PROVISION OF CENTRAL BANK OF THE RUSSIAN FEDERATION

of October 2, 2017 No. 606-P

About procedure for reflection on accounts of financial accounting by credit institutions of transactions with securities

This Provision based on article 57 of the Federal Law of July 10, 2002 No. 86-FZ "About the Central bank the Russian Federation (Bank of Russia)" (The Russian Federation Code, 2002, No. 28, Art. 2790; 2003, No. 2, Art. 157; No. 52, Art. 5032; 2004, No. 27, Art. 2711; No. 31, Art. 3233; 2005, No. 25, Art. 2426; No. 30, Art. 3101; 2006, No. 19, Art. 2061; No. 25, Art. 2648; 2007, No. 1, Art. 9, Art. 10; No. 10, Art. 1151; No. 18, Art. 2117; 2008, No. 42, Art. 4696, Art. 4699; No. 44, Art. 4982; No. 52, Art. 6229, Art. 6231; 2009, No. 1, Art. 25; No. 29, Art. 3629; No. 48, Art. 5731; 2010, No. 45, Art. 5756; 2011, No. 7, Art. 907; No. 27, Art. 3873; No. 43, Art. 5973; No. 48, Art. 6728; 2012, No. 50, Art. 6954; \Art. U-2116\53, 7591, Art. 7607; 2013, No. 11, Art. 1076; No. 14, Art. 1649; No. 19, Art. 2329; No. 27, Art. 3438, Art. 3476, Art. 3477; No. 30, Art. 4084; No. 49, Art. 6336; No. 51, Art. 6695, Art. 6699; No. 52, Art. 6975; 2014, No. 19, Art. 2311, Art. 2317; No. 27, Art. 3634; No. 30, Art. 4219; No. 40, Art. 5318; No. 45, Art. 6154; No. 52, Art. 7543; 2015, No. 1, Art. 4, Art. 37; No. 27, Art. 3958, Art. 4001; No. 29, Art. 4348, Art. 4357; No. 41, Art. 5639; No. 48, Art. 6699; 2016, No. 1, Art. 23, Art. 46, Art. 50; No. 26, Art. 3891; No. 27, Art. 4225, Art. 4273, Art. 4295; 2017, No. 1, Art. 46; No. 14, Art. 1997; No. 18, Art. 2661, Art. 2669; No. 27, Art. 3950; No. 30, Art. 4456; No. 31, the Art. 4830), parts 6 of article 21 of the Federal Law of December 6, 2011 No. 402-FZ "About financial accounting" (The Russian Federation Code, 2011, No. 50, Art. 7344; 2013, No. 26, Art. 3207; No. 27, Art. 3477; No. 30, Art. 4084; No. 44, Art. 5631; No. 51, Art. 6677; No. 52, Art. 6990; 2014, No. 45, Art. 6154; 2016, No. 22, Art. 3097; 2017, No. 30, the Art. 4440) (further - the Federal Law of December 6, 2011 No. 402-FZ), article 6 of the Federal law "About Banks and Banking Activity" (The sheet of the Congress of People's Deputies of RSFSR and the Supreme Council of RSFSR, 1990, No. 27, Art. 357; Russian Federation Code, 1996, No. 6, Art. 492; 1998, No. 31, Art. 3829; 1999, No. 28, Art. 3459, Art. 3469; 2001, No. 26, Art. 2586; No. 33, Art. 3424; 2002, No. 12, Art. 1093; 2003, No. 27, Art. 2700; No. 50, Art. 4855; No. 52, Art. 5033, Art. 5037; 2004, No. 27, Art. 2711; No. 31, Art. 3233; 2005, No. 1, Art. 18, Art. 45; No. 30, Art. 3117; 2006, No. 6, Art. 636; No. 19, Art. 2061; No. 31, Art. 3439; No. 52, Art. 5497; 2007, No. 1, Art. 9; No. 22, Art. 2563; No. 31, Art. 4011; No. 41, Art. 4845; No. 45, Art. 5425; No. 50, Art. 6238; 2008, No. 10, Art. 895; 2009, No. 1, Art. 23; No. 9, Art. 1043; No. 18, Art. 2153; No. 23, Art. 2776; No. 30, Art. 3739; No. 48, Art. 5731; No. 52, Art. 6428; 2010, No. 8, Art. 775; No. 27, Art. 3432; No. 30, Art. 4012; No. 31, Art. 4193; No. 47, Art. 6028; 2011, No. 7, Art. 905; No. 27, Art. 3873, Art. 3880; No. 29, Art. 4291; No. 48, Art. 6730; No. 49, Art. 7069; No. 50, Art. 7351; 2012, No. 27, Art. 3588; No. 31, Art. 4333; No. 50, Art. 6954; No. 53, Art. 7605, Art. 7607; 2013, No. 11, Art. 1076; No. 19, Art. 2317, Art. 2329; No. 26, Art. 3207; No. 27, Art. 3438, Art. 3477; No. 30, Art. 4084; No. 40, Art. 5036; No. 49, Art. 6336; No. 51, Art. 6683, Art. 6699; 2014, No. 6, Art. 563; No. 19, Art. 2311; No. 26, Art. 3379, Art. 3395; No. 30, Art. 4219; No. 40, Art. 5317, Art. 5320; No. 45, Art. 6144, Art. 6154; No. 49, Art. 6912; No. 52, Art. 7543; 2015, No. 1, Art. 37; No. 17, Art. 2473; No. 27, Art. 3947, Art. 3950; No. 29, Art. 4355, Art. 4357, Art. 4385; No. 51, Art. 7243; 2016, No. 1, Art. 23; No. 15, Art. 2050; No. 26, Art. 3860; No. 27, Art. 4294, Art. 4295; 2017, No. 14, Art. 2000; No. 18, Art. 2661, Art. 2669; No. 25, Art. 3596; No. 30, Art. 4456; No. 31, the Art. 4754, the Art. 4830) and according to the solution of the Board of directors of the Bank of Russia (the minutes of the Board of directors of the Bank of Russia of September 27, 2017 No. 26) establish for credit institutions procedure for reflection on accounts of financial accounting of transactions with securities.

