STATEMENT FROM THE CHAIRMAN OF THE SUPERVISORY BOARD
I am pleased to present you with the 2022 report of the Supervisory Board of Moscow Exchange.
The previous year brought about significant changes in the Russian financial market, which had a profound impact on the business of Moscow Exchange Group companies and our clients. This was primarily due to increased sanctions pressure from so-called developed countries and measures taken by the Russian authorities to maintain financial stability. The European Union imposed sanctions on NSD, while international financial institutions froze the assets of hundreds of thousands of Russian financial market participants, including cash, international shares and bonds. Russia had to abandon free movement of capital and full convertibility of the national currency, and the securities market was divided into onshore and offshore.
Amid these challenging circumstances, the effectiveness of our risk management system and central counterparty institution once again proved successful. Our experience in handling crisis situations enabled us to prevent the bankruptcy of financial intermediaries in 2022. The suspension of trading in certain market segments allowed participants to adjust to the new realities. We resumed trading in all markets within a short time, and our Group companies implemented all regulatory changes without experiencing operational risks or defaults. The Group ensured new business processes, such as the conversion of depositary receipts, transfer of Russian securities to the Russian infrastructure, issuance of replacement bonds, ruble payments on Eurobonds held in the Russian record-keeping infrastructure, and operation of the type C and K accounts.
The Supervisory Board provided guidance and direct involvement in these activities, maintaining throughout the year the necessary balance between the interests of shareholders, users, and other stakeholders in the Moscow Exchange Group’s operations.
While Moscow Exchange can no longer serve non-residents on the Equity and Bond Market and had to partially discontinue providing Russian clients access to international capital markets, our key markets adapted to the changed situation, allowing us to maintain business prospects and generate meaningful financial results. The Supervisory Board, in collaboration with the executive bodies of Moscow Exchange Group companies, responded promptly to the challenges of 2022 by adjusting priorities and even strategic directions of the Group’s development, recognizing that the approved development strategy had lost much of its relevance.
According to the Shareholders’ Agreement, NSD’s corporate governance is independent of the other Group companies. At the same time, the constructive interaction between the Group’s governing bodies and NSD’s governing bodies enables the adaptation of key business processes to ensure continuous service delivery for the Russian financial market. NSD’s governing bodies also took all possible measures to minimize the consequences of the unlawful extension of sanctions against NSD to clients’ assets. This work will continue in 2023.
Despite the demanding workload, the Supervisory Board worked to the extent necessary to develop the Group’s future strategy. This strategy is anticipated to be approved in the second half of 2023. It is evident that the new business environment and strategic priorities of Moscow Exchange Group companies will necessitate substantial capital investment. This investment will be required to execute the technical upgrade program and guarantee the sustainability of the Group’s business model in the medium and long term. The Group’s objective is to continue functioning as an efficient infrastructure for the Russian capital market that enables Russian citizens and the economy to meet their living and production needs. As part of the new strategy, the Group’s new dividend policy will also be approved.
For the Board to perform its assigned functions effectively, its combined competence and coherence as a team are crucial. In 2022, a personal self-assessment of the competencies of its directors was carried out to enable succession planning for the upcoming years. The Supervisory Board proposes that the shareholders return to the previous number of twelve Supervisory Board members and adopt such a resolution at the Annual General Meeting of Shareholders (the number of Supervisory Board members to be elected at the Annual General Meeting in 2023 has been determined as nine in accordance with the shareholders’ resolution).
If the matter is approved, the Supervisory Board will convene an Extraordinary General Meeting of Shareholders to form a Board of 12 members. The Supervisory Board invites the shareholders to support the nine nominees as a provisional (interim) resolution at the AGM.
Since the pandemic, the Annual General Meeting of Shareholders has been held in absentia. The 2022 AGM will also be held in absentia. Individual shareholders of the Exchange, whose number has reached almost half a million, will be able to use the electronic service E-voting developed by NSD to vote at the meeting.
For 2022, the Supervisory Board recommended to the Annual General Meeting of Shareholders a dividend of RUB 4.84 per share. The primary factors that influenced the amount of the recommended dividend were the need to comply with regulatory requirements in view of the growth prospects of the markets, the technological upgrade programme and the need to invest in development.
In conclusion, I would like to thank Moscow Exchange’s partners, clients and shareholders for their loyalty and understanding as well as the management and employees of Moscow Exchange Group for their dedicated work and achievements in 2022.