Slide 1 31 st October 2007 John Falk, Securities Market Infrastructures SWIFT The role of ISO Standards in Russia

Slide 2 RU_Conference_ Standards Do you care?

Slide 3 Investments into Developing Markets

Slide 4 No standards or many standards  Cost  Errors  Risk  Poor service –Unhappy customers

Slide 5 Why ISO Standards  Business clarity  Significantly reduces errors (STP)  Reduction of risk  Volume insensitive  Domestic and Cross border access  Reduction in costs overall

Slide 6 But…….  Business cases are difficult to build –Direct cost –Pressure to continue to use domestic standards –Local market practice easier to handle with domestic standards

Slide 7 A world without ISO and SWIFT Different Standards, Messaging & Connectivity Market Infrastructures eg CSD’s User

Slide 8 Single Window with ISO and SWIFT Reusing Standards, Messaging and Connectivity Market Infrastructures eg CSD’s User

Slide 9 Source: European Commission (2006). Harmonisation in Europe The possible GDP Effect

Slide 10 Benefits for all market players  Sharing information on how standards supports their needs  Centralised working group to address initiatives impacting institutions and their use of standards  Harmonisation of requirements for standards  Harmonisation of market practices

Slide 11 Russian Stock Market Infrastructure  6 Stock Exchanges  5 Settlement Depositories  80 Registrars  10 Clearing Organisations  300,000+ Investors  1,440 Broker/Dealers  483 Custodians  No CSD  Fragmented and product related settlement  Absence of mandatory DVP settlement in RUB (except for MICEX trades)  Foreign nominees are not recognised  No central source of information on corporate actions Source: National Depository Center Market Fragmentation

Slide 12 Инвесторы резиденты Инвесторы нерезиденты Банки- кастодианы Расчетные банки Реестры Международные клиринговые системы НДЦ Банк России РП ММВБ ММВБ Расчетные депозитарии ДКК Эмитенты РТС Другие биржи Брокеры/ Дилеры РП РТС Россия

Slide 13 Инвесторы резиденты Инвесторы нерезиденты Банки- кастодианы Расчетные банки Реестры Международные клиринговые системы НДЦ Банк России РП ММВБ ММВБ Расчетные депозитарии ДКК Эмитенты РТС Другие биржи Брокеры/ Дилеры РП РТС Россия

Slide 14 Standards in the Russian payments market - Domestic payments traffic via SWIFT exceeds cross-border - RUR6 is generally accepted in the market for Ruble payments - BIC identifier project with the Central Bank - Elements from RUR6 are used in RTGS project with the Central Bank

Slide 15 Standards in the Russian securities market (1) - MoU between SWIFT and FFMS signed in SWIFT is part of the FFMS coordinative council for Russian securities market infrastructure - MoU’s has been signed with NAUFOR and PARTAD - The current version of PARTAD standards has been examined by SWIFT for ISO compatibility

Slide 16 Standards in the Russian securities market (2) Investment Funds - ISO should be used for investment funds messages in the Russian market - The first set of investment funds messages, with Russian market practice, are awaiting approval by the Funds working group - Investment Funds WG is collaborating closely with SWIFT Standards

Slide 17 Results of the Russian SMPG (SWIFT-RUS 4) - SWIFT–RUS 4 document approved, covering settlement messages in the Russian securities market (instructions, statements, confirmations) - SWIFT-RUS4 updates include: - message matrices - message flow examples - Collaboration with SWIFT Standards & Global SMPG on party identification for securities settlement “through” Registrars

Slide 18 Status of various initiatives using ISO standards RTGSGREEN SWIFT infrastructure implemented NDC/DCCYELLOW RUS4 approved and accepted by both organizations. Not fully implemented FFMSGREEN Cooperation continues. SWIFT is included on Coordinative Council PARTADYELLOW Existing use is not ISO compliant NAUFORYELLOW Work in progress

Slide 19 Инвесторы резиденты Инвесторы нерезиденты Банки- кастодианы Расчетные банки Реестры Международные клиринговые системы НДЦ Банк России РП ММВБ ММВБ Расчетные депозитарии ДКК Эмитенты РТС Другие биржи Брокеры/ Дилеры РП РТС Россия

Slide 20 Инвесторы резиденты Инвесторы нерезиденты Банки- кастодианы Расчетные банки Реестры Международные клиринговые системы НДЦ Банк России РП ММВБ ММВБ Расчетные депозитарии ДКК Эмитенты РТС Другие биржи Брокеры/ Дилеры РП РТС Россия

Slide 21

Slide 22 Next steps in Russia with Securities standards  Continued proactive participation in the standardisation initiatives of the Russian securities market  Further cooperation with FFMS  Participation in the CSD infrastructure project  Russian securities market participants to work within global SMPG

15-19 September 2008 Vienna, Austria

Slide 24 Thank you for your attention

Slide st October 2007 John Falk, Securities Market Infrastructures SWIFT The role of ISO Standards in Russia