Chapter 1. General provisions

1.1. Transaction date on acquisition and disposal (realization) of security the date of transition of the property rights to security determined according to article 29 of the Federal Law of April 22, 1996 No. 39-FZ "About the security market" is (The Russian Federation Code, 1996, No. 17, Art. 1918; 2001, No. 33, Art. 3424; 2002, No. 52, Art. 5141; 2004, No. 27, Art. 2711; No. 31, Art. 3225; 2005, No. 11, Art. 900; No. 25, Art. 2426; 2006, No. 1, Art. 5; No. 2, Art. 172; No. 17, Art. 1780; No. 31, Art. 3437; No. 43, Art. 4412; 2007, No. 1, Art. 45; No. 18, Art. 2117; No. 22, Art. 2563; No. 41, Art. 4845; No. 50, Art. 6247; 2008, No. 52, Art. 6221; 2009, No. 1, Art. 28; No. 18, Art. 2154; No. 23, Art. 2770; No. 29, Art. 3642; No. 48, Art. 5731; No. 52, Art. 6428; 2010, No. 17, Art. 1988; No. 31, Art. 4193; No. 41, Art. 5193; 2011, No. 7, Art. 905; No. 23, Art. 3262; No. 29, Art. 4291; No. 48, Art. 6728; No. 49, Art. 7040; No. 50, Art. 7357; 2012, No. 25, Art. 3269; No. 31, Art. 4334; No. 53, Art. 7607; 2013, No. 26, Art. 3207; No. 30, Art. 4043, Art. 4082, Art. 4084; No. 51, Art. 6699; No. 52, Art. 6985; 2014, No. 30, Art. 4219; 2015, No. 1, Art. 13; No. 14, Art. 2022; No. 27, Art. 4001; No. 29, Art. 4348, Art. 4357; 2016, No. 1, Art. 50, Art. 81; No. 27, Art. 4225; 2017, No. 25, Art. 3592; No. 27, Art. 3925; No. 27, Art. 3925; No. 30, the Art. 4444) (further - the Federal Law of April 22, 1996 No. 39-FZ) or terms of the contract which subject is acquisition or disposal (realization) of security if it is stipulated by the legislation the Russian Federation.

