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PRESS ANNOUNCEMENT |
Thomas Murray Upgrades the Central Securities Depository Rating for the Depository Clearing Company to A
with Stable Outlook
LONDON - Thomas Murray has raised The Depository Clearing Company's (DCC) rating from A to A
, which means low risk. The outlook is Stable. The rating is made up of the following components:
The increase in the rating reflects the significant progress made by DCC during the past year in minimising risk and, as a result, three of the six risk components have been upgraded. Both Asset Commitment and Financial Risk have been upgraded to A, and Liquidity Risk has been upgraded to A.
The key contributing developments to the rating upgrades have been as follows:
DCC has continued to automate the data transfer process with registries by further extending the use of the Electronic Data Interchange (EDI) linkage to four new registries and renewing nine existing agreements to allow enhanced automated matching and efficient security transfer between registries. Also, DCC has established security sub-accounts with custodians, to support near immediate direct transfer of securities between DCC and custodian clients on register. Both these achievements have significantly improved FOP settlement times and settlement efficiency leading to the upgrade in Asset Commitment Risk and Liquidity Risk.
USD and RUB settlement of the RTS classic market for quote driven and non-anonymous trades, and off-exchange OTC transactions has been rationalised through DCC's DVP net cash settlement multiple batch process. The single platform has improved settlement efficiency, simplified the settlement process and provided a low risk, cost effective settlement option for FOP settlement.
DCC's capital has increased from Roubles 273.2 million to Roubles 1,124.7 million as at 01.10.2008 (USD 8.5 million to USD 44.5 million as at 01.10.2008). The higher capital, coupled with DCC's USD 50 million insurance coverage, has strengthened DCC's balance sheet against unforeseen events and claims. Accordingly, Financial Risk has been upgraded from A to A.
Other key developments contributing to DCC's improved risk profile over the last twelve months were:
| (i) | the successful internal testing of the upgraded DRP and BCP arrangements in April 2008; |
| (ii) | the successful completion of an external IT security penetration audit; and |
| (iii) | the use of straight-through-processing in the market has become more widespread with the increased acceptance of using SWIFT and EDI for corporate actions coupled with the provision for electronic pre-matching for trades. |
Although the outlook is regarded as 'Stable', which indicates that there are no imminent developments that may change the A rating at this stage, DCC has other activities underway that are likely to have a positive impact towards reducing its risk profile in the future. These include:
| (i) | a comprehensive programme to improve governance around the internal risk management framework and tighten internal controls; |
| (ii) | the re-engineering of business processes in pursuit of ISO 9000/9001/2000 accreditation; |
| (iii) | the initiation of a project to develop a BCP response capacity based upon British Standard 25999; and |
| (iii) | the implementation of a new depository and net settlement system DEPO/X scheduled for the first quarter 2009. The new DEPO/X system is currently being tested. It will offer new functionality to execute instructions on-line, increase system flexibility through customisation, and increase the system capacity through a scalable platform. |
Simon Thomas, CEO and Chief Ratings Officer of Thomas Murray said: "During the rating process, Thomas Murray has closely examined the changes that have taken place at DCC and noted the progress made by DCC in some key risk areas, which has led to an upgrade in several of the risk components. DCC has also demonstrated its strong management commitment to further reduce its risk profile through support for STP and adoption of other risk reduction management measures. Overall, this upgrade in its risk rating reflects the achievements obtained by DCC in minimising the risk exposure faced by market participants".
Mikhail Laufer, President of The Depository Clearing Company, said "The Depository Clearing Company is pleased with the overall rating upgrade and the upgrade in three of the six risk components. DCC has worked diligently in the last year to address those areas for further risk reduction identified by Thomas Murray in the 2007 assessment, and we have projects in train to continue to strengthen our processes and procedures and further minimise custody and settlement risk. The improvement in the rating should provide our participants with ongoing confidence in DCC".
For further information contact:
|
Simon Thomas or John Woodhouse |
Mikhail Laufer/Boris Cherkasskiy |
About Thomas MurrayThomas Murray is a specialist custody rating, risk management and research firm specialising in the global securities services industry. Thomas Murray was established in 1994. The Company tracks and analyses over 250 custodians globally and monitors the risk of over 100 capital market infrastructures. The Company has a strong position as a provider of public and private ratings and risk assessments on global custodians, domestic custodian banks and capital market infrastructures. About the Depository Clearing Company (DCC)DCC was established on 29 October 1993 under the Federal Commission on Securities Market project sponsored by US AID. It began operations in 1993. DCC provides depository, settlement and some clearing services for equities traded on the RTS Classic Market, RTS Stock Exchange and the MICEX Stock Exchange. It is supervised by the Federal Service for Financial Markets of the Russian Federation. |