Annual Report 2004 - Georgian Stock Exchange

Georgian Central
Securities Depository
In 2004 the Georgian Central Securities Depository (GCSD) was
reorganized into a Joint Stock Company. Four leading Georgian
