UniCredit Bulbank AD
Summary:
The Bulgarian National Bank (“BNB”) has implemented some changes related to CSDR requirements.
Fri, 01/04/2022
Following promulgation of the amended Ordinance No. 31 of 4 October 2007 on Government Securities Settlement (“Ordinance No. 31”) in the State Gazette on 18 March 2022, the Bulgarian National Bank has put into force the new CSDR system functionalities in ESROT (the Electronic System for Registration and Servicing of Trades in Government Securities).
The CSDR-related changes in Ordinance No. 31 are the following:
- Recycling by BNB of failed settlement instructions within 4 business days.
- Bilateral cancellation of matched settlement instructions whose settlement has failed within 4 business days.
- Accrual and distribution of penalty interest for failed settlement on a daily basis.
- Penalty interest will vary per reason for fail, i.e. lack of securities or cash, and nominal value will be used for calculation in case (i) there is no market price available or (ii) the available market price is below the nominal value.
- Monitoring of penalty interest will be possible via the web interface of ESROT. No MT537 reporting will be introduced by BNB.
- BNB will report settlement fails to the Ministry of Finance and provide public disclosure on such fails via its website on an annual basis.
- Partial settlement and Hold & Release mechanism will not be implemented by BNB.
Impact on investors: Clients should note that CSDR requirements related to settlement discipline have been implemented by the Bulgarian National Bank.