Environmentally friendly and trusted market infrastructure

A market’s effective functioning and appeal are determined by its infrastructure, which should ensure high-quality and accessible information for end-users, brokers, and investors; reliable barriers to deter market manipulation and conflicts of interest; smoothly operating IT systems; and the ability to process substantial flows of information between issuers and providers of capital.

Cybersecurity is an integral part of Moscow Exchange Group’s risk management strategy and system. Measures taken to enhance information security ensure that the quality of management systems and the reliability of infrastructure are in line with global best practices.

Moscow Exchange Group’s objectives and the UN Sustainable Development Goals
	SDG 9.b Ensure the sustainability of the financial infrastructure

Major highlights in environmentally friendly and trusted market infrastructure


Risk management

Moscow Exchange Group has successfully established an integrated risk management system that complies with Russian regulatory requirements, as well as with leading international standards and best practices.

Role of management bodies in risk management
 

ESG risk management is handled by the Supervisory Board and other management bodies, such as participants in the Group’s integrated risk management system. They perform monitoring and control procedures.

The Supervisory Board of Moscow Exchange is responsible for establishing principles and approaches of the risk management system, including approving the risk management strategy, internal documents, and policies that stipulate actions to prevent the materialization of risks and minimise their consequences.

The Risk Management Committee of the Supervisory Board reviews risk management reports and develops recommendations for managing individual risk profiles, analyzes internal procedures and proposes measures for improving them, and monitors reports submitted. Similar structures have been established within the Group’s companies, including the Risk Committee of the NCC Supervisory Board and the Risk Committee of the NSD Executive Board. Moscow Exchange has also created a separate structural unit that is responsible for managing the risks of the market operator.

ESG risks and their potential impact on the Group’s operations are identified annually within the Group’s integrated risk management system. Risk acceptance and pre-approval of risk management issues are submitted for discussion at Supervisory Board meetings. The Executive Board is responsible for defining an acceptable level of risk.

The Group has been conducting regular training sessions for its employees to improve their risk identification skills. The sessions are part of the Risk Management System Development Strategy. Risk-management-related KPIs are included in the criteria used by management for assessing employee performance.

Key risk profile
 

Each of the Group’s companies faces different types of risk, depending on the specific nature of their activities. As the parent company of the Group, Moscow Exchange faces risks associated with the organisation of trading, as well as with transactions involving its own assets. The NSD, as a core element of Russia’s financial market infrastructure, faces risks in its depository activities. The key risk bearer in the Group is the NCC, which acts as a clearing house and central counterparty for all major markets of the Group, and as a commodity delivery facility for the commodities market. The Group’s financial and non-financial risk map is updated annually following the results of the risk identification procedure.

Internal audit and internal control
 

Moscow Exchange’s risk management system is based on the COSO principles and structured on the ‘three lines of defense’ model, which stipulates that risk management and internal control responsibilities be distributed among management bodies, business units responsible for control and coordination, and the internal audit function. The Group continues to improve its internal control system to maintain a high level of performance.

COSO Internal Control System

Compliance with international standards
 

The Group conducts an annual audit of its compliance with the CPMI-IOSCO Principles for Financial Market Infrastructures, the COSO Enterprise Risk Management Framework, and the Basel Committee on Banking Supervision risk management guidelines.

Every two years NCC successfully undergoes an operational audit by PwC (an international audit and consulting company) to check compliance with the requirements of the Central Bank of Russia. The audit covered the following components: management of risks of the central counterparty, assessment of the accuracy of the central counterparty model, stress-testing of risks of the central counterparty, determination of the allocated capital of the central counterparty, and recovery of financial stability of the central counterparty.

KEY DOCUMENTS:

• Market operator-related risk management rules
• Financial platform operator-related risk management rules
• Declaration on Business Continuity
• Business Continuity Policy of Moscow Exchange
• Regulatory Risk Management Policy of Moscow Exchange
• Personal Data Processing Policy of Moscow Exchange
• Regulation on the Audit Committee
• Regulation on the Internal Audit Service
• Declaration on Information Security
• Policy on Information Security Management of Moscow Exchange

RESPONSIBLE BODIES:

• Risk Management Committee of the Supervisory Board
• Risk Management Unit
• Internal Audit Service
• Internal Control Service

Information security
 

Information security (IS) means the protection of information and the equipment used to process it from accidental or deliberate interference, whether natural or artificial.

The main goal of ensuring IS is to appropriately protect the Company’s business processes, as well as to minimize IS risks when organizing trading and clearing services or when providing services on the Equity, Derivatives, and Money Markets. This goal is achieved by ensuring and continuously maintaining the confidentiality, integrity and accessibility of the Company’s protected information assets.

Moscow Exchange has implemented an information security management system that meets the requirements of Russian law and complies with ISO 27001. Organisational and technical activities are continuously conducted to ensure information security and manage IT infrastructure and information security incidents. The Security Operations Center is responsible for monitoring and responding to information security incidents. The Group regularly conducts information security audits, intrusion tests, and anti-phishing tests to manage risks. To protect against malicious attacks, Moscow Exchange uses its own equipment or a provider’s.