In financial accounting the specified transactions are reflected in the basis of source accounting documents confirming transition of the property rights to security, or in case of accomplishment determining transition of the property rights to security of terms of the contract which subject is acquisition or disposal (realization) of security.

1.2. In case of initial recognition securities are estimated at fair value, increased in case of the securities estimated not at fair value through profit or loss, on cost amount according to the transaction, the securities connected with acquisition.

Assessment of fair value of security is performed according to the International accounting standard (IFRS) 13 "Assessment of fair value" enacted in the territory of the Russian Federation by the order of the Ministry of Finance of the Russian Federation of December 28, 2015 No. 217n "About introduction of International accounting standards and Explanations of International accounting standards in action in the territory of the Russian Federation and about recognition No. which voided some orders (separate provisions of orders) of the Ministry of Finance of the Russian Federation", the registered Ministry of Justice of the Russian Federation on February 2, 2016 40940, on August 1, 2016 No. 43044 (further - the order of the Ministry of Finance of the Russian Federation No. 217n), with amendments, enacted in the territory of the Russian Federation by the order of the Ministry of Finance of the Russian Federation of June 27, 2016 No. 98n "About introduction of documents of International accounting standards in action in the territory of the Russian Federation and about recognition voided some orders of the Ministry of Finance of the Russian Federation", the registered Ministry of Justice of the Russian Federation on July 15, 2016 No. 42869 (further - the order of the Ministry of Finance of the Russian Federation No. 98n), and the order of the Ministry of Finance of the Russian Federation of July 11, 2016 No. 111n "About enforcement and cancellation of documents of International accounting standards in the territory of the Russian Federation", the registered Ministry of Justice of the Russian Federation on August 1, 2016 No. 43044 (further - the order of the Ministry of Finance of the Russian Federation No. 111n) (further - IFRS (IFRS) 13).

Methods of determination of fair value affirm credit institution as accounting policy.

1.3. After initial recognition and to derecognition securities are estimated on depreciated cost which is determined according to Appendix A of the International accounting standard (IFRS) 9 "Financial instruments" at editions of 2014 enacted in the territory of the Russian Federation by the order of the Ministry of Finance of the Russian Federation No. 98n with the amendments enacted in the territory of the Russian Federation by the order of the Ministry of Finance of the Russian Federation No. 111n (further - IFRS (IFRS) 9), or at fair value depending on their classification provided by Chapter 2 this provision.

1.4. The income added in the form of percent, the coupon, discount belongs to interest incomes on securities (further - interest incomes).

Recognition in financial accounting of interest incomes on securities is performed according to the Provision of the Bank of Russia of December 22, 2014 No. 446-P "About procedure for determination of the income, expenses and other comprehensive income of credit institutions", the registered Ministry of Justice of the Russian Federation on February 6, 2015 No. 35910, on December 8, 2015 No. 40025, on December 12, 2017 No. 49219 (further - the Provision of the Bank of Russia No. 446-P).

Depreciated cost is determined by straight-line method or effective interest rate method (further - EPS) according to IFRS (IFRS) 9.

Methods of determination of depreciated cost affirm credit institution as accounting policy.

When calculating depreciated cost with use of straight-line method of recognition of interest income percent and coupons are charged at the rate established by conditions of release of the debt security, the amounts of discount and award belong into the balance sheet account on accounting of interest incomes regularly during circulation period and (or) repayment of the debt security.

Need of application of the EPS method to securities if the repayment period of securities from the date of their acquisition does not exceed one year or if the difference between the depreciated cost of securities determined by the EPS method, and the depreciated cost of securities determined by straight-line method is not essential, is determined by credit institution.

Criteria of materiality are developed taking into account Item 7 of the International accounting standard (IAS) 1 "Accounts presentation" enacted in the territory of the Russian Federation by the order of the Ministry of Finance of the Russian Federation No. 217n with the amendments enacted in the territory of the Russian Federation by the order of the Ministry of Finance of the Russian Federation No. 98n, the order of the Ministry of Finance of the Russian Federation No. 111n (further - IFRS (IAS) 1), and affirm credit institution as accounting policy.

