MICEX Settlement House

The Moscow Interbank Currency Exchange Settlement House (MICEX SH) is a credit organization that provides settlement banking services, including cash settlements on trades made by financial market participants.

The Bank of Russia’s License entitles the MICEX Settlement House to perform the following banking operations in rubles and foreign currency:

1. opening and maintaining bank accounts for legal entities;
2. performing settlements on behalf of legal entities, including correspondent banks, through their bank accounts;
3. collecting cash, promissory notes, payment and settlement documents; providing cash services to legal entities;
4. making cashless foreign currency transactions; and
5. transferring monetary funds for individuals without opening bank accounts (except for postal money orders).

The Federal Financial Markets Service License of the Russian Federation entitles the MICEX SH (as a professional participant in the securities market) to conduct clearing activities.

The MICEX Settlement House:

• acting as a settlement bank, offers its clients a full range of settlement services and serves over 600 of the largest banks and financial companies from various regions of Russia;
• performs cash settlements in real time. Clients’ payment orders are handled and executed immediately after their delivery to the MICEX SH;
• completes cash settlements on participants’ transactions on the day of trading;
• guarantees timely settlements and the safety of its clients’ funds;
• interacts with clients throughout the entire trading day from 9:00 AM to 8:30 PM Moscow time;
• is one of the main exchange trading infrastructure elements. Since January 1, 1997, it has provided reliable and prompt cash settlements on trades made in MICEX financial markets;
• provides settlement services in all of the MICEX financial markets:
  • the government-backed securities market;
  • the corporate securities market;
  • the currency market;
  • the derivatives (standard contracts) market.

The MICEX Settlement House guarantees timely settlements and the safety of its clients’ funds because active operations are not performed on clients’ funds. The MICEX SH does not attract funds for placement, place clients’ funds on deposits, or provide bank guarantees. The current License and Bank of Russia regulations do not allow these operations.

The MICEX Settlement House offers to all legal entities:

• settlements on clients’ financial and economic transactions through the Bank of Russia’s settlement network and the MICEX SH’s correspondent network;
• settlement services on credit transactions with collateral in the form of a pledge of securities (“delivery vs. payment”);
• a set of services for connecting to S.W.I.F.T. services via a MICEX SH terminal, allowing users to take advantage of the international interbank telecommunication system. Users’ costs are 2 to 3 times lower than those when using an independent connection to S.W.I.F.T. services, depending on the specific hardware and software configuration.

The MICEX Settlement House provides many advantages to its clients:

• fully electronic document circulation with FAPSI (Federal Agency of Government Communications and Information) and certified encryption of transmitted information;
• real-time cash management capabilities;
• information on account transactions is immediately delivered to clients;
• the ability to receive information on account status and movement of funds at any time during the trading day;
• urgent re-allocation of funds between the financial market and other exchange markets depending on trading conditions;
• various channels of communication for sending payment information to the MICEX Settlement House, including S.W.I.F.T., telex and the Internet;
• a specialized Bank-Client system that connects over 400 banks and financial companies;
• the Settlement House can perform cash management services once a transaction has been executed in the MICEX financial markets.

Reliable settlement services and the lowest possible risks are ensured by:

• the absence of credit risks;
• the availability of automated systems and data processing complexes using software and hardware provided by leading manufacturers (Hewlett-Packard, IBM, Microsoft, INFORMIX and others);
• the opportunity to use several alternate channels of communication to send settlement documents and other official information to the MICEX SH;
• backup of all basic automated systems supporting the MICEX SH;
• a high level of automation at all stages of the settlement process, which eliminates the manual handling of information;
• the use of FAPSI-certified information encryption and digital signatures;
• keeping clients’ funds exclusively in the MICEX SH’s corresponding account with the Bank of Russia;
• the availability of highly-qualified personnel with extensive experience in credit organizations.