The National Depository Centre

Address: 1/13, bld. 4, Sredny Kislovsky Pereulok, 103009 Moscow, Russia

Customer Services:Telephone: 7�(095) 956�2789

7�(095) 956�27907�(095) 956�2791

Fax: 7�(095) 956�2792E�mail: ord@ndc.ru

The NDC�St. Petersburg Branch

Address: 6�A Poltavskaya Str., Room 204, 193024St. Petersburg, Russia

Telephone: 7�(812) 380�10877�(812) 380�1088

The NDC Siberian Branch

Address: 27/29 Kommunisticheskaya Str.,Novosibirsk 630007, Russia

For letters: P.O.B. 131, 630099, NDCTelephone: 7�(3832) 10�21�50

7�(3832) 18�38�46

ANNUAL REPORT2001NOT�FOR�PROFITPARTNERSHIP’THE NATIONALDEPOSITORYCENTRE’

Moscow, 2002

CONTENTS

04 MESSAGE TO THE MEMBERS OF THE NATIONAL DEPOSITORY CENTRE

06 THE 2001 HIGHLIGHTS

08 LICENCES ISSUED TO NDC

09 NDC MANAGEMENT. ORGANISATIONAL STRUCTURE AND PERSONNEL

100 DEPOSITORY SERVICES PROVIDED IN 200110 ACCEPTANCE OF SECURITIES FOR SERVICE11 CORPORATE ACTIONS AND INCOME TRANSFERS11 DELIVERY OF INFORMATION ON CORPORATE EVENTS11 RELATIONS WITH COMPANY REGISTRARS AND TRANSFER AGENTS12 OUR DEPOSITORS14 NDC AS THE NATIONAL NUMBERING AGENCY15 TARIFF POLICY16 REGIONAL PRESENCE18 HARD � AND SOFTWARE IN USE

20 PROJECTS IMPLEMENTED IN 200121 SERVICING NON�FEDERAL SECURITIES BASED ON E�DOCUMENT INTERCHANGE21 DEVELOPING E�DOCUMENT INTERCHANGE. CONNECTION TO THE S.W.I.F.T. SYSTEM22 HANDLING OF PRIMARY PLACEMENTS OF NEW SECURITIES VIA MICEX22 SECURITIES RE�REGISTRATION23 SERVICES FOR DELIVERY�VERSUS�PAYMENT TRANSACTIONS23 LOAN COLLATERAL MONITORING SERVICES

24 SUMMARY OF SIGNIFICANT EVENTS IN 2001

26 FINANCIAL REPORTING27 AUDIT REPORT27 AUDIT FIRM'S OPINION28 BALANCE SHEET29 PROFIT AND LOSS ACCOUNT29 INFORMATION ON THE NDC MEMBERS' CAPITAL

30 MAJOR PERFORMANCE FIGURES

32 ANNEX33 THE SYSTEM OF ELECTRONIC DOCUMENT INTERCHANGE38 LOAN COLLATERAL MONITORING TECHNOLOGY42 DELIVERY VERSUS PAYMENT

Ladies and Gentlemen,

2001 was remarkable for the National Depository

Centre as the fifth year of its existence and

development.

Like other participants in the Moscow Interbank

Currency Exchange (MICEX) Holding, NDC

devoted those five years to forming an advanced

infrastructure of the Russian securities market

through designing and improving the depository

services system and promoting new types of

securities.

Today, NDC has a strong foothold on the market,

being one of Russia's leading financial institu�

tions that operates in all securities market

segments. NDC safekeeps government bonds

in roubles (GKOs and OFZs), regional and

municipal bonds, corporate securities, including

those issued by major Russian companies.

The total amount and specifics of the structure

of assets held in NDC make it number one in

the Russian custodial community, with the grow�

ing volume of its safe custody transactions and

the increasingly stable financial position.

In 2001, NDC launched a number of new

projects under the agreed strategy designed

jointly with MICEX Holding participants.

TO THE MEMBERS OFTHE NATIONAL DEPOSITORY CENTRE

A. Zakharov, General Director of MICEX

M. Laufer, Director of NDC

Before all, we extensively modified and improved

our depository service technology. NDC completed

the transition to using unified software for

supporting depository transactions with government

bonds and corporate securities. As a result, our

depositors were offered the opportunity of using

a comprehensive system for electronic document

interchange. The admission of NDC to

the Society for Worldwide Interbank Financial

Telecommunications (S.W.I.F.T.) provided new

opportunity windows.

But we focused our attention not only on innova�

tions in technology. What could also be written

on the 'business card' of NDC in 2001 were

flexible schemes of communication with our

customers, responsiveness to their wishes and

demands, and the high level of reliability and

information transparency.

The Russian stock market is developing dynami�

cally, so is the National Depository Centre. Now,

the market is turning its face to the real sector of

Russia's economy. Domestic enterprises are

looking at it as a source of investment, and

issuance of securities is no longer the exclusive

prerogative of major companies. The number of

market segments is increasing, with the growing

market share of small operators effecting their

transactions via the Internet. Given this, the

range, quality and cost of services being offered

by infrastructure organisations – trading floors,

settlement and clearing centres, and deposito�

ries – have become crucial to maintaining their

competitive edge.

The level of the NDC's depository services for

MICEX�traded securities is an integral part of the

concept of the MICEX Holding's business quality

– the cornerstone of its competitive advantages.

And the role being played by NDC is quite

significant, and it is growing further as the

Holding is developing into the major infrastruc�

ture organisation on the Russian securities

market.

A. ZakharovGeneral Director

Moscow Interbank Currency

Exchange,

Chairman of the General Meeting

of NDC Members

M. LauferDirector

National Depository Centre

THE 2001HIGHLIGHTS In the year under review:

The number of depository accountsincreased by 13.1%.The number of securities held in NDCrose by 2% on average, while that ofequities increased 4%.451.6 thousand securities inventory transactions were made, of which 360.3 thousand with equities.141 billion securities were transferred.The number of the issuers, whose secu�rities were held in NDC, grew by 11.8%.

At the end of 2001:NDC was maintaining 977 depositoryaccounts.NDC was servicing 1,149 securitiesissues undertaken by 313 issuers.

For 2001:Gross profit totalled RUR 71.45 million.Net profit aggregated RUR 40.8 million.

6

7

3

LICENCESISSUED TO NDCNDC has the unlimited Professional Securities MarketParticipant Licence for conducting depository activityNo. 177�03431�000100 and the unlimited Licencefor handling the clearing function No. 177�03437�000010 issued by the Federal Commission for theSecurities Market (FCSM) on 4 December 2000.On 28 September 2001 the Presidential Agency forGovernment Communications and Information (FAPSI)issued to NDC three licences for 3 years each. Theselicences entitle NDC to:

provide technical maintenance of crypto�graphic devices for protection of informationnot containing official secret in the course ofits processing, storage and transmissionwithin the NDC's e�document interchangesystem (Licence No. LF/07�1900 of 28September 2001);distribute among the users of the NDC's e�document interchange system encryptiondevices for protection of information not con�taining official secret in the course of its pro�cessing, storage and transmission within thesystem (Licence No. LF /07�1901 of 28September 2001);render services for encryption of informationnot containing official secret within the NDC'se�document interchange system (LicenceNo. LF/07�1902 of 28 September 2001).

