Central Depository AD (“CDAD”) has made the following announcement related to its upcoming migration to TARGET2-Securities (“T2S”) on 11 September 2023:
- At CDAD’s Board of Directors meeting on 30 August 2023, the CSD has proposed a decision to introduce new fees in its Fee Schedule which are mainly T2S-related and shall enter into force as of 20 October 2023. The proposal is subject to a review by CDAD’s User Committee.
UniCredit Bulbank will analyze the above fee changes to be introduced by CDAD and share further information with its clients upon completion of the analysis.
- For the purpose of migration to T2S, CDAD will temporarily suspend the transfers in T2S-eligible financial instruments in the period 5 - 8 September 2023. A preliminary list (in Bulgarian only) of the EUR-denominated financial instruments which are to be migrated to T2S can be found on CDAD’s website - https://csd-bg.bg/au/news.xhtml.
Final list of financial instruments subject to T2S migration will be made available by CDAD within the course of the week 4 - 8 September 2023.
- As of 11 September 2023, settlement of CDAD-eligibile financial instruments at T2S will be allowed only under DVP Settlement Model 1 (gross settlement of securities and cash). DVP Settlement Model 2 (gross settlement of securities, net settlement of cash) for trades at T2S will be postponed until the implementation of EUR currency in Bulgaria and the migration of all CDAD-eligible financial instruments to T2S.
The above change in process has been explained by CDAD with the low number of trades and lack of effectiveness of the netting of such trades, as well as with the complex netting algorithms and potential operational complications for CDAD members.
- The community tests for DVP Settlement Model 2 will be postponed until 1 January 2024.
Considering the above new details announced by CDAD, UniCredit Bulbank will amend its procedure for putting in place optional changes for its clients instructing settlement at T2S as of 11 September 2023, as follows:
1. Clients will be able to instruct with field :95P::PSET//TRGTXE2S in Subsequence E1 SETPRTY for settlement at T2S. It should be noted that even if a client continues to instruct with :95P::PSET//CEDPBGSF (for settlement at CDAD) or :95P::PSET//BNBGBGSF(PRM) (for settlement at BNB), accordingly, UniCredit Bulbank will not reject the respective client instruction but process it, even if it is related to settlement at T2S.
2. Amended: As long as only DVP Settlement Model 1 (gross settlement of securities and cash) is allowed for settlement at T2S by CDAD, UniCredit Bulbank will instruct CDAD for settlement at T2S under DVP Settlement Model 1 by default. UniCredit Bulbank will disregard the information, if any, populated by clients in field :22F::CASY// in Sequence E SETDET of their settlement instructions. Clients are strongly encouraged not to use the above-mentioned field, in order to avoid confusion in the settlement process in the interim period until DVP Settlement Model 2 (gross settlement of securities, net settlement of cash) is also possible for settlement of CDAD-eligible financial instruments at T2S.
Impact on investors: As of 11 September 2023, clients can optionally update their settlement instructions for transactions settled by CDAD and BNB at T2S, however it shall be noted that CDAD will initially allow only DVP Settlement Model 1.