Basic Terms Of REPO Transactions In Government Securities, Conducted On MICEX, Adopted As A Standard For The Self-Regulating Organization "The National Stock Association".

The meeting of the Council of the National Stock Association adopted 22 January 2004 "The Basic Terms of Concluding and Executing REPO Transactions in the RF Government Securities in the Organized Securities Market" as NSA's standard of conducting REPO operations. The draft document, prepared by international law firm "Hammonds, Zhigachyov, Khristoforov", was discussed by experts from the Bank of Russia, the MICEX and the NSA, as well as leading dealers in the government securities market.

The Basic Terms were developed as part of the legislation regulating operations in government securities in the organized securities market. This is the first document of its kind in Russia that sets the standard terms of regulating relations between market participants, which arise when concluding and executing REPO transactions. The provisions of the document are based on the international experience of executing REPO operations, including the standards of the International Stock Market Association (ISMA).

The Basic Terms determine the order of concluding, executing and terminating REPO transactions. The most important sections of the Basic Terms deal with the consequences of a failure to execute obligations for a REPO transaction and default on a REPO transaction, as well as penalties imposed in the case of improper execution of obligations for a REPO transaction. The document gives definition of certain special terms, used in REPO transactions, and explains the order of exempting from liability for the failure to execute obligations for REPO transactions and the order of settling disputes arising when concluding and executing REPO transactions. The Basic Terms apply only to those REPO transactions which parties to the transaction have declared to be covered by the Basic Terms.

The adoption of the Basic Terms creates better conditions for the development the Bank of Russia's operations of refinancing the banking system through government securities and the government debt market as a whole.

The Basic Terms are intended for the members of The National Stock Association and other professional participants of the securities market, who intend to conduct REPO operations in securities on the MICEX.