Euroclear cuts bond deal with Russian exchange

By Luke Jeffs

LONDON, Oct 4 (Reuters) - Russian bond trading is set to become easier for the world's top investment banks under a deal cut by the Russian stock market and one of Europe's top share settlement firms.

Euroclear, a Brussels-based settlement firm owned by the world's top trading banks, said on Thursday it had won approval from the Moscow Exchange, the largest Russian exchange, to start handling Russian government bonds, a deal which could later be expanded into corporate debt.

This will, in effect, enable Euroclear clients to trade Russian bonds on the same platform they use to buy and sell some of Europe's most liquid debt and stocks, which should boost demand for Russian bonds.

Prior to this agreement, international investment houses had to connect directly to the Russian exchange's own settlement platform, known as the National Settlement Depository (NSD), or use a local brokerage to trade these instruments.

The Russian government bond market is worth some $175 billion, according to the firms, but trading has been muted compared with other European sovereign debt because it was relatively inaccessible to the largest international trading firms.

"Client abilities to conduct cross-border transactions in accounts opened with our organisations means increased transparency and, as a consequence, improved attractiveness of the Russian market for global investors," said Eddie Astanin, chief executive of NSD.

Euroclear did not commit to a launch date for the new Russian offering because the service requires further regulatory clearance, according to a source close to the firms.

Euroclear and its main European rival Clearstream, which is owned by Deutsche Boerse , settle trades on behalf of bank and brokers by moving stock and cash between trading counterparties.

The agreement between Euroclear and NSD is the latest signal the Moscow Exchange, which was formed in December by the merger of Russia's top stock and futures markets, is keen to attract more trades from the world's top investment banks and brokers.

(Editing by David Holmes)

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