T2S Preparations in Bulgaria – BNB Webinar

UniCredit Bulbank AD
Bulgarian National Bank held a TARGET2-Securities (“T2S”)-related webinar on 29 May 2023.
Tue, 30/05/2023
On 29 May 2023 the Bulgarian National Bank (“BNB”) organized a T2S webinar with market participants to update on the progress of BNB’s readiness to join TARGET2-Securities on 11 September 2023 and to discuss and clarify open questions.
The main points from the webinar can be summarized as follows:
  • BNB has completed its self-assessment for T2S eligibility in May 2023.
  • Migration simulation tests have been successfully completed on 7 May 2023.
  • Migration to T2S in September 2023 will include positions in Bulgarian EUR-denominated government securities (currently only 1 ISIN). The remaining government securities will be migrated to T2S upon the EUR implementation in Bulgaria.
  • All CSD participants will be Indirectly Connected Parties (“ICP”) at T2S.
  • The communication between BNB and CSD members will continue to be via ISO 15022 standard through the existing communication channels, i.e. SWIFT and the web interface of ESROT (the Electronic System for Registration and Servicing of Trades in Government Securities). BNB will translate bi-directionally the T2S messages which are based on ISO 20022 standard, aiming to minimize the impact for its CSD members.
  • DVP Model 1 (gross settlement of securities and cash) will continue to be used for against- payment settlement.
  • No changes in BNB’s Fee Schedule for government securities is currently foreseen.
  • T2S securities accounts will be linked to a DCA (Dedicated Cash Account) opened with TARGET2. The same DCA shall be used for both BNB and Central Depository (CDAD)’s eligible financial instruments.
  • Testing with CSD participants shall start at the end of June 2023 and be completed by mid-August 2023. BNB will provide detailed test scenarios in advance.
  • The tests will include not only against- and free-of-payment settlement but also income collection events (interest and redemption payments).
  • Regulatory amendments in the government securities area are expected, namely to Ordinance No 5 on the terms and procedure for acquisition, registration, redemption and trade in government securities, Ordinance No 31 on government securities settlement and ESROT Rules for registration and settlement of government securities.
  • The agreement for participation in ESROT shall also be amended.
  • Upon T2S joining, BNB intends to initiate activities related to the implementation of the  corporate action and billing standards of European Central Bank’s Ami-SeCo (Advisory Group on Market Infrastructures for Securities and Collateral).
  • In terms of corporate actions, BNB targets replacing the currently used MT564 and MT566 messages under ISO 15022 with seev.031 and seev.036 messages under ISO 20022 standard by the end of 2024.
BNB has also informed that, upon joining T2S, settlement deadlines will also be amended. Details will be included in the upcoming revision of ESROT Rules for registration and settlement of government securities.

Impact on investors: For information purposes.