KEY DOCUMENTS:

• Policy on Information Security Management of Public Joint-Stock Company Moscow Exchange MICEX-RTS
• Declaration on Information Security
• Personal Data Processing Policy of Moscow Exchange
• Information Security Strategy

RESPONSIBLE BODIES:

• Operating Risk, Information Security, and Business Continuity Department
• Technical Policy Committee

Market access and customer experience
 

Moscow Exchange offers its clients information and technology services that provide real-time market data, as well as information on trading results and indices.

It works to increase the appeal of its services on organizing trade on the commodity and financial markets for investors and issuers.

Moscow Exchange’s technology infrastructure provides market participants with a safe and reliable environment that supports uninterrupted trading, clearing, and settlement operations. Reliability is ensured by the following factors:

• high-quality risk management;
• settlement infrastructure with capitalization for counterparties and the central counterparty;
• high standards of listing and information disclosure by issuers.

Moscow Exchange spares no efforts to ensure convenience for its customers:

• develops new products, services, and ways of trading;
• extends trading hours;
• implements new technologies for access to trading and market data;
• strengthens cooperation with other markets and exchanges.

KEY DOCUMENTS:

• Listing Rules of Moscow Exchange
• Clearing Rules of the National Clearing Center (JSC) for the Equity and Bond Markets
• Rules of National Settlement Depository JSC

RESPONSIBLE BODIES:

• Customer Service Department
• Customer Support Department
• Technical Access Department

Environmental efficiency
 

Moscow Exchange Group hosts annual events to reduce negative impacts on the environment. In its operations, the Group is guided by the laws and regulations of the Russian Federation as well as corporate standards that ensure compliance with environmental requirements.

Energy efficiency
 

The Group’s companies have an extensive network of server and computer equipment across two data centers. Therefore, improvements in energy efficiency are largely dependent on timely upgrades to the Group’s equipment and the use of IT technologies to transmit information.

Modern equipment consumes less energy: each new generation of servers is about 2–3% more efficient than the previous one. The Moscow Exchange Technology Policy sets timelines for upgrades of server equipment.

To reduce electricity consumption in our offices outside of business hours, hallway lighting systems, ventilation systems and office air-conditioning systems are automatically turned off. In winter, cold air from outside is used to cool server rooms.

Climate change impact
 

Direct GHG emissions are emitted by the Group’s corporate vehicles and the back-up diesel generators used to create electricity in case of emergency outages on the part of the supplier. Indirect emissions stem from the use of electricity and heat purchased from energy suppliers.

The Group’s modern fleet of vehicles is key to reducing direct GHG emissions: most of the corporate vehicles were manufactured after 2014, and all of them have engines with an environmental classification of IV or V.

Water consumption and waste water disposal

Moscow Exchange Group strives to improve the efficiency of water consumption at its offices. The Group receives water only from municipal water systems.

Wastewater (including from storm drains) is discharged only to municipal sewage systems, where it is treated in accordance with applicable regulations. No wastewater is discharged into bodies of water or natural habitats designated as nationally or internationally protected areas. The Group does not operate in regions affected by water scarcity.

Emissions of air pollutants

According to the results of the inventory of emissions of harmful (polluting) substances into the atmospheric air and their sources, it was established that the sources of impact on the atmospheric air are: emergency diesel generator set (DGS), operational printing station, motor transport, including three organised sources of emissions:

• exhaust and ventilation stack of diesel generator set;
• tank for diesel fuel;
• equipment of the Operational Printing Unit (paper cutting, creasing, paper boring, thermal bagging of paper products);

and one fugitive, which is exhaust emissions from vehicles entering and exiting the underground car park.

Taking into account that there are substances of hazard classes I and II in the air emissions, it is planned to carry out calculation methods of their emission value control, including cases when the technological equipment operates in the modified mode for more than three months to determine the indicators of pollutants in emissions from stationary sources.

Waste management
 

The activities of Moscow Exchange Group generate office waste (paper, non-industrial waste, fluorescent lamps, etc.), as well as e-waste and waste associated with the vehicle fleet. The Group aims to reduce its office waste and increase the share of recyclable waste. For this purpose, the Group has taken the following measures:

• introduction of electronic document management to reduce the generation of paper waste;
• collection and disposal of used batteries;
• use of bins for separate collection and disposal of non-industrial waste.

The Moscow Exchange Group does not handle waste on its own, but transfers it for treatment, utilisation, storage, neutralisation and disposal to specialised organisations holding appropriate licences for handling hazard classes III-V waste.

Waste removal from Moscow Exchange Group facilities is carried out under contracts concluded with specialised organisations in accordance with the requirements of environmental legislation, with subsequent request for documents confirming the actual recycling of waste or its disposal in a solid waste landfill (SDW).

Disposal of Hazard Class I-II waste (HLW) is carried out under the contract concluded with the federal operator.

After planned replacement of office computer hardware, Moscow Exchange promotes its continued use by offering it to employees or donating it to schools and orphanages.

The waste generated by Moscow Exchange Group does not directly affect any nationally or internationally protected areas.

KEY DOCUMENTS:

• Russian environmental legislation and standards
• Waste Generation Standards and Waste Disposal Limits approved by the Moscow Department of Resource Management and Environmental Protection up to February 2023
• Environmental Policy of Moscow Exchange
• Moscow Exchange Environmental Monitoring and Industrial Control Programme

RESPONSIBLE BODY:

• Administrative Department of Moscow Exchange