Settlements and Clearing

MICEX conducts clearing activity on the basis of a Professional Securities Market Participant License No. 077–05869–000010 dated the 26th of February 2002, issued by the Russian Securities Commission (unlimited).

As a clearing organization, MICEX conducts clearing activities in the securities market in compliance with Russian securities laws, the regulations of the Federal Securities Commission (the Regulation on Clearing Activity in the Securities Market of the Russian Federation, adopted by Decree of the Federal Securities Commission No.32/ps and dated the 14th of August 2002), the ZAO MICEX Rules of Clearing Activities in the Securities Market (hereinafter referred to as “the Rules of Clearing”), and Agreements for Clearing Services on Securities Transactions concluded with Clearing Participants.

Basic Principles of Settlements and Clearing

1. MICEX provides settlements for Clearing Participants’ net obligations and net claims on condition of their mandatory compliance with the ”delivery vs. payment” principle.

MICEX performs clearing for spot transactions (transactions with settlement codes Т0 and В0—В05), REPO transactions (transactions with settlement codes R00-R90, Rb, S0 – S2) and other securities transactions (transactions with settlement codes В06—В30).

Settlement code Т0 – the settlement code used in concluding spot transactions, meaning that a transaction is to be executed on the day that it is made. When a spot transaction with settlement code Т0 is concluded, its coverage is checked, after which the transaction is regarded as covered.

Settlement codes from В0 to В05 (В0—В05) are settlement codes used in concluding spot transactions where the day of execution of a transaction is the day Т+n, where Т is the date of concluding the transaction and n is the number of calendar days, the value of which is the last figure of the respective settlement code (an integer that may vary from 0 to 5).

Obligations for transactions with settlement codes B02 – B05 may be discharged simultaneously by both Clearing Participants before maturity on any settlement day after the date of concluding said transaction at the Stock Exchange and before the date of their proper execution.

For spot transactions with settlement codes B0 – B05, their coverage is only controlled by Clearing Participants’ obligations to pay the fee.

Settlement codes from В06 to В30 (В06—В30) are settlement codes used in concluding transactions with securities other than spot transactions where the day of execution of a transaction is the day Т+n, where Т is the date of concluding the transaction and n is the number of calendar days, the value of which is the last two figures of the respective settlement code (an integer that may vary from 6 to 30).

Obligations for transactions with settlement codes B06 – B30 may be discharged simultaneously by both Clearing Participants before maturity on any settlement day after the date of concluding such transaction at the Stock Exchange and before the date of their proper execution.

For transactions with settlement codes B06 – B30, their coverage is only controlled by Clearing Participants’ obligations to pay the fee.

Settlement codes from R00 to R90 (R00-R90) are settlement codes used in concluding REPO transactions where the proper date of execution of the first part of the REPO transaction is the day of its conclusion and the proper date of execution of the second part of the REPO transaction is the day Т+n, where Т is the day of concluding the transaction and n is the number of calendar days, the value of which is the last two figures of the respective settlement code (an integer that may vary from 0 to 90).

Obligations for the second parts of REPO transactions with settlement codes R01 – R90 may be discharged simultaneously by both Clearing Participants before maturity on any settlement day from the date of proper execution of the first parts of such transactions to the date of proper execution of their respective second parts.

For REPO transactions with settlement codes R00 – R90, their coverage is only controlled with respect to their first parts, after which the transaction is regarded as covered.

Settlement code Rb (Rb) is a settlement code used in concluding REPO transactions where the proper date of execution of the first part of the REPO transaction is the day of its conclusion and the proper date of execution of the second part of the REPO transaction is the day Т+k, where Т is the day of concluding the REPO transaction and k is the term of the REPO transaction specified at the time of its conclusion.

In the event that the Clearing Participant fails to discharge his obligations for the margin provided for by the terms of the REPO transaction, the Clearing Participants must discharge their respective obligations under the second part of the REPO transaction on the first settlement day following the proper date of contribution to the margin (as the proper date of execution of the second part of the REPO transaction will be postponed to the said settlement day according to the Rules of Trading).

Obligations for the second parts of REPO transactions with settlement code Rb may be discharged simultaneously by both Clearing Participants before maturity on any settlement day from the date of proper execution of the first parts of such transactions until the date of proper execution of their respective second parts.