8

Mikhail A. LauferDirectorAlexander E. AbramovDeputy Director, OperationsAlexander P. SyominDeputy Director, Technology and Development

In 2001, the number of people on staff increasedby 15.5%. At the end of the year, NDC had 119full�time employees, over 50% of which havingFCSM qualification certificates.

NDC MANAGEMENT.ORGANISATIONAL STRUCTUREAND PERSONNEL

9

Depository licence of professional securities market participant Clearing licence of professional securities market participant

Licence issued by the Presidential Agency for GovernmentCommunications and Information

In the year under review, the number of securitiesissues accepted for service grew to 1,149, or a 1.15�fold increase on the previous year, while thenumber of issuers, whose securities were held in NDC, rose from 250 to 282.The number of NDC�serviced government short�termbonds (GKOs) and federal loan bonds (OFZs) grewfrom 278 to 298. Besides these federal securities,the National Depository Centre continued to handle'government non�market loan bonds' (OGNZs, 1 issue).The number of issues of NDC�serviced subfederalsecurities, including so�called 'agricultural bonds'and municipal bonds, increased from 68 issues of30 issuers to 92 issues of 31 issuers. This increasewas due to the servicing of new securities issued bythe Government of Moscow, administrations of theRepublic of Bashkortostan, the Republic of Komiand the authorities of the Leningrad Region. Thetotal face value of those securities rose from RUR5,856 million to RUR 13,177 million.At the year�end, NDC was servicing the securitiesissued by such major Russian companies as theUKOS Oil Company, Surgutneftegaz, LUKoil, Sibneft,RAO UES, Norilsky Nickel, the Savings Bank ofRussia, Tatneft, Mosenergo, Rostelecom, etc. Thetotal face value of securities held in the depositoryaccounts in NDC increased from RUR 5 billion toRUR 5.8 billion, and their market value went upfrom RUR 38.1 billion to RUR 71.8 billion.In 2001, NDC started to handle new bonds of largeRussian companies, such as TiumenskayaNeftianaya Kompanya (two securities issues of RUR6 billion). JSC ALROSA (five issues of RUR 2.7 bil�lion), Credit Swiss First Boston Capital (one issue ofRUR 2 billion), RTK�Leasing (two issues of RUR

1.5 billion), Baltiyskoye Finansovoye Agentstvo (one issue of RUR 2 billion), MagnitogorskyMetallurgicheskiy Kombinat (seven issues of RUR1.26 billion),Obiedinyonniye Zavody (three issues ofRUR 1.06 billion), Neftegazovaya KompaniyaSlavneft (one issue of RUR 1 billion), MoskovskayaGorodskaya Telephonnaya Set (one issue of RUR 1 billion), and a number of other industrial enter�prises, investment companies, and banks.At the end of the year the National DepositoryCentre was servicing 72 issues of centrally held corporate bonds of RUR 74 billion at par and 5 issues of registered bonds the nominee holder ofwhich was NDC. Since several of the bond issueswere placed in tranches traded in the market, NDCwas holding securities of 95 corporate bond issuesin safe custody at end�2001. In total, NDC acceptedfor service 54 centrally held bond issues of 35 issuers. The face value of those securities wasabout RUR 32 billion.In 2001, NDC also serviced two issues of registeredbonds of OAO Proton�PM and the Kalina Concern.

DEPOSITORY SERVICES PROVIDED IN 2001

ACCEPTANCE OF SECURITIES FOR SERVICE

CORPORATE ACTIONS ANDINCOME TRANSFERS

NDC conducts corporate actions itself and provides information support for corporateactions on all issues of securities held in itsdepository accounts. Besides, NDC delivers services for its depositors to exercise their andtheir clients' legal right to the benefits accruingto securities.In the reporting year, NDC made nearly 1,050transfers of income on shares and bonds of 89 issuers. The overall volume of such transferscame to RUR 95.6 billion.As the central depository for the corporate bondmarket, NDC interacts with the issuers and payingagents in order to ensure that income paymentsare made to the securities holders. In 2001, NDChandled coupon payments and scheduledredemption in accordance with 84 securitiesissues and processed early redemption of 28 corporate bond issues.The National Depository Centre provided adviceon the income payment and funds transfer procedures, taxation of securities deposited inNDC, corporate actions, and the ways and orderfor exercising securities owners' rights.The Centre offers its depositors and their clientsthe opportunity to consolidate their securitiesholdings for corporate actions. In addition, NDCmay participate in general shareholders' meetingsas the authorised representative of its depositorsand realise their voting rights by proxy.

DELIVERY OF INFORMATIONON CORPORATE EVENTS

Throughout 2001, the National Depository Centreregularly informed its depositors of all corporateevents arranged by the issuers' whose securitieswere held in safekeeping in NDC. We receive corporate information directly from the registrarsand issuers, and then place it on our website andalso deliver details of corporate events uponrequest.

RELATIONS WITH COMPANYREGISTRARS AND TRANSFERAGENTS

At the year�end, the National Depository Centrehad nominee accounts with the registrars of 253 issuers of NDC�serviced registered corporatebonds and equities. The securities registers weremaintained by 113 registering companies andtheir branches.By the end of 2001, almost all of our nomineeaccount transactions related to the depot or with�drawal of securities from safekeeping wererecorded in the registers maintained by not morethan 20 company registrars.

11

OUR DEPOSITORS

In the year under review, the number of NDCdepositors grew by 10%.

The majority of NDC depositors are professionalsecurities market participants – the clients of thetrading systems for which NDC performs the settlement depository function.

NDC DEPOSITORS BY CATEGORY

Total number % of the total numberof depositors

Depositors 514 100

of which:

GKO�OFZ market dealers 282 54.9%

MICEX stock market participants 403 78.4%

Custodians participating in the MICEX stock market 54 10.5%

Participants in trading in Novosibirsk regional bonds, or ODOs 16 3.1%

12

13

NDC AS THE NATIONAL NUMBERING AGENCY

In this capacity the National Depository Centre, a member of the Association of National NumberingAgencies, assigns international securities identification numbers (ISINs) to domestic securities and otherfinancial instruments in accordance with ISO 6166 and ISO 10962. NDC performs the daily monitoring of,and exchanges data with, the database of international securities identification numbers containing information on more than 900,000 ISINs allocated to financial instruments in 155 countries world�wide.In 2001, NDC checked the list of the international securities identification numbers previously assigned toRussian securities in order to remove duplicate ISINs.Also, NDC began to allocate ISINs to corporate bonds during their primary placement at the request ofissuers and underwriters and to apply ISINs as trade codes within the MICEX trading system and as depository codes in the NDC's accounting books.NDC plans to extend this practice to other financial instruments.

