V. Kulipanov3 IRSF, LondonApril 16, BESP settlement system Recent developments and progress report 3 IRSF, London, April 16, 2008

V. Kulipanov3 IRSF, LondonApril 16, General characteristic of BESP Voluntary participation; Gradual introduction; Real Time Gross Settlement system; Some liquidity saving features, generally attributed to Net Settlement systems; Centralization at the federal level.

V. Kulipanov3 IRSF, LondonApril 16, Information on the Web The relevant information about BESP settlement system, applicable regulations and statistics will be available in the “English” part of Internet site in mid May

V. Kulipanov3 IRSF, LondonApril 16, Options of membership Special participation Direct participation Associated participation

V. Kulipanov3 IRSF, LondonApril 16, Options of membership Special participation Direct participation Associated participation CBR Head Office BESP system CBR Branches

V. Kulipanov3 IRSF, LondonApril 16, Options of membership Special participation Direct participation Associated participation CBR Head Office BESP system CBR Branches Bank DSP

V. Kulipanov3 IRSF, LondonApril 16, Options of membership Special participation Direct participation Associated participation CBR Head Office BESP system CBR Branches Bank DSP Bank ASP Non-bank ASP

V. Kulipanov3 IRSF, LondonApril 16, UFEBM BESP CBR Transport system DS P AS P DS P AS P DSP SWIFT transport SSP Conversion SWIFT formats UFEBM V – scheme Transport

V. Kulipanov3 IRSF, LondonApril 16, Functions of Central Bank in BESP Regulator and oversight authority OperatorUser

V. Kulipanov3 IRSF, LondonApril 16, Time schedule Until BESP was implemented Interregional Settlement System Up to 2 days

V. Kulipanov3 IRSF, LondonApril 16, Time schedule After implementation of BESP Core of BESP system System runs in Real time Unified Schedule for all time zones

V. Kulipanov3 IRSF, LondonApril 16, Three phases of BESP business day Preliminary phase Regular phase Final phase

V. Kulipanov3 IRSF, LondonApril 16, Preliminary phase Updating regulatory and reference information; Registration /exclusion/ temporary suspension of BESP participants; Initial liquidity setting in BESP by DSP Setting (multilateral, bilateral, etc) limits to benefit from liquidity saving mechanism

V. Kulipanov3 IRSF, LondonApril 16, Regular phase Payment acceptance and processing; Queue maintenance and management; Information exchange with BESP participants; Liquidity management by DSP; Temporary suspension/release of DSP participation by CBR.

V. Kulipanov3 IRSF, LondonApril 16, Final phase Daily completion of BESP settlement; Generation and transmission of statements and reports to BESP participants; Generation and transmission of output report to the General Ledger; Information archiving.

V. Kulipanov3 IRSF, LondonApril 16, Views on DSP liquidity Entire liquidity of DSP Available line of overdraft credit Account balance Total liquidity Liquidity for BESP Liquidity for Local PS Acc+OvdrftBESP+LocalPS

V. Kulipanov3 IRSF, LondonApril 16, Liquidity bridge between BESP and Local payment system Liquidity in BESP Liquidity in Local PS

V. Kulipanov3 IRSF, LondonApril 16, Liquidity in BESP Liquidity in Local PS Liquidity bridge between BESP and Local payment system

V. Kulipanov3 IRSF, LondonApril 16, Single transaction Business process Technical checks. Logical checks. Liquidity sufficiency check (Queue). Payment settled. Finality and irrevocability. Synchronization request from BESP system to accounting systems. Debit/Credit confirmation.

V. Kulipanov3 IRSF, LondonApril 16, Queuing in BESP Ordinary payments Time-critical payments This payment will be processed first This payment will be processed only after all time-critical payments are settled This payment will be processed last This payment will be settled before any ordinary payment is processed

