Moscow Exchange to offer a new type of security – clearing participation certificate
Moscow Exchange is launching a new security called clearing participation certificate (CPC) to allow participants to increase their turnover on the Equity & Bond Market and Money Market. The new instrument combines the advantages of the two most popular products on Russia’s money market: centrally cleared repo and GC basket repo with collateral management.
A clearing participation certificate is a non-equity security issued by the NCC Clearing Bank against assets contributed by a clearing firm to a combined pool. The new instrument will start trading on 29 February 2016. Cash (EUR, USD and RUB) and any bonds accepted by the NCC Clearing Bank as collateral (OFZs, corporate bonds, Eurobonds) are eligible for the pool. The list of eligible assets will be extended by creating a pool of shares.
Participants contributing to the pool remain the legal owner of the securities, and are entitled to receive any interest on securities contributed to the pool and to take part in corporate events. At the same time, participants are allowed to replace securities and use them to settle trades on the Equity & Bond Market and in centrally cleared repos.
CPCs are universal collateral for repo transactions. Moscow Exchange therefore expects that they will facilitate liquidity and longer maturities of money market transactions.
CPCs will be eligible for anonymous and negotiated repos with terms ranging from one day to three months. Repos in CPCs, Equity & Bond Market transactions and CCP-cleared repos will be netted, while all assets in the pool will be marked to market in total. This will allow participants to reduce their funding costs.
Source: MOEX