14

TARIFF POLICY

NDC has used the cost�based approach to setting service charges. At the present time, the basic tariff ontransfers of stock exchange�traded securities and securities transfers within NDC on a free delivery basis isset at RUR 50, and that on transfers of securities traded on a delivery�versus�payment basis at RUR 90.NDC seeks to reduce its service charges. In 2001, the optimisation of technological processes enabled NDCto lower its fees for:

placement of securities in safekeeping and securities accounting (from RUR 200 to RUR 100, if re�registration is to be made by NDC service units);transfer of income on securities (currently, RUR 100 is charged for transactions of more than RUR700, and no fee is paid for transfers of income payment of less than RUR 700, as compared withthe previous tariff of RUR 20 plus 0.5% of an amount of income exceeding RUR 5,000);new services for registration of pledged securities as loan collateral (in the area of securities lending, we have introduced a new overnight scheme of tariffs for those customers which havesmall transaction volumes).

15

REGIONAL PRESENCE

The migration to e�document interchange hasenabled our depositors to obtain direct access tothe depository system without having to contactour branches or local representatives.In the year of this annual report, 105 regionalcustomers (73% of the overall number of ourdepositors) became the users of the NDC's e�document interchange system. In the fourthquarter of 2001, the share of depository instruc�tions transmitted by regional depositors directlyto the NDC's processing system made up animpressive 95%. Of 14 new regional customers,10 were 'remote' depositors operating outsidethe cities in which NDC branches or representa�

tives are based. The total number of our regionaldepositors was 144 at the year�end.In 2001, NDC branches and regional representa�tives got increasingly involved in interactions withlocal registrars. The National Depository Centreestablished relationships with 14 new regionalregistrars, which made it possible to do businesswithout transfer agents and to reduce operatingcosts. With the participation of its representa�tives and branches, NDC effected transactionsusing its nominee accounts with the registeringcompanies based in Novosibirsk, St. Petersburg,Nizhny Novgorod, and Rostov�on�Don.

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17

NDC Regional Depositors, %

SICE – Samara Interbank Currency ExchangeURCE – Urals Regional Currency ExchangeNNC & SE – Nizhny Novgorod Currency and Stock ExchangeRC & SE – Rostov Currency and Stock ExchangeAPICE – Asia�Pasific Interbank Currency Exchange

computer systems and telecommunication facilities, and are equipped with uninterruptedpower supply, fire�fighting and air conditioningdevices. This architecture enables significantlyincreased fault�tolerance of both complexes,thus ensuring the smooth functioning of theentire system. The warranty service agreementsconcluded with the equipment manufacturersprovide for high quality expert advice and prompthelp from specialists of those companies, wherenecessary. The high level of reliability of our oper�ation as a whole is secured because the hard�and software complexes are interchangeable andboth support the mutual backing function. All thisforms a strong basis for delivering excellent safecustody services to our customers to meet theirgrowing needs and requirements in today's fastpaced business environment.We have focused particular attention on providing effective Central Depository Systemsoftware solutions. The functional capabilities ofthe advanced applications created under thisapproach made it possible to implement newprojects and offer new services to NDC clients,including e�document interchange. Our specialists are currently developing software forthe NDC Depositor's remote workstation (RW).

To support our depository operations relating toall types of government and corporate securities,we use our Central Depository System (CDS), acutting edge soft� and hardware configurationdesigned by CMA Small Systems AB. The CDSoperates within the framework of the MICEXTechnical Complex and the Central BankInformation Centre. The MICEX Technical Complexis the data processing core for performing thedepository function on the securities market andfor automation of the services that are renderedto NDC customers. The Central Bank data pro�cessing centre operates as a stand�by facility.Both structures are based on industry�leadingHewlett�Packard servers enabling access toshared disk arrays of large volume. The opera�tional environment meeting high performancerequirements and having sufficient scalingcapacity is made up of the Hewlett�Packard HP�UX software and a relational database management system developed by Informix. The telecommunication system hardware is buildon the network equipment manufactured by suchleading companies as Cisco, Lightstream, andHewlett�Packard. The hard� and software com�plexes are capable of performing the multipleredundancy and backing function for the main

HARD� AND SOFTWARE IN USE

The Central Depository System

19

PROJECTS IMPLEMENTED IN 2001

SERVICING NON�FEDERAL SECURITIES BASED ON E�DOCUMENTINTERCHANGE

In 2001, NDC passed on to employing a new version of the software designed for handling corporate, subfederal and municipal securities.This application software enables our depositors to use the advantages of electronic document interchangeto lower costs of processing depository instructions and reduce the time required for conducting safe custody operations. Now our customers, including regional depositors, can transmit their depository instruc�tions, the lists of securities owners on record date and notices of entry of securities in the NDC's nomineeaccount with the registrars directly to our Moscow Office and receive respective statements, reports andnotifications via publicly accessible e�mail facilities. NDC depositors can monitor the major phases of processing e�documents forwarded to NDC and make the daily reconciliation of those transmitted to, andaccepted by, the Depository.

The migration to the new software has made it possible:to unify the forms of depository instructions and reports,to cease using paper documents at the depositor's request,to lower operational risks,to raise the level of information protection,to send reports in real time,for NDC depositors to separately account for their clients' securities through opening client sub�accounts.

In the course of the project, NDC specialists improved the technology for performing a number of depositoryoperations. For example, the introduction of a scheme for recording the registrars' advices of execution andthe discontinuance of obligatory presentation of those documents by the depositors upon submission ofsecurities acceptance instructions have allowed us to accelerate the time of operations and reduce thenumber of securities the owners of which are unknown. We have also expanded the list of reports that areprepared in response to information inquiries, including those generated on a periodic basis.The implementation of the new software solutions contributed heavily to the improvement of e�documentinterchange between NDC and its customers.

In 2001, NDC designed and introduced a scheme for exchange of information with its depositors in theform of full�range electronic document interchange.NDC offered its Moscow and regional customers the opportunity to send depository instructions and receivereports via publicly accessible Internet e�mail facilities (e.g., Microsoft Outlook, Microsoft Exchange).Our depositors have already appreciated the advantages of exchange of information with NDC through theNDC's electronic document interchange (EDI) system. For 8 months since the date of its implementation,the majority of NDC customers have come over to using the EDI.At the end of the reporting year, 50% of the total clientele in Moscow and 70% of our regional depositorswere the users of this system.In 2001, NDC put much effort into incorporating into its e�filing system S.W.I.F.T. messages under the newInternational Standard ISO 15022.On 3 March 2002 NDC joined the Society for Worldwide Interbank Financial Telecommunications.Our new projects envisage the processing of e�document flows via the S.W.I.F.T. in addition to the existingcapacity for exchanging electronic documents through Internet e�mail channels or the MICEX Open Mail as well as processing paper document flows.