When calculating depreciated cost with use of the EPS method interest incomes are charged on EPS. EPS for calculation of depreciated cost is determined according to Appendix A of IFRS (IFRS) 9.

Depreciated cost is determined by banks with the universal license at least once a month the last calendar day of month, and also for date of derecognition of debt securities.

Depreciated cost of debt securities will be determined by banks with the basic license and non-bank credit institutions at least once a quarter the last calendar day of quarter, and also for date of derecognition of debt securities.

Frequency of determination of depreciated cost of security affirms credit institution as accounting policy.

The credit institution shall review the expected cash flows according to debt securities depending on change of estimations of payments and receipts.

Change of depreciated cost of debt securities as a result of review of the expected cash flows is reflected taking into account the following.

Increase in depreciated cost of debt securities is reflected accounting entry:

The debit of the balance sheet account on accounting of the adjustments increasing the cost of debt securities

The account No. 70601 credit "Income" (in the report on financial results (further - OFR) on symbols of the Section 2 "Income (except Percentage) from Transactions with the Acquired Debt Securities" of part 2 "Operating incomes").

Reduction of depreciated cost of debt securities is reflected accounting entry:

The debit of the account No. 70606 "Expenses" (in OFR on symbols of the Section 2 "Expenses on Transactions with the Acquired Debt Securities" of part 4 "Operating expenses")

The credit of the balance sheet account on accounting of the adjustments reducing the cost of debt securities.

If necessary recalculation of provision under the expected credit losses is made.

The value adjustment of debt securities is performed in case of difference of EPS used for calculation of depreciated cost in the accounting period from the interest rate established by conditions of release of the debt security.

1.5. Book value of securities is created on accounts on accounting:

securities,

the interest incomes added on securities

the revaluation increasing or reducing the cost of securities

the adjustments increasing or reducing the cost of securities

reserves on possible losses,

adjustments of reserves on possible losses.

1.6. Write-off of security from accounting on balance sheet accounts is performed in case of assignment of rights of property on security, repayment of security or impossibility of realization of the rights affirmed by security and also in cases, stipulated in Item 3.2.3 IFRS (IFRS) 9.

The security is charged off balance sheet accounts in completion date by person obliged on security (further - the issuer), obligations on repayment of the debt security.

1.7. Acquisition of rights (transfer) of the property rights to securities on the transactions made on the terms of urgency, recoverability and the paid nature (further - the transactions made on returnable basis), is the basis for initial recognition (derecognition) of securities if requirements for derecognition, stipulated in Item 3.2.6 IFRS (IFRS) 9 are fulfilled.

1.8. In financial accounting transactions according to each transaction regardless of the place and method of their making are reflected. Balancing of financial results (the income and expenses) according to different transactions on acquisition and securities sale is not allowed.

1.9. Analytics of debt securities are kept on the personal accounts opened on balance sheet accounts on accounting of securities of the second procedure with currency code of nominal (obligation).

Analytics of equity securities are kept in rubles or in nominal currency.

If securities are acquired for the currency other than currency of nominal (obligation), their cost is determined by the official rate of foreign currency established by the Bank of Russia in relation to ruble (further - the official rate) or by cross-rate of foreign currencies proceeding from the official rates established for foreign currencies.

On the issued securities and securities having the international identification code of security (ISIN) or the code assigned by the national registration agency or the organization replacing it in this quality (further - identification code of security), analytics shall provide information according to the chosen method of value assessment of the disposed (realized) issued securities by releases.

On the securities which are not relating to issued, or the securities which do not have identification code of security, analytics shall provide information on each security or batch of securities.

1.10. Financial accounting of the interest income according to debt securities paid in case of acquisition is led on front (front) the account (accounts) "The added percent (to obtaining)" or on front (front) the account (accounts) of release (separate security or batch).

Financial accounting of the income added in the form of percent on debt securities is led on separate (separate) front (front) the account (accounts) "The added percent (to obtaining)" (further - personal account on accounting of the added interest receivable), opened (opened) on balance sheet accounts of the second procedure with currency code in which interests are paid (coupons are settled).

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