V. Kulipanov3 IRSF, LondonApril 16, Queuing in BESP Ordinary payments Time-critical payments

V. Kulipanov3 IRSF, LondonApril 16, Queuing in BESP Ordinary payments Time-critical payments Set-off

V. Kulipanov3 IRSF, LondonApril 16, Queuing in BESP Ordinary payments Time-critical payments Set-off

V. Kulipanov3 IRSF, LondonApril 16, Queuing in BESP Ordinary payments Time-critical payments Set-off

V. Kulipanov3 IRSF, LondonApril 16, Queuing in BESP Ordinary payments Time-critical payments Set-off

V. Kulipanov3 IRSF, LondonApril 16, Queuing in BESP Ordinary payments Time-critical payments Set-off

V. Kulipanov3 IRSF, LondonApril 16, Queuing in BESP Ordinary payments Time-critical payments Optimization

V. Kulipanov3 IRSF, LondonApril 16, Queuing in BESP Ordinary payments Time-critical payments Optimization

V. Kulipanov3 IRSF, LondonApril 16, Queuing in BESP Ordinary payments Time-critical payments Optimization

V. Kulipanov3 IRSF, LondonApril 16, Queuing in BESP Ordinary payments Time-critical payments Optimization

V. Kulipanov3 IRSF, LondonApril 16, Queuing in BESP Ordinary payments Time-critical payments Optimization

V. Kulipanov3 IRSF, LondonApril 16, Queuing in BESP Ordinary payments Time-critical payments Optimization

V. Kulipanov3 IRSF, LondonApril 16, Queuing in BESP Ordinary payments Time-critical payments Optimization

V. Kulipanov3 IRSF, LondonApril 16, Queuing in BESP Ordinary payments Time-critical payments Optimization

V. Kulipanov3 IRSF, LondonApril 16, Queuing in BESP At the end of day all payments in queues are automatically cancelled !

V. Kulipanov3 IRSF, LondonApril 16, Information services for DSP Results of processing of the recently input document; Debit/Credit confirmation based on the recently input document Final daily statement Without request On request Correspondent account balance; BESP Liquidity statement; Total overnight line of credit, and it’s available value; Aggregated value of incoming payment orders in the queues of other DSP Banks Liquidity statement for affiliates Intraday statement … and some other minor issues…

V. Kulipanov3 IRSF, LondonApril 16, New business opportunities that were enabled by BESP Extension and unification of business day schedule throughout entire territory of the country, which result in acceleration of payments, stop discrimination of banks on “the geographical” basis; Concentration of liquidity flows over nostro accounts of Direct participants, who may now provide their fast payment services to non- member banks.

V. Kulipanov3 IRSF, LondonApril 16, Joining BESP membership How to apply. Where to apply. Requirements to be met by applicant. Terms of expected reply. Necessity of pilot run. Self-evaluation act for security recommendations of CBR. Terminal of DSP. Functionality and integration. Available STP features.

V. Kulipanov3 IRSF, LondonApril 16, BESP tariffs 25 RUR per ordinary payment 30 RUR per time-critical payment Applicable to Direct Settlement Participants Applicable to Associated Settlement Participants 20 RUR per payment

V. Kulipanov3 IRSF, LondonApril 16, Pattern of Contracts Bank DSP Amendments to Banking Account Contract Amendments to Technical interfaces Contract

V. Kulipanov3 IRSF, LondonApril 16, Launch Date of BESP July 1, All regulated documents were adopted and became effective by that date. Technical preparations were finished. The first participants were in. The system started, however there were no payments until… December 21, 2007 The first few payments came through.

V. Kulipanov3 IRSF, LondonApril 16, BESP in figures Quantity of Direct, Associated and Special participants.

V. Kulipanov3 IRSF, LondonApril 16, BESP in figures Volume and total Value of payments.

V. Kulipanov3 IRSF, LondonApril 16,

V. Kulipanov3 IRSF, LondonApril 16, BESP in figures Comparison of active participants to their total quantity

V. Kulipanov3 IRSF, LondonApril 16, BESP in figures The average daily value of liquidity in the system was 92 mln. RUR The average processing time of single transaction is 30 seconds.

V. Kulipanov3 IRSF, LondonApril 16, BESP Pilot Run BESP Pilot Run continues even after the system itself was successfully launched on Dec 21, The reason is to provide testing facilities to new prospective BESP participants. BESP Pilot Run provides entire collection of BESP services, that are available in the real system. BESP Pilot Run is performed in the real-time manner, where the prospective participants experience liquidity control mechanisms, Limits control mechanisms, Queuing control mechanisms, and, of cause, try sending and revoking their payment instructions.

V. Kulipanov3 IRSF, LondonApril 16, By the date April 11, 2008 BESP Pilot Run was covering 55 regions of Russian federation, located in 11 time zones. The overall amount of registered participants totals to 698, including: D.S.P.S.S.P. A.S.P. Banks others BESP Pilot Run

V. Kulipanov3 IRSF, LondonApril 16, The future possible participants MICEX Settlement House and National Clearing Centre to join BESP; Anticipating for SBERBANK to come during 2008; Estimates for Critical quantity of members to join BESP.

V. Kulipanov3 IRSF, LondonApril 16, The future possible participants from top 30 Citibank Zenit Transcreditbank Russian Standard Promsvyazbank Micex Settlement House Petrocommerce Raiffeisenbank Uralsib Already BESP members Gasprombank Pilot run completed CBR consent received

V. Kulipanov3 IRSF, LondonApril 16, What’s next? anticipated and discussed steps Extending the schedule to enable almost non-stop operations during the business week. Introduction of obligatory membership in BESP for banks; Introduction of Max cap of payment for local Payment Systems when every bank joins the BESP system; Tariff policy encouraging the use of BESP.

V. Kulipanov3 IRSF, LondonApril 16, Thank you for attention! Questions welcome!