expenses that arise out of the Partnership's activity are covered by the membership fees and fees received for services provided.
4.	What process is in place at the depository to ensure that it meets the needs of all its stakeholders (e.g. institutions, broker dealers, retail investors, issuers)?	DCC and VTB annually convene shareholder meetings. DCC, NDC and VTB conduct special seminars for brokers and other professional market participants, where they present new services, discuss needs and new initiatives of the users. The depositories work out the new re-registration schemes that allow the clients to reduce the cost of the re-registration and the risk of non-settlement.
5.	What is the communications strategy of the depository to its stakeholders and how is this run?	DCC: Besides the issuance of an annual report with financial information, DCC releases weekly News Letter containing the information on the corporate actions, market changes, registrars and issuers news. DCC has an official internet site, listing its services, fees, required documents to open an account at DCC, corporate news, securities ISIN codes, etc. Each client of DCC is provided with the account manager, who is responsible for handing questions arising in daily business operations and who ensures the client's satisfaction. NDC issues its digest, annual report and corporate actions bulletin. It also has official internet site with all information on depository services, corporate news, market information, etc. NDC organises special seminars for professional market participants introducing market changes and depository news. VTB issues annual financial reports and publishes all the information on its site.