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NBU Improves Conditions for Depository Activity and Settlements of Transactions with Government Securities

22 December 2017

Press Release


The National Bank of Ukraine is updating approaches to depository activity with government securities, by standardizing and expanding the capacity of custodian institutions, and introducing new types of settlements for securities transactions on the OTC market.


To this end, the NBU approved a new Regulation on the Conduct of Depository and Clearing Activities and Ensuring the Settlement under Securities Transactions by the National Bank of Ukraine.


Approval of the regulation in a fundamentally new version aims to make it more customer-friendly, with the same-type description of all processes, operations and rules of customer service, as well as to bring the Regulations to the uniform basic requirements for custodian activity in Ukraine and international standards of custodian accounting.


Being more logical and better structured, the new Regulation also contains a number of innovations.


First, the document introduces new calculation models that will create alternative opportunities for stock market participants when dealing with government securities. In particular, the DVP model was introduced. It is a mechanism for the depository to guarantee the settlement of transactions with securities concluded in the OTC market, and it provides that the ownership title for securities passes to the new owner only after payment. This new model is a reliable alternative to settlements through the Settlement Center and will create the preconditions for the previously announced abolition of the monopoly of the SCs for settling securities transactions.


Second, the new Regulation clearly defines the procedure for settlement on the FOP basisto ensure the settlement of government securities in the OTC market in a situation where the parties do not require any guarantees of settlements from the stock market infrastructure and regulate it by terms and conditions of their contract.


Third, for new clients of the NBU Depository, the procedure for opening an account is simplified. Thus, the list of documents to be submitted for opening an account was reduced significantly, and the requirements for their form were simplified, in particular, the requirement for documents certification with a seal was lifted. In addition, the actual procedure for reviewing the documents will be accelerated and simplified due to the introduction of new principles of interaction between the NBU Depository and its clients.


The regulation also introduces additional measures to protect investors’ rights.


Thus, now it is possible to open so-called “segregated accounts” - individual personalized accounts for all types of depositors at the level of the NBU Depository. This will help both simplify accounting of securities and improve the security of information storage about the rights to securities of clients. In addition, such a measure will increase the flexibility of service, as well as expand the list of services that depository institutions provide to their clients.


In addition, in order to preserve the rights to assets registered with the depository institution which terminates its activity, the procedures of dealing with such assets were clearly defined. This will be another step towards improved investor’s rights protection.


The new Regulation also sets a legal basis for the entry of an international depository into the Ukrainian stock market. To this end, the procedure for interaction with international depositories and operations servicing on the depository account in an international depository are defined, as well as the procedure for opening and maintaining an account of an international depository at the NBU Depository.


The mentioned Regulation is approved by NBU Board Resolution No. 140 On Approval of the Regulation on the Conduct of Depository and Clearing Activities and Ensuring the Settlement under Securities Transactions by the National Bank of Ukraine dated 21 December 2017.


The main part of the Regulation comes into force on 22 December 2017, with the exception of some innovations that come into force on 2 April 2018, after the introduction of the updated software to the depository.

Last modification   22.12.2017