The Bulgarian Central Depository and the Bulgarian National Bank (BNB) recently concluded three milestone projects that aim to develop and deepen the nascent Bulgarian capital markets.
Settlement of government securities at the Central Depository
The Central Depository functions as a central registry for all securities and security settlement systems with the exception of Bulgarian governmental securities, which, until recently, were settled and booked through ESROT, the BNB-operated governmental securities settlement system.
As of early February, the Central Depository has become a member of ESROT, and can operate as a settlement and book-entry system for government-security transactions, traded on a regulated market. As a result, Members of the Central Depository, which represent a larger pool of investors than the members ESROT, can settle governmental security transactions between themselves and, more importantly, book government securities at the sub-accounts of their clients.
These arrangements between the Central Depository and BNB will provide additional liquidity to the market through a larger investor base, which will now have access to the Bulgarian treasury market.
Transaction settlements in euro
In addition, the Governing Council has approved the Central Depository as а TARGET 2 ancillary system registered with the BNB. This provides the Central Depository with the opportunity to settle transactions in euro, including corporate transactions such as distribution of dividends denominated in euro, and payment of interest from bonds (including euro denominated government bonds). According to analysts, the benefit of this change to euro settlements is that it will facilitate transactions with foreign depositories.
As part of the technical preconditions, a non-bank member of the Central Depository (eg Investment intermediaries) must open a euro settlement account with a Central Depository bank, and inform the Depository that it wishes to provide such services.
Faster settlements in Bulgarian currency
Pursuant to Regulation (ЕU) No. 909/2014, the BNB has introduced changes to the Real-time Gross Settlement System (RINGS), whereby the securities settlement system operated by the Central Depositary AD can submit an additional third-settlement request. This change would increase the speed of securities settlements in local currency. The new schedule should be operational by the end of Q1 2018.
The Central Depository has developed a proprietary online platform (EPOS) for organising and conducting General Meetings for the shareholders of public companies. The platform allows shareholders to cast their votes from a distance and prior to the actual meeting. It also calculates votes, generates entries into shareholders books, appoints proxies, and conducts live streaming of General Meetings. The aim of the platform is to reduce transaction and logistical costs for shareholders, and improve corporate governance and shareholder participation in public companies.