National Clearing CentreNational Clearing Centre

2008

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National Clearing CentreNational Clearing Centre ( (NCCNCC))

NCC was incorporated on October 24, 2005, as a closed joint-stock company

NCC’s shareholders are: Moscow Interbank

Currency Exchange, 99.329%National Depository Center, 0.671% Authorized capital:

– in 2008, the authorized capital will increase to 1.735 million roubles (~ EUR 49 million).

– today, the equity is 824,4 million roubles, including the authorized capital of 700 million roubles.

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MICEX Settlement House

MICEX Settlement House

MICEXMICEX

NDCNDC

• Cash settlements• Depository operations

• Organization of trade: foreign currency, government securities, bonds, standard contracts.

• Clearing in government securities markets (stock and futures markets)• Engineering project support and development of new IT products

Saint Petersburg Yekaterinburg Samara Nizhni Novgorod

Novosibirsk Rostov-on-Don Vladivostok

Regional currency and stock exchanges

Regional currency and stock exchanges

MICEX Stock Exchange MICEX Stock Exchange

National Mercantile Exchange National Mercantile Exchange

• Organization of trade in stock, corporate andmunicipal bonds,units in mutual funds, stock index futures

• Government intervention inthe grain market

• Trade: petroleum products, grain

NCCNCC

NCC in the MICEX GroupNCC in the MICEX Group

• Clearing operations and trade settlements

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NCCNCC’s Operating Principles’s Operating Principles

NCC is the central counterparty control of collateralization of executed transactions control of performance of obligations based on PVP and DVP

principles ongoing maintenance of NCC’s liquidity, specifically through

the retention of liquidity suppliers NCC takes risks associated with possible non-performance of

clearing obligations by clearing members

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Basic Elements of Basic Elements of NCCNCC’s Risk ’s Risk Management SystemManagement System

Limitation of traded instrument price fluctuations Preliminary depositing of participants’ funds Availability of guarantee funds Fixing of various types of limits Setting requirements for the clearing participants’ financial

standing and control over it Mechanism for the substitution of an unfair participant by the

Bank of Russia MICEX’s of 2.6 billion rubles guarantees NCC’s capital

From December 10, 2007,From December 10, 2007,National Clearing Centre operates as central National Clearing Centre operates as central

counterparty in the MICEX FX marketcounterparty in the MICEX FX market

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NCC TODAYNCC TODAY

NCC’s total balance as of April 1, 2008, is 37,8 billion roubles Total balance of derivative transactions as of April 1, 2008, is

167.8 billion roubles USD- and EUR-denominated account balance as of April 1,2008,

in the rouble equivalent exceeds 10 billion rouble The total number of banks-clearing participants is 464, including

338 Moscow banks and 126 regional banks 228 banks participate in the USD 4,6 million Risk Covering Fund The equity is 824,4 million roubles, including 700 million roubles of

the authorized capital Daily turnover of FX trade in March reached USD 7 billion

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Volumes of Trade in the Foreign Exchange Volumes of Trade in the Foreign Exchange Market Involving the Central CounterpartyMarket Involving the Central Counterparty

January

2007

February

2007

March

2007

January

2008

February

2008

March

2008

Total trade volumes

(roubles in billions)

1,466.3 2,093.6 2,028.9 2,749.4 3,468.3

2,484.5

Including EUR-

denominated volumes

39.6 45.9 37.3 90.9 144.4 94,8

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Correspondent BanksCorrespondent Banks

JPMorgan Chase Bank, New York The Bank of New York, New York Deutsche Bank, Frankfurt/Main VTB Germany, Frankfurt/Main BELVNESHECONOMBANK, Minsk PRIVATBANK, Dnepropetrovsk Bank TuranAlem, Almaty

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NCC’s Regional Settlement ModelNCC’s Regional Settlement Model

Saint Petersburg

Moscow

Nizhny Novgorod

Novosibirsk

Rostov-on-Don Yekaterinburg

Vladivostok

Samara

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Development of NCC’s Clearing Development of NCC’s Clearing OperationsOperations

Introduction of the central counterparty in the REPO government securities market

Upgrading of risk management system Broadening the range of services provided Extension of clearing to other financial market segments

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NCC NCC in the REPO Government Securities Marketin the REPO Government Securities Market

• NCCoperates as the central counterparty• Deals are concluded under the following terms:

• full or partial preliminary collateralization for the first part of a repo;• partial preliminary collateralization for the second part of a repo;

• REPO deals are concluded upon matching of dealers’ requests and confirmations from NCC

• The first and second parts of REPO deals are settled upon transaction settlement requests received from dealers and NCC

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Improvement of Risk Management Improvement of Risk Management System in the Currency MarketSystem in the Currency Market

Setting of the exchange rate fluctuation limits and preliminary depositing standards depending on the external market situation adjusted for the current composition of two-currency basket:

- - symmetric increase of the exchange rate fluctuation limits with respect to the central rate of the current trading day and a proportionate increase in preliminary depositing standards;

- non-symmetric setting of the exchange rate fluctuation limits with respect to the central rate of the current trading day towards the external market trend without changing preliminary depositing standards.

