DRs: Russia Revokes License Of Moscow Depositary


By Gordon Platt

The Russian securities market regulator revoked the license of the Moscow Central Depositary, following an audit that alleged that the depositary ignored court rulings, the regulator’s own instructions and regulations to counter money laundering.

The Federal Service for Financial Markets said the revocation would be effective on February 1, 2011, giving companies whose shareholders’ registers are held by the MCD adequate time to appoint a new registrar. Russia has two other main depositaries, the DCC (Depository Clearing Company), which is owned by market participants, and the NDC (National Depository Center), which is controlled by the Micex exchange.

The Kremlin has proposed financial reforms that would create a single central depositary. A central depositary would enable delivery against payment, speeding up the clearing process. As it now stands, the delivery of shares can take three to four days following a trade.

Igor Sechin, deputy prime minister, instructed government-affiliated companies using MCD to change their registrar. During the period when registers are being transferred, depositary receipt issuances and cancellations may be affected, according to DR bankers.

Gazprom’s wholesale generating company, OGK-2, decided to terminate its contract with MCD effective November 9, 2010, and to switch to a specialized gas-industry registrar. Two private sector generating companies, TGK-2 and OGK-4, also terminated MCD’s services.