Russia’s NCC sharpens dividend handling for MOEX-listed international shares
17 September 2021 Russia
Image: AdobeStock/OlegDoroshin
Russia’s National Clearing Centre (NCC) has been granted Qualified Derivatives Dealer (QDD) status by the US Internal Revenue Service.
With this development the clearing house, which is owned by Moscow Exchange Group, will be able to process dividend equivalent income on US securities, including income transferred as a result of repo trades where the record date for the dividend payment is between the first and second legs of the repo transactions.
NCC explains that this will remove cascading tax when income is transferred through a chain of repo trades. It will also remove the need for the buyer in the first leg of the transaction to make withholding tax claims.
US legal requirements do not allow tax administration of dividend payments to be processed without QDD status.
NCC deputy CEO Georgy Uryutov says, “QDD status will enable NCC to expand liquidity management options for its clearing members and to facilitate further growth in the group’s business”.
Moscow Exchange’s managing director for compliance and business ethics Irini Grekova says: “Assignment of QDD status confirms Moscow Exchange Group’s strong commitment to complying with all requirements, including US laws and regulations, and our efforts to build a culture of trust in the Russian financial market”.
QDD status will enable MOEX to improve the efficiency of trading in US securities for banks and brokers, as well as on the money market.
The exchange explains that it introduced trading in international shares settling in RUB in August 2020. Currently, 281 international securities are available for trading on MOEX.
However, from 27 September, market participants will be able to trade international shares in USD, either in their own account or on behalf of clients. By the end of 2021, it expects the number of international shares available for trading on MOEX to rise to around 500.
Dividends paid on these shares will be booked in the issuer’s currency — for example, in USD for US securities.
With this development the clearing house, which is owned by Moscow Exchange Group, will be able to process dividend equivalent income on US securities, including income transferred as a result of repo trades where the record date for the dividend payment is between the first and second legs of the repo transactions.
NCC explains that this will remove cascading tax when income is transferred through a chain of repo trades. It will also remove the need for the buyer in the first leg of the transaction to make withholding tax claims.
US legal requirements do not allow tax administration of dividend payments to be processed without QDD status.
NCC deputy CEO Georgy Uryutov says, “QDD status will enable NCC to expand liquidity management options for its clearing members and to facilitate further growth in the group’s business”.
Moscow Exchange’s managing director for compliance and business ethics Irini Grekova says: “Assignment of QDD status confirms Moscow Exchange Group’s strong commitment to complying with all requirements, including US laws and regulations, and our efforts to build a culture of trust in the Russian financial market”.
QDD status will enable MOEX to improve the efficiency of trading in US securities for banks and brokers, as well as on the money market.
The exchange explains that it introduced trading in international shares settling in RUB in August 2020. Currently, 281 international securities are available for trading on MOEX.
However, from 27 September, market participants will be able to trade international shares in USD, either in their own account or on behalf of clients. By the end of 2021, it expects the number of international shares available for trading on MOEX to rise to around 500.
Dividends paid on these shares will be booked in the issuer’s currency — for example, in USD for US securities.
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