Amended KDD Rules and Regulations

UniCredit Bank Slovenija d.d.
Summary: 
The Slovenian CSD, KDD, amended its operational rules and technical regulations regarding T2S implementation
Tue, 07/02/2017

The KDD Rule amendments were published in the Official Gazette on 3 February 2017 and are valid from 6 February 2017.  The main changes are related to the T2S migration and the CASG/CAJWG international standard implementation for corporate actions:

•    Introduction of systemic member: There are only two types of CSD members: member-issuer and system members. Member-issuer is a member that issued the securities registered at a CSD. A system member is a member which is allowed by a CSD to transmit orders into the CSD system.

•    The conditions to become a systemic member:

  • The member has to have the status of a taxpayer in accordance with the tax procedure act or should use another system member to act as the taxpayer for their account.
  • The member should ensure the use of a DCA (Dedicated Cash Account) in the Target 2-Slovenija system, where they should have a separate DCA if they want to participate in the settlement of stock exchange transactions.
  • Detailed conditions related to system members: acquiring member status, supervision over the system members, temporary restrictions of access to the information system, cancellation of system membership, exclusion of the system member.

•    Definition of technical settlement accounts in T2S

•    Corporate actions (CA)conducted by CSD:

  • Obligation of implementation through CSD:  CA have to be performed through CSD. In addition, Member-issuers are obliged to inform the CSD about the CA.
  • General Meeting of Holders: Member issuer is obliged, immediately to notify the CSD on the convocation of GM of shareholders, extending the agenda of the meeting, resolutions adopted on the GM.
  • Issue /Deletion of securities
  • Concurrent securities issuance/deletion
  • Replacement of Securities
  • Takeover
  • Payments from securities

•    Important days for CAs are more clearly defined in Article 29 of CSD rules (https://www-en.kdd.si/rules_regulations_and_tariff/rules). They are outlined below according to the CASG/CAJWG standards implemented by T2S.

  • Announcement  date : RD -4
  • Record date (RD): Day according to which persons involved in a particular CA are determined. Holdings as of RD are determined based on the holdings as of closure of KDD information system (CRVP) at that day.
  • Last trading day (last day of on exchange trading with securities entitled to a CA): RD – 2
  • Ex date: RD-1
  • Pay date (PD): RD+1Market deadline (MD): PD-1 (The last day to communicate the choice in a particular CA is 1 working day before the date of publication of the outcome and the PD)
  • Start of election period: MD – 10 (The first day to communicate the choice in a particular CA is 10 working days before the last day to communicate the  choice)
  • Guaranteed participation date: MD – 3
  • The first and the last day of communicating the election (the day of guaranteed influence of the buyer on the election within the CA and the day for communicating the buyers election to the seller)
  • The day for communicating the buyers election: Guaranteed participation date - 2 business days

•    Introduction of corporate actions on Flow:

  • Transformations (reorganisations),
  • Market claims (distributions),
  • Buyer protection procedures (elective corporate actions).

•    Rules related to the Buy in/sell out procedure remain the same.

In addition to the operational rules, the technical regulations and the KDD regulations were amended as well, with the same date of validity being 6 February 2017. The main change in the KDD regulation is:

•    The market deadline for settlement of on exchange transactions (all instruments) is now one hour earlier, at 10 am CET.

The KDD operations rules, KDD regulations, and technical regulations are published in English on the KDD’s web page: https://www-en.kdd.si/rules_regulations_and_tariff/rules.

Impact on investors:  Compliance and harmonisation of the Slovenian securities market with EU regulations on corporate actions and international CA standards due to T2S implementation.