NBU Approves Procedure for Cash Leg Settlement of Securities Transactions

The NBU has approved the Regulation On the Procedure for Cash Leg Settlement of Delivery-Versus-Payment Transactions with Securities and Other Financial Instruments executed on the Exchange and Over the Counter (hereinafter the Regulation). 

The Regulation was drafted in accordance with Law No. 738–IX On Amendments to Certain Laws of Ukraine on Streamlining Investment and Introducing New Financial Instruments. The Regulation meets the requirements of international legislation governing securities transactions settlements and stipulates the implementation of best practices in these settlements. Specifically, it allows capital market participants to choose the method for the settlement of securities transactions and infrastructure that will guarantee such settlement.

The Regulation stipulates, in particular:

• requirements for entities that provide settlement services for DVP transactions with securities and other financial instruments
• procedure for the cash leg settlement of DVP securities transactions by recording in the accounting books of the clearing entity the changes in the rights and obligations concerning the funds paid in said transactions to reflect the transfer of ownership of these funds, including when said obligations are terminated after netting
• procedure for making the cash leg settlement of DVP transactions with securities and other financial instruments using the NBU’s System of Electronic Payments (SEP) technology
• procedure for providing the Central Securities Depository with access to the SEP-based settlement-servicing technology.

By using SEP technologies, market participants will be able to settle DVP securities transactions in "central bank money" through cash accounts of parties to these transactions opened directly with the NBU. This will make settlements more reliable and shore up investor confidence in Ukrainian capital markets. 

The Regulation was approved by NBU Board Resolution No. 130 On Approval of the Procedure for Cash Leg Settlement of Delivery-Versus-Payment Transactions with Securities and Other Financial Instruments executed on the Exchange and Over the Counter, dated 2 December 2021. The document will take effect on 3 January 2022.