For REPO transactions with settlement code Rb, their coverage is only controlled with respect to their first parts, after which the transaction is regarded as covered.

Settlement codes from S0 to S2 (S0 – S2) are settlement codes used in concluding REPO transactions where the proper date of execution of the first part of the REPO transaction is the day Т+x, where Т is the date of conclusion of the REPO transaction, and x is the number of settlement days, the value of which is the last figure of the respective settlement code (an integer that may vary from 0 to 2), and the proper date of execution of the second part of the REPO transaction is the day Т+x+k, where Т+x is the proper date of execution of the first part of the REPO transaction and k is the term of the REPO transaction specified at the time of its conclusion.

In the event that the Clearing Participant fails to discharge his obligations as per the margin provided for by the terms of the REPO transaction, the Clearing Participants must discharge their respective obligations under the second part of the REPO transaction on the first settlement day following the proper date of contribution to the margin (as the proper date of execution of the second part of the REPO transaction will be postponed to the said settlement day according to the Rules of Trading).

Obligations for the second parts of REPO transactions with settlement codes S1 – S2 may be discharged simultaneously by both Clearing Participants before maturity on any settlement day from the date of proper execution of the first parts of such transactions to the date of proper execution of their respective second parts.

For REPO transactions with settlement codes S0 – S2, their coverage is only controlled by Clearing Participants’ obligations to pay the fee.

2. Clearing Participants’ obligations are determined by means of multilateral clearing. MICEX arranges for registering changes in Clearing Participants’ cash positions and deposit positions, implements the coverage control procedure, and applies the multilateral netting mechanism.

MICEX controls the sufficiency of Clearing Participants’ funds and securities, not allowing a Clearing Participant’s positions to be in the red. If a transaction or a margin contribution has passed through the coverage control procedure, the Clearing Participant can use assets received from said transaction or margin contribution for concluding other transactions in the course of the current trading session or to discharge his obligations under transactions concluded earlier.

Multilateral netting is used to ensure the mutual offset of Clearing Participants’ similar obligations and claims with respect to monetary funds and securities and is based on those results via which Clearing Participants’ net obligations or net claims with respect to monetary funds and securities are calculated. This makes it possible to reduce Clearing Participants’ costs related to executing each concluded transaction.

In the course of clearing, MICEX does not act as a party to obligations arising out of clearing pool transactions (that is, MICEX does not perform centralized clearing).

3. MICEX provides Clearing Participants with the opportunity to conclude transactions with full coverage (transactions with settlement codes Т0, R00 – R90 and Rb — for the first parts of REPO transactions) or without preliminary coverage (transactions with settlement codes В0—В05, В06—В30 and S0 – S2). Correspondingly, MICEX performs clearing with full coverage and clearing without preliminary coverage. MICEX does not perform clearing with partial coverage.

4. MICEX performs clearing for transactions, settlements for which are performed at the expense of Clearing Participants, at the expense of Clearing Participants’ clients, and at the expense of monetary funds in the Clearing Participants’ trust management.

5. MICEX performs clearing for transactions with securities concluded in Russian rubles and clearing for transactions with securities concluded in foreign currency (only for the RF foreign loan bonds – federal eurobonds). Clearing Participants’ obligations and claims with respect to monetary funds and securities are registered separately with respect to transactions concluded in foreign currency and transactions concluded in Russian rubles

6. The MICEX Settlement House (hereinafter referred to as “the Settlement House”) performs settlements under Clearing Participants’ net obligations and net claims with respect to monetary funds in Russian rubles and foreign currency.

The National Depositary Center non-commercial partnership (hereinafter referred to as the “NDC”) effects settlements under Clearing Participants’ net obligations and net claims with respect to securities.

In the course of trading, Clearing Participants are provided with the opportunity to change the initial values of their deposit positions and cash positions in real time, depending on the increase/decrease of assets reserved for trading in the trading portions of deposit accounts with the NDC and in trading accounts with the Settlement House.

The fees for clearing services charged to Clearing Participants are established by the ZAO MICEX Rules of Clearing Activities in the Securities Market (hereinafter referred to as “the Rules”) and set forth in Supplement No.1 to the Rules.