DEVELOPING E�DOCUMENT INTERCHANGE. CONNECTION TO THES.W.I.F.T. SYSTEM

21

HANDLING OF PRIMARY PLACEMENTS OF NEW SECURITIES VIAMICEX

In 2001, the National Depository Centre made all necessary arrangements for servicing primary placementsof newly�issued securities via MICEX. In particular, NDC:

developed a securities primary placement scheme for interactions between participating partiesand relevant technology procedures, as agreed upon with MICEX;agreed with the Federal Commission for the Securities Market the necessary amendments to theNDC Operating Rules and Procedures;prepared proposals on the required changes and amendments to the Securities SettlementAgreement between MICEX and NDC.

SECURITIES RE�REGISTRATION

In the year under review, the National Depository Centre started to provide services on re�registration of equities in the registers of securities owners. NDC offered its depositors and their clients the opportunity ofprocessing re�registration instructions through NDC in the event of entry of equities in the NDC's nomineeholder accounts opened with the Moscow�based registrars.The introduction of this service allows the possibility of lowering the depositor's expenses on re�registrationof securities and reducing the number of organisations the depositor has to communicate with in theprocess of entering its shares in the nominee account of NDC.In 2001, fourteen depositors made use of the service, including Surgutneftegazbank, MENATEP St. PetersburgBank, the Alor�Invest Company, the ELEMTE Investment Company, the Metropol Investment and FinancialCompany.With the help of equities re�registration, NDC lowers the operational risks associated with the posting ofsecurities to the customer's depository account upon a third party's submission of a copy of the notificationof re�registration.

22

SERVICES FOR DELIVERY�VERSUS�PAYMENT TRANSACTIONS

In September 2001, NDC offered its clients a new service: settlement of securities transactions on a DVP basisusing the depository accounts opened in NDC and cash accounts in the MICEX Settlement House. In December2001, the similar scheme was implemented for foreign currency settlements through InternationalMoscow Bank.It is expected that this project will result in higher attractiveness of MICEX�listed financial instruments. And it is very likely that the expanded range of transactions with those financial instruments will spur corporate bond markets, raise their liquidity, and reduce investment risks relating to this type of securities.

LOAN COLLATERAL MONITORING SERVICES

The strong technology platform created in NDC in 2001 facilitated the development of a new package of loancollateral monitoring services to support securities lending transactions and the system for guaranteeing thedue performance of obligations by the parties to repo and swap agreements based on securities as the under�lying asset.For lenders, this set of services will make it possible to:

carry out securities lending transactions without opening safe custody accounts in the lender'sdepository;reduce the lender's expenses on the monitoring of the borrower's collateral;authorise NDC to monitor compliance with the requirements on disposal of the object of pledge.

For borrowers, these services will make it possible to:reduce expenses on interdepository transfers between the lenders' depositories;save on lower interest rates by substituting unsecured loans for those secured by marketablesecurities;substitute the object of pledge in a timely manner, if required.

23

SUMMARY OF SIGNIFICANTEVENTS IN 2001

The number of securities issues accepted for service exceeded 1,000, of which 64% was represented by corporateshares and bonds, 27% by federal securities (GKOs and OFZs), and 9% by subfederal bonds.

The National Depository Centre, with the participation of representatives of the Society for Worldwide InterbankTelecommunications, conducted a seminar on NDC's migration to full�function electronic document interchangeusing e�mail facilities. The seminar focused on discussing the prospects of applying ISO 15022 by NDC.

In Moscow and St. Petersburg the National Depository Centre conducted conferences on its migration to full�function electronic document interchange. Over 150 representatives of NDC client organisations participatedin the conference in Moscow, and representatives of about 50 depositors of our St. Petersburg branch attendedthe gathering in that city.

NDC completed the installation of a new software version and switched completely to full�range Depository�Cliente�document interchange.We provided our depositors with the opportunity to exchange e�documents with us through publicly accessiblecommunication channels, including Internet e�mail facilities and the Open Mail system.We expanded the list of the issuers of securities serviced through using the 'NDC�DCC bridge', the effective mechanism of interactions between the National Depository Centre and the Depository Clearing Company for re�registration and transfer of securities. The list was broadened to include 10 new joint stock companies for whichinterdepository accounts were opened.

NDC participated in the General Meeting of Members of the Association of National Numbering Agencies heldin Prague.The Association of National Numbering Agencies comprises over 60 organisations handling the function of national numbering agency assigning international securities identification numbers (ISINs) to local securities.

The National Depository Centre and the Depository Clearing Company conducted a seminar on current issues ofcustodial business. The seminar was held in St. Petersburg and attended by representatives of many professionalsecurities market participants (banks and investment companies), depositors, DCC and NDC partners.The General Meeting of Members of Not�for�Profit Partnership 'The National Depository Centre' approved the2000 Annual Report and elected a new membership of the NDC Depository Service Committee.

NDC participated in the regular meeting of the Russian Stock Market Analysis Task Force.The NDC Subdepository Technical Support Centre started to record the establishment of trustee depositoryaccounts for the managing companies of pension funds and unit investment trusts.

NDC began to provide a set of services for re�registration of securities through the Moscow�based companyregistrars.As Russia's National Numbering Agency, a member of the Association of National Numbering Agencies, NDC started to deliver information on international securities identification numbers to all interested persons and allocate new ISINs to domestically�issued financial instruments.

The Presidential Agency for Government Communications and Information (FAPSI) issued to NDC three licencesfor 3 years each. These licences entitle NDC to:

provide technical maintenance of cryptographic devices for protection of information;distribute among the users of the NDC's e�document interchange system encryption devices for protection of information;render services for encryption of information.

NDC, in co�operation with the MICEX Settlement House, conducted a presentation of the first phase of itsSecurities Lending Project. Credit market operators were offered a new service under which NDC would record the pledge of securities used as loan collateral.A general meeting of NDC members was held. The General Meeting adopted the resolution on our joining theS.W.I.F.T. system.Those present also approved a project for offering new services to maintain trustee depository accounts openedfor trust managing companies – professional securities market participants.

NDC was involved in the first one�day loan�against�securities transaction between Transkreditbank andTsentrokredit Bank according to the first phase of the Securities Lending Project jointly designed by NDC and the MICEX Settlement House.

NDC began to process transfers of securities and control cash settlements made through the participating settlement institutions on the basis of counter�instructions issued by the buyers and sellers of securities.

