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June 25, 2009

The developing of the Standard documentation for derivative transactions on OTC financial markets is completed

The wide application of the proposed documentation will result in stable business practices being formed on the Russian derivatives market and in mitigating the basic risk resulting from the use by market participants of different contract forms when establishing civil law relations with various counterparties.

June, 24, 2009: The Association of Russian Banks, the National Association of Securities Market Participants and the National Foreign Exchange Association have announced the completion of developing the Standard documentation for derivative transactions on OTC financial markets. This documentation is the Russian analog of the standard documents published by the International Swaps and Derivatives Association Inc., which are used to document most derivative transactions in the international financial markets and its preparation was a major breakthrough in developing the Russian derivatives market. Development of the standard documentation was aimed at facilitating financial market participants' negotiating and entering into agreements regulating their relationships in OTC derivative transactions with various kinds of underlying assets.

The wide application of the proposed documentation will result in stable business practices being formed on the Russian derivatives market and in mitigating the basic risk resulting from the use by market participants of different contract forms when establishing civil law relations with various counterparties.

The set of the published standard documentation includes Model Provisions of Agreement for Derivative Transactions on Financial Markets (including as a schedule a model form of the Master Agreement for Derivative Transactions on Financial Markets); Standard Terms of FX, Currency Option and Currency Swap Transactions; Standard Terms of Interest Rate and Swaption Transactions; Standard Terms of Shares and Index Derivative Transactions; Standard Terms Bond Derivative Transactions; and, finally, Model Provisions of Agreement on Margin Transfers under the Master Agreement for Derivative Transactions on Financial Markets (which includes a model form of Agreement on Margin Transfers). It is expected that the list of underlying assets will be extended, the standard terms to be developed for such assets within the agreement structure proposed in this publication.

The following associations have the exclusive right to use the Standard documentation for derivative transactions on financial markets: Association of Russian Banks (ARB), National Foreign Exchange Association (NFEA) and National Association of Securities Market Participants (NAUFOR). The rightholders consent to the use of the Standard Documentation for the purposes of concluding transactions.

Joerg Bongatz, Chairman of the Tender Committee of the Documentation Development Project and Chairman of the Board of Deutsche Bank Ltd. said, “We are very pleased with the work that has been done. It was long, complex and painstaking. However, I am sure the results are worth the effort. The rapidly growing turnover of the Russian derivatives market, the increasing number of players on this market dictated the urgent need for the preparation of such Documentation. This is another breakthrough towards forming of the derivatives market in Russia.”



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