Increase of the Risk Covering Fund Setting of various modes of operations performed by trade participants depending on

the assessment of the current market volatility and the status of their open positions Insurance of the NCC operational risks Extension of Risk Management System to various financial market segments Establishing of the Risk Committee and arranging of its functioning

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Modes of OperationsModes of Operations

Participant will have the opportunity to operate depending on the assessment of the current market volatility and the status of his open market positions:Basic mode: the participant’s operations are not limited, for collateral fully covers potential exchange rate risk associated with his positions;Restricted mode: with the scale of the participant’s potential losses reaches the amount of collateral, the participant will have the opportunity to operate only for closing the existing positions;Position close-out mode: if the participant fails to allocate collateral or its amount is not sufficient, the participant’s operations are put on hold and his position is closed out during the trading session.

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NCCNCC’s Services Development’s Services Development

Setting the limits of EUR-denominated net operations Currency band regulation Online matching of clearing participants’ positions Intraday crediting of clearing participants to facilitate their obligations’ settlement Maintaining a single ruble-denominated position of participants in exchange markets Offering clearing participants an opportunity to settle securities transactions in foreign

currency Offering participants an opportunity to execute transactions in the stock market with

partial preliminary collateral Creating a single clearing participant’s “portfolio” to settle operations in various financial

market segments Beginning of operation in the interbank credit market

REGULATION OF CLEARING OPERATIONSREGULATION OF CLEARING OPERATIONS

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Today’s Regulatory Framework Today’s Regulatory Framework for Clearing Operationsfor Clearing Operations

Clearing operations are governed by: - Federal Law No. 39-FZ of April 22, 1996 “On the Securities Market”, which defines

clearing and clearing operations only in the securities market; - Resolution of the Federal Commission for the Securities Market No. 32-ps of August

14, 2002, which only defines ordinary, multilateral and centralized clearing in the execution of securities transactions;

- Regulations of the Central Bank of the Russian Federation No. 219-P of March 25, 2003 and No. 220-P of February 25, 2003, which govern clearing in the government securities market.

Standards applied to clearing in the securities market are used for clearing in the currency and government securities markets.

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Improvement of Clearing Laws in Improvement of Clearing Laws in RussiaRussia

The central counterparty’s (CCP) legal status defining will allow to introduce the CCP in the financial market as an independent infrastructural entity which concludes transactions for clearing purposes without being a trade participant and is rewarded for rendering clearing services. Determination of the legal status of deposited and blocked funds (property) of clearing participants for securing their obligations will allow to reduce the risk they litigate the use of the above-mentioned funds by the CCP. Introduction of separate legal status and usage mode for clearing accounts to prevent them from being used in the bank account mode envisioned by the Civil Code of the Russian Federation, including unconditional cash debiting upon the clearing participant’s request. The clearing institution needs to have the right to withhold the clearing participant’s funds until its obligations are fully fulfilled.

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Improvement of Clearing Laws in Improvement of Clearing Laws in Russia Russia (contd)(contd)

Amendment to the Laws “On Joint-Stock Companies” and “On Limited Liability Companies” stating that the standard for major and related-party transactions will not apply to transactions concluded in the course of organized trade, which will reduce the risk of litigation of the above-mentioned transactions by market participants, including transactions with the CCP.

Establishing the possibility and procedure for using assets of the Risk Covering Fund and guarantee funds in full volume.

Introduction of the procedure for the fulfillment of obligations by the clearing participant in case of his bankruptcy or license withdrawal will allow to terminate the obligations of such participant only after their fulfillment.

Establishing legal grounds and procedures for the cancellation of clearing service agreement will allow to cancel such agreement by mutual consent between the parties rather than at any time as provided for by Chapter 39 of the Civil Code of the Russian Federation.

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Improvement of Clearing Laws in Improvement of Clearing Laws in Russia Russia (contd)(contd)

Establishment by law of the procedure and new way for termination of obligations in the course of clearing will allow a clearing institution to define and terminate the obligations of clearing participants. None of the ways for termination of obligations currently envisioned by the Civil Code of the Russian Federation allows the clearing institution which is not a party in the transaction to terminate the clearing participant’s obligations. This does not allow to conduct ordinary or multilateral clearing operations. Clearing with the CCP is not envisioned by laws of the Russian Federation.

Centralized clearing operations can only be performed using the assignment of rights what requires the consent from the other party in the transaction. The clearing centre has to track the rights and obligations of the party so as not to become the all-in-one debtor and creditor in the result of assignment.

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National Clearing CentreNational Clearing Centre

Thank you for your attention!Thank you for your attention!

Our address: Russia, 125009, Moscow,

Bolshoy Kislovsky Pereulok, 13

Telephone: +7 (495) 782 97 94

E-mail: info@nkcbank.ru

Internet: www.nkcbank.ru