January

February

March

April

May

June

July

August

September

October

December

25

FINANCIAL REPORTING

AUDIT REPORTZAO PricewaterhouseCoopers Audit(PwC)52, Bld. 5 Kosmodamianskaya Nab., 113054 Moscow, RussiaTelephone: +7 (095) 967 6000Fax: +7 (095) 967 6001

License No. 016152 for auditing exchanges, non�budget funds and investment institutions issued by the CentralAttesting and Licensing Audit Committee of the Ministry of Finance of the Russian Federation on 23 November1999. The licence is valid through 10 June 2002.General auditing license No. 016153 issued by the Central Attesting and Licensing Audit Committee of theMinistry of Finance of the Russian Federation on 23 November 1999. The licence is valid through 24 June 2002.State registration certificate No. 008.890 issued by Moscow Registration Bureau on 28 February 1992.Settlement account No. 407 028 104 000 010 012 93 with ING Bank Eurasia, correspondent account No. 301 018 105 000 000 002 22, BIC 044 52 52 22, INN 770 505 11 02.The audit was conducted with the participation of statutory auditor S. Blokhin.

AUDIT FIRM'S OPINIONZAO PricewaterhouseCoopers Audit(ZAO PwC)52, Bld. 5 Kosmodamianskaya Nab., 113054 Moscow, RussiaTelephone: +7 (095) 967 6000Fax: +7 (095) 967 6001

on the 2001 statutory accounting reports of Not�for�Profit Partnership 'The National Depository Centre'

To the participants of Not�for�Profit Partnership 'The National Depository Centre':We have audited the accompanying statutory accounting reports of Not�for�Profit Partnership 'The National Depository Centre', hereinafter referred to as 'NDC', as of and for the year ended 31 December 2001. These statutory accounting reports were prepared by the management of NDC inaccordance with the Federal Law on Accounting and Regulation on Accounting and Reporting in theRussian Federation adopted by the decree of the Ministry of Finance of the Russian Federation No. 34н(n), dated 29 July 1998. Such statutory accounting reports differ to a significant extent fromthose prepared in accordance with International Accounting Standards.Preparation of the statutory accounting reports is the responsibility of management of NDC. Our responsibility as statutory auditors is to express our opinion on these statutory accounting reports basedon our audit.We conducted our audit in accordance with the Federal Law on Auditing, Russian Auditing Standardsissued by the Presidential Audit Committee, and International Standards on Auditing. Russian AuditingStandards and International Standards on Auditing require that we plan and perform the audit to obtainreasonable assurance about whether the statutory accounting reports are free of material misstatement.The audit includes examining, on a test basis, evidence supporting the amounts and disclosures in thestatutory accounting reports. The audit also includes assessing the accounting principles used and significant estimates made by the management of NDC, as well as evaluating the overall statutoryaccounting reports presentation as concerns its compliance with laws and regulations of the RussianFederation. We believe that our audit provides a reasonable basis for our opinion.In our opinion, the statutory accounting reports attached to this report have been properly prepared in allmaterial respects the assets and liabilities of NDC as of 31 December 2001 and the financial results ofits operations for the year ended 31 December 2001 in accordance with the Federal Law on Accountingand Regulation on Accounting and Reporting in the Russian Federation adopted by the decree of theMinistry of Finance of the Russian Federation No. 34н(n) on 29 July 1998.Without qualifying the opinion expressed above, we hereby note that balance sheet line 470 does notinclude undivided profit for the current reporting year as it was allocated to target financing of core activities. This is recorded in Form No. 6 'Statement on directed use of funds received', line 050.

Director ZAO PricewaterhouseCoopers Tamjid Basunia

Statutory auditor Sergei Blokhin1 April 2002

1.

2.

3.

4.

5. 27

BALANCE SHEET AS AT 31 DECEMBER 2001

RUR '000

ASSETS Line code At beginning of At end of reporting reporting

year year

I. NON�CURRENT ASSETSIntangible assets (04, 05) 110 16,816 27,093

Patents, licences, trade marks,other rights and assets similar to those listed above 111 16,816 27,093

Fixed assets (01,02,03) 120 6,904 9,576Buildings, machinery, and equipment 122 6,904 9,576

TOTAL Section I 190 23,720 36,669

II. CURRENT ASSETSInventories 210 775 3,269

Raw and other materials and similar items (10, 12, 13,16) 211 � 337Expenses related to future periods (31) 216 775 2,932

Value added tax on goods purchased (19) 220 1,724 4,730Accounts receivable (payment expected beyond 12 months of the reporting date) 230 1,774 1,233

Other debtors 235 1,774 1,233Accounts receivable (payment expected within 12 months of the reporting date) 240 33,632 33,638

Buyers and customers (62, 76, 82) 241 18,592 22,028Contributions to issued capital (75) 244 11,750 �Advances issued (61) 245 1,297 1,736Other debtors 246 1,993 9,874

Monetary assets 260 40,646 67,754Cash on hand (50) 261 � 3Settlement accounts (51) 262 40,394 67,553Hard currency bank accounts (52) 263 104 149Other monetary assets (55, 56, 57) 264 148 49

TOTAL Section II 290 78,551 110,624TOTAL Sections I and II [sum of lines 190 and 290] 300 102,271 147,293

RUR '000

EQUITY AND LIABILITIES Line code At beginning of At end of reporting reporting

year year

III. EQUITY AND RESERVESCharter capital (85) 410 50,000 50,000Directed financing (96) 450 16,687 51,641TOTAL Section III 490 66,687 101,641

IV. NON�CURRENT LIABILITIESBorrowings and bank loans (92, 95) 510 � �TOTAL Section IV 590 � �

V. CURRENT LIABILITIESAccounts payable 620 35,584 45,652

Suppliers and contractors (60, 76) 621 16,428 42,833Payable to staff (70) 624 12 �Payable to state non�budget funds (69) 625 69 �Payable to budget (taxes) (68) 626 8,924 2,620Advances received (64) 627 10,127 149Other creditors 628 24 50

TOTAL Section V 690 35,584 45,652TOTAL Sections III, IV, V [lines 490+590+690] 700 102,271 147,293

28

PROFIT AND LOSS ACCOUNTRUR '000

Narrative Line For reporting For the previouscode year year

предыдущегогода

I. INCOME FROM AND EXPENSES ON ORDINARY SHARESSales of goods, products, work, services (less Value added tax, excises, and other similar compulsory payments) 010 206,287 174,960Cost of goods, products, work, services sold 020 134,839 128,986Total revenue 029 71,448 45,974Gross profit (loss) from sales [lines 010�020�030�040] 050 71,448 45,974

II. OPERATING INCOME AND EXPENSES Interest receivable 060 447 529

III. NON�SALE PROFIT AND LOSSESNon�sale profit 120 295 381Non�sale losses 130 1,668 3,681Income (loss) from operations [lines 050+060�070+080+090�100+120�130] 140 70,522 43,203Income tax and other similar compulsory payments 150 29,724 14,695Profit (loss) from ordinary activity 160 40,798 28,508

IV. EXTRAORDINARY PROFIT AND LOSSESExtraordinary profit 170 � �Extraordinary losses 180 � �Retained earnings (loss) of the reporting year [lines 160+170�180] 190 40,798 28,508

