Statement from the Chairman of the Supervisory Board

Statement from the Chairman of the Supervisory Board

Dear shareholders,

I am pleased to present you with the 2020 report of the Supervisory Board of Moscow Exchange.

The past year will be remembered for a pandemic that brought significant changes to the business and social lives of people and companies around the world. Like many companies, Moscow Exchange had to move all of its operations to a remote format and significantly modify internal processes as quickly as possible. This action was taken to protect employees’ health and to ensure, as much as feasibly possible, business continuity during the quarantine period when the virus was most prevalent. This most challenging work was accomplished without compromising the interests and business of the Exchange’s clients, and the ideas used to redesign internal processes were extended to consider how we can incorporate digital technologies when managing the group’s business in the future.

The Annual General Meeting of Shareholders held in April 2020 was convened on the planned date, as expected. Given the restrictive measures related to the pandemic, the meeting was held digitally for the first time and Company shareholders were able to listen to management presentations online and ask questions via a special web conference. On the recommendation of the Supervisory Board, the Annual General Meeting decided not to make use of the dividend deferral granted by the regulator. As a result, dividends were paid to shareholders on the usual pre-pandemic date.

The Annual General Meeting of the Shareholders will also be held digitally in 2021. More than 190,000 individual Exchange shareholders will be able to use the E-voting system developed by the National Settlement Depository, a non-banking credit institution within the Moscow Exchange Group, to vote at the meeting.

Moscow Exchange reported strong operational and financial results for 2020. A massive inflow of private investors, a boosted IPO market, the expansion of trading hours and the launch of new products and services all led to record trading volumes and the highest ever level of fee income.

The successful financial performance allowed the Supervisory Board to recommend that the Annual General Meeting increase dividends by almost 20% compared to the previous year. The share of profits that Moscow Exchange allocates to the payment of dividends is one of the highest among Russian public companies, which indicates the high quality of the Company’s corporate governance.

During the reporting year, in addition to the Company’s usual business issues, the development of the range of products and services, conducting asset transactions and the improvement of the incentive system for the Company’s Executive Board members, the Supervisory Board reviewed and approved a number of important strategic documents designed to develop a modern corporate culture and improve the quality of the Company’s risk management. Moscow Exchange Group’s Internal Audit Strategy was adopted and a profound change in the Company’s compliance culture was supported. Moscow Exchange Group’s Information Security Development Strategy for 2021–2024, Moscow Exchange Group’s Risk Management System Development Strategy through 2024 and Moscow Exchange’s Information Technology Development Strategy were all approved. Under the guidance of the Supervisory Board, a Memorandum of Understanding was developed between the NBCO Central Counterparty National Clearing Centre (JSC) and Moscow Exchange, which aims to improve the quality of operational risk control in interactions between the Group’s trading and clearing systems. The Supervisory Board also devoted part of its activity to investigating global innovation trends in exchange technologies and their application in advanced exchange business models.

2020 saw personnel changes at the management level. Andrey Burilov and Alexey Khavin were elected as members of the Executive Board, while Anna Kuznetsova stepped down. Personnel changes needed to develop more modern business strategies also took place amongst departmental heads.

In 2020, composition of the Exchange’s Supervisory Board was substantially renewed to handle the adoption of a new development strategy and the need to increase expertise in information technology, financial infrastructure and digital products. The new Board proved its effectiveness and it is, therefore, proposed that its composition for 2021 remain almost unchanged. The only change to be proposed to the Annual General Meeting is the election of Sergey Lykov, who served on the Board for many years, in place of Andrey Golikov, who has been a Board member for 18 years. Andrey Golikov’s expertise and in-depth experience remain strongly sought after within the Group, namely in the National Settlement Depository Supervisory Board and the National Clearing Centre Supervisory Board, on which he will continue to serve. I would like to take this opportunity to express my gratitude to Andrey for his enormous contribution to the development of the Company and his active involvement in the work of the Exchange’s Supervisory Board.

Environmental, social and governance (ESG) criteria play an increasingly important role in investor decision making in global capital markets. Moscow Exchange is working hard to build a dialogue between investors, issuers and regulators to facilitate responsible investment. The Exchange established the Sustainable Development Sector to support green and social bonds. In cooperation with RSPP, sustainability indices are calculated on a daily basis and exchange-traded mutual funds have been formed based on these indices. In 2020, the Exchange issued its first sustainability development report and, in 2021, plans to publish a Best Practices Guideline for Responsible Finance and Sustainable Development (ESG) aimed at issuers. Every year, in early March, the Exchange holds a ceremony, kicked off by ringing the Exchange’s opening bell, dedicated to gender equality. Recognition of gender equality is reflected in the corporate culture of the Exchange, with women accounting for 45% of Exchange employees.

In conclusion, I would like to thank Moscow Exchange’s clients and shareholders for their trust, support and effective cooperation in developing the Russian financial market. The Supervisory Board of Moscow Exchange, in close cooperation with the Company’s management, will continue to work on developing the financial market infrastructure, increasing its reliability for all participants, and thereby ensuring growth of shareholder value.

Oleg Viyugin Chairman of the Supervisory Board