INFORMATION ON THE NDC MEMBERS' CAPITAL AS OF THE YEAR ENDED31 DECEMBER 2001

RUR '000

1 EQUITY AND RESERVES (BALANCE SHEET SECTION III) 101,6411.1 Special purpose finance and proceeds (undeductible in case of depositories acting as non�profit partnerships) �1.2 Intangible assets at residual value (less certified software used for depository activity and included in the 'Intangible assets') 9,7381.3 Construction in progress �1.4 Shares (stakes, units) purchased from shareholders (members) �1.5 Contributions to issued capital due from members (founders) �1.6 Investments in branches and affiliates �1.7 Inventories 3,2691.8 Debtors' accounts payable in more than 12 months 1,2331.9 Bills receivable, including discounted bills �1.10 Unrecovered losses �1.11 Book value of the depository's mortgaged property �1.12 Book value of securities issued by the depository's participants (founders, members),

but not included in the listing published by the FCSM�licensed organisers of trading �1.13 Book value of unlisted securities issued by organisations in which the depository

has more than a 10 per cent interest in the form of shares, stakes, or units �1.14 Book value of participatory shares in the shareholders' (members') capital of the depository's

participants (founders, members) in which the depository has more than a 10 per cent interest in theform of shares, stakes, or units, except for the securities specified in 1.14 of the FCSM Instructions �

1.15 Book value of participatory shares (units, stakes, etc.) in the shareholders' (members') capital oforganisations in which the depository has its interest, except for the securities specified in 1.13 �

1.16 Book value of securities (shares, units) issued by the organisations which, at the moment of submission of application, are liquidated or declared bankrupt under Russian Federation legislation �

1.17 Debtors' accounts payable within 12 months from reporting date, if past due or restructured 3571.18 Book value of securities not registered under Russian Federation legislation �

TOTAL EQUITY AND RESERVES [LINE 1 � LINE 1.1 � LINE 1.18] 87,044

29

At 31.12.2000 At 31.12.2001 Increase(decrease),

%

1. SECURITIES IN DEPOSITORY ACCOUNTSGovernment securities, total in thds 12,695,569 12,761,918 0.5including: GKO in thds 3,051 19,541 540.5

RUR mln 3,051 19,541 540.5OFZ in thds 12,676,258 12,709,126 0.3

RUR mln 522,341 470,455 �9.9OGSZ in thds 10 �

RUR mln 5 �OGNZ in thds 16,250 16,250 0.0

RUR mln 16,250 16,250 0.0Regional andmunicipalbonds in thds 9,684 17,001 75.6

RUR mln 5,856 13,177 125.0Corporate securities, total in thds 8,152,816 8,501,181 4.3including: Equities in thds 8,097,229 8,415,626 3.9

RUR mlnat market 38,068 71,810 88.6

Bonds in thds 55,587 85,556 53.9RUR mln 46,047 73,755 60.2

2. NUMBER OF ISSUESHELD IN SAFEKEEPING 1,001 1,149 14.8Government securities, total 281 391 39.1including: GKO 34 40 17.6

OFZ 244 258 5.7OGSZ 2 �OGNZ 1 1 0.0Regional andmunicipalbonds 68 92 35.3

Corporate securities, total 652 758 16.3including: Equities 619 663 7.1

Bonds 33 95 187.9

MAJOR PERFORMANCE FIGURES

30

3. NUMBER OF ISSUERS OF SECURITIESHELD IN SAFEKEEPING, TOTAL 280 313 11.8including: Regional and

municipalbonds 30 31 3.3Corporate securities, total 250 282 12.8of which: Equities 233 250 7.3

Bonds 25 52 108.0

4. NUMBER OF DEPOSITORY ACCOUNTS, TOTAL 864 977 13.1including: Interdepository accounts 392 424 8.2

Owner andtrustee accounts 472 553 17.2Investor accounts 16,410 14,711 �10.4

5. NUMBER OF ACCOUNTS WITH REGISTRARS AND THEIR BRANCHES 110 113 2.7

6. DEPOSITORY INVENTORY TRANSACTIONSNumber of transactions, total 508,688 451,595 �11.2including: Government

securities 116,971 82,367 �29.6of which: GKO 3,243 2,958 �8.8

OFZ 113,723 75,034 �34.0OGSZ 5 �OGNZ � 31Federal and municipalbonds 1,011 4,344 329.7

Corporate securities 390,706 369,112 �5.5of which: Equities 388,984 360,253 �7.4

Bonds 1,722 8,859 414.5Number of securities transferred, total in thds 144,363,341 141,033,485 �2.3including: Government securities 31,699,850 23,696,276 �25.2

of which: GKO 210,646 334,590 58.8OFZ 31,489,190 23,303,494 �26.0OGSZ 14 � Federal and municipalbonds 17,228 43,945 155.1

Corporate securitie 112,646,293 117,287,811 4.1of which: Equities 111,674,177 117,040,556 4.8

Bonds 972,116 247,255 �74.6

7. NUMBER OF RECORD DATETRANSACTIONS, TOTAL 379 474 25.1including: Regional bonds 63 28 �55.6

Equities 276 323 17.0Corporate bonds 40 123 207.5

8. PARTICIPATION IN SHAREHOLDERS' MEETINGS

No. of issuers 70 189 170.0

9. NUMBER OF EXECUTED NON�DEPOSITORY INSTRUCTIONS 784 748 �4.6

10. PROVISION OF RELATED INFORMATION, TOTAL 1,750 1,828 4.5including: Notices 448 501 11.8

Information messages 1,302 1,327 1.9

31

ANNEX

32

THE SYSTEM OF ELECTRONIC DOCUMENT INTERCHANGE

In 2001, we put much effort into improving our e�document interchange hard� and software and developingrelated technologies.Below is the diagram showing the functioning of our e�document interchange system at the start of 2002.

The migration to the full�function exchange of electronic documents using publicly accessible Internet e�mail channels in particular has enabled all NDC depositors to maintain remote communication with ourMoscow Office. NDC provides all customers with the required software free of charge. The software consistsof programs for editing depository instructions and the lists of securities owners and those for viewingreports – the set constituting the NDC EDI Local Workstation (LW).

The Electronic Document Interchange (EDI) System

33

The NDC EDI Local Workstation makes it possible to generate, electronically sign, encode and send via e�mail channels any depository instructions provided for by valid depository agreements.The NDC EDI LW functions under the Windows95 and Windows NT operating systems. Performing the crypto�graphic protection function requires the availability of a compatible version of the VERBA�OW cryptolibrary.The user's monitor must support the video resolution of 800x600 (small font), with the recommended videoresolution of 1027x768 (small font).No special computer memory or internal performance requirements are applied to the NDC EDI LW. Anycomputer, with Windows95 or Windows NT installed and not less than 5 Mb of free disk space, can be rununder the NDC EDI requirements.Installation of the NDC EDI LW software is automated. The user can choose the installation of selectedcomponents (only the NDC EDI LW application without the cryptographic library) or that of the entire package (the NDC EDI LW, plus the cryptolibrary). In the latter case, before the start of the installation

The NDC EDI Structure

34

process the NDC EDI LW files are supplemented with the content of the downloading cryptolibrary diskette.Each library has its unique registration number incorporated in the electronic digital signature (EDS) generated by this library, hence the need to use the individual cryptolibrary diskette.The NDC EDI LW enables inputting, printing out, storing and uploading depository instructions and technicalorders to the Subdepository Technical Support Centre (STSC).In addition to processing depository instructions, the NDC EDI LW allows the following cryptographic operations: putting of EDSes, their authentication, encoding with the use of all encryption keys from theirlist, and decoding. The NDC EDI LW also makes it possible to edit the lists of encryption keys through viewing, adding andremoving them.The NDC EDI LW permits automated generation of e�mail messages. The instructions specified by the user orindividual documents are signed and then archived. The archive is encoded, and after that the system cantransmit the file (package of electronic documents) via e�mail. Sending packages of electronic documents viae�mail, the NDC EDI Local Workstation communicates with e�mail customers supporting the MessagingApplication Programming Interface (MAPI).A specific feature of NDC's electronic data interchange system is the application of technology proceduresfor controlling the receipt and processing of e�documents sent to us by our customers.

Generation and encryption of e�documents (packages of e�documents) withinthe NDC EDI System

35

Control over the receipt and processing of e�documents within the NDC EDI System

36

In accordance with the documents regulating the exchange of electronic messages via the NDC EDI system,several e�documents are generated and forwarded to its user in response to each message received. In particular, NDC sends to the system's participant:

notice of receipt of the package of e�documents;report on acceptance/non�acceptance of the customer's depository instruction (with the indicationof its registration number and date);advice of execution/non�execution.

Every day, irrespective of whether the exchange of electronic documents between NDC and its customertakes place or not, the Centre forwards to the customer the list of all e�documents sent and received byNDC on the previous day. Thus, the counterparty can control the entire cycle of processing its depositoryinstruction. The implementation of the full�scale e�document interchange system has provided a firm basis for expanding the range of our services and building new forms of communication with our depositors andother counterparties. The areas of further development of the NDC EDI System include:

ensuring the possibility of electronic data interchange for all types of operations within our deposi�tory activity and provision of related services as well as the creation of a unified regulatory frame�work to support all depository service agreements concluded between NDC and its counterparties;creating a strong capacity for the exchange of e�documents not only with all counterparties whichsigned relevant agreements with NDC, but also with their representatives authorised by the counterparties under the signed agreements;upgrading our clients' workstation software with the aim of broadening the list of available functionsto enrich the information content of e�messages exchanged with NDC, make it easier for the user tosearch, generate and edit electronic documents required for delivering high quality safe custodyservices.

One of our top priorities in the area of further developing and improving the NDC EDI System is to build ISO15022 into our e�document interchange system.Specifically, the application of ISO 15022 in NDC�Depositor e�document interchange would make it possible to:

enable receipt and processing of electronic messages generated in accordance with uniform international standards;to more effectively use best world practices in the sphere of securities transactions processing and recording;implement a straight�through processing system (for the handling of data from receipt of a deposi�tor's instruction to delivery of relevant statements) with no involvement of domestic organisationsin order to ensure timely, reliable, accurate and uninterrupted settlement of securities transactions;optimise the number of standard e�messages processed within the NDC EDI System;create an EDP environment that would enable establishment of correspondent relations with international custodial institutions (Euroclear Bank, Clearstreаm International) and formation of an effective system for communicating with foreign banks' branches performing the depositoryfunction in the Russian Federation.

37

LOAN COLLATERAL MONITORING TECHNOLOGY

For the purpose of recording securities pledged as loan collateral in NDC, loan agreements and contracts of pledge must include the following initial terms and conditions:

the pledge of securities will be recorded in the safe custody accounts maintained by the DVPCentre's depository;the list of eligible transactions with pledged securities and the order for conducting such transactions shall be provided for by the DVP Centre's Procedures;the order for exercising the rights to pledged securities (income payment, participation in the general shareholders' meetings, other corporate actions) shall be in accordance with the DVPCentre's Procedures;the list of the lender's possible actions in respect of pledged securities in case of the borrower'snon�compliance with the loan agreement and the contract of pledge (conclusion of a release�money agreement, submission of the instruction to sell the pledged securities on MICEX, and payment of the obligation out of the funds so received);the parties' agreement to the levy of execution against the object of pledge on an out�of�court basis.

The services for monitoring loan collateral are provided by NDC upon receipt of the instructions from thelender and borrower to transfer the pledged securities to the borrower's depository sub�account 'Blockedas pledged. Accounting for liabilities'.Specific parameters of the loan collateral monitoring services for individual borrowers, lenders and securi�ties pledged as collateral are determined according to the data in the parties' depository counter�instructionsand in the transaction questionnaire, specifying the terms of loan agreement and contract of pledge. Thelender and the borrower shall inform NDC of all changes in the contractual documents through issuing relevant counter�instructions.The borrower and the lender may set the parameters to be used for calculation of the price of loan collateralfor each issue of securities put in pledge.The terms of performance of obligations and the status of collateral are monitored at the close of the operating day and as changes in the amount of liabilities and collateral occur. The availability of sufficient security is a pre�condition for the processing of unilateral customer instructions that change the transactionparameters and/or the amount of loan collateral.NDC sends to the lender and the borrower a daily statement on the status of loan collateral and existingobligations at the end of the operating day.

Below is a summary of the terms of the operations we conduct with pledged securities:The order for handling pledged securities is stipulated in Depository Service Agreement (the Depository's Operating Rules and Procedures).The National Depository Centre records pledged securities on the basis of securities transfer counter�instructions received from the lender and the borrower.The Depository records the borrower's obligations under the loan agreement and the contract ofpledge in accordance with the counter�instructions issued by the lender and the borrower.NDC, under both parties' counter�instructions, transfers income on pledged securities to the borrower or the lender, depending on the type of the borrower's sub�account for recording the securities put in pledge.On record date, NDC enters the name of the holder of the depository account, into which thepledged securities are posted, in the register of securities owners.Transfers of pledged securities are made on the basis of counter�instructions issued by the lenderand the borrower.NDC makes transfers of pledged securities under the lender's instruction only if so provided for inthe Depository's Operating Rules and Procedures (e.g., if a depository transfer is to be made in the execution of the release�money offer accepted by the lender).

38

Recording of loan collateral

39

The status of loan collateral is monitored:after collateral revaluation at the close of the operating day;after changes in the amount of liabilities being accounted for by NDC (in case of changes in the loan transaction details, settlement of the obligations, including early or partial settlementbased on the borrower's unilateral instruction);in the process of substituting the object of pledge, releasing securities from pledge as per the lender's instruction (in the event of payment of release�money or the sale of pledged securities).

The collateral monitoring algorithm is as follows:The amount of total liabilities, i.e. the volume of all cash transactions related to the sub�accountfor the pledged securities concerned, is computed. Included in total liabilities are principal andinterest to be paid at the date of loan maturity.The current price of loan collateral is calculated as the discounted market value of all pledgedsecurities (the sum of the discounted market values of all securities put in pledge). The list ofsecurities specifies the maximum price of pledged securities as well as the discount rates of individual securities and discounts on release�money payments for each securities issue.In case of the release of securities from pledge under the lender's instruction (in the event ofpayment of release�money or the sale of pledged securities), the discount on release�money payment is used.The level of sufficiency of collateral is determined by comparing the sum of total liabilities with the current amount of collateral.

1.

2.

3.

4.

Recording of changes in the borrower's obligations at loan maturity

40

Any parameter of a loan transaction, contract of pledge, or the current amount of liabilities being accountedfor by NDC may be changed on the basis of counter�instructions issued by the creditor and the debtor, withthe matching of changes made. This method is used in the case of settling existing obligations betweenlender and borrower without the involvement of the banks that otherwise fulfil the settlement function forNDC. Counter�instructions are processed regardless of the status of collateral.NDC provides collateral monitoring services in accordance with the transaction details recorded by NDC at the date of execution of counter�instructions for registration or at the time of introduction of changes in the transaction details.NDC executes the debtor's settlement instructions only in the event of a transfer of funds to the creditor'saccount.If the borrower repays an amount exceeding that stated as its liabilities under the loan, the settlementinstruction is processed, with the amount of collateral stated as 'overpaid' in the advice of execution at the maturity date. That amount is not specified in subsequent reports.Obligations may be settled in full or in part, before or at the maturity date. In processing the settlementinstruction, the period of accrual of interest on the principal amount outstanding is taken into account. If the interest accrual section of the transaction questionnaire reads 'for the actual term of use of the loan',interest is accrued on the amount outstanding as from the date of change in the amount of liabilities. If thatsection reads 'for the entire period of the loan', interest is accrued on the amount of initial liabilities at the repayment date, as specified in the transaction questionnaire.

Termination of obligations by payment of release�money

41

DELIVERY VERSUS PAYMENT

The delivery�versus�payment method is used for settlements of stock market transactions, repurchaseagreements, securities lending, including payments in foreign currency and rouble transactions withinterregional settlements.The settlement of securities transactions on a DVP basis ensures that the principal risk of both parties'non�performance of their obligations and operational risk are eliminated. The buyer transmits funds and the payment order to the settlement bank, with the note to transfer the required amount from itsaccount to the seller's account on condition that NDC, as the DVP Centre, agrees to this transfer.

After the delivery of the payment order to the settlement bank, the bank suspends its execution and forwards its copy to NDC. The parties to the deal must submit two counter�instructions with payment detailsto NDC where the depository instructions are matched and their details are reconciled with the paymentorder. If all parameters agree, the underlying securities intended for delivery will be blocked in the deposito�ry account.Then NDC informs the settlement bank that the latter may perform the transfer of funds. If the cashaccount balance is sufficient, the required amount of funds is transferred to the seller, and the settlementbank notifies NDC of it. Upon receipt of the notification, NDC completes the transfer of securities. After thatthe buyer and the seller receive reports from NDC and the settlement bank.If the cash account balance is insufficient or if the payment order has not been processed for some rea�sons, NDC waits for the bank's confirmation of settlement of the cash leg until the end of the operating day.If there are not enough securities in the seller's depository account in NDC, the matched depository instruc�tions are also left in the 'waiting mode'. At the close of business, execution of all instructions that musthave been processed during the day, but remained unprocessed due to the insufficient amount of cashfunds or securities, is cancelled, with the explanation of reasons for non�execution forwarded to the parties.This DVP scheme can be employed both for the settlement of transactions between the NDC's depositorsand between their clients through using interdepository accounts. In 2001, within the framework of thisstructure the MICEX Settlement House and International Moscow Bank became settlement banks for roublepayments and settlements in US dollars and euros, respectively.

The NDC�MICEX Settlement House (SH) DVP Structure

42

The major advantages of the settlement system implemented by NDC are:settlement of securities transactions in various currencies;settlement on a DVP basis from T+0 to T+N;minimisation of settlement risks;safekeeping of securities in a reliable custodial institution;use of e�document interchange to support the execution of transactions.

It is in our plans to unite all those banks that perform the cash settlement function for NDC into a singleDVP network to offer our customers the opportunity to conduct multi�currency over�the�counter transactionson a DVP basis at minimum transactional costs. Under this scheme, our depositor may choose the mostconvenient method of cash settlements in accordance with DVP procedures, using:

its main cash account opened with the settlement bank;its additional client account under NDC administration;the NDC's wash account that allows the depositor to effect DVP settlements without having to open its own account with any of the participating settlement banks.

The only obligatory condition for customers to effect settlements on a DVP basis is the need to have ownerdepository accounts opened with NDC or to deposit their securities in their custodian's interdepositoryaccount with NDC.

NDC's settlement bank network

43

FOUNDERS OF NOT�FOR�PROFIT PARTNERSHIP 'THE NATIONALDEPOSITORY CENTRE'

The Central Bank of the Russian Federation (Bank of Russia)

The Moscow Interbank Currency Exchange (MICEX), a closed�type joint stock society

MEMBERS OF NOT�FOR�PROFIT PARTNERSHIP 'THE NATIONALDEPOSITORY CENTRE'

The Central Bank of the Russian Federation (Bank of Russia)

The Moscow Interbank Currency Exchange (MICEX), a closed�type joint stock society

Moscow Municipal Bank (The Bank of Moscow), an open�type joint stock society

The Savings Bank of Russia (Sberbank of Russia), a joint stock commercial bank

International Moscow Bank, a closed�type joint stock society

J.P. Morgan Chase & Co.

The Bank for Foreign Trade (Vneshtorgbank), an open�type joint stock society

Rossiysky Kredit Bank, an open�type joint stock society

Eurofinance, a joint stock commercial bank

Des

ign

“A

ztek

Med

ia”

The National Depository Centre

Address: 1/13, bld. 4, Sredny Kislovsky Pereulok, 103009 Moscow, Russia

Customer Services:Telephone: 7�(095) 956�2789

7�(095) 956�27907�(095) 956�2791

Fax: 7�(095) 956�2792E�mail: ord@ndc.ru

The NDC�St. Petersburg Branch

Address: 6�A Poltavskaya Str., Room 204, 193024St. Petersburg, Russia

Telephone: 7�(812) 380�10877�(812) 380�1088

The NDC Siberian Branch

Address: 27/29 Kommunisticheskaya Str.,Novosibirsk 630007, Russia

For letters: P.O.B. 131, 630099, NDCTelephone: 7�(3832) 10�21�50

7�(3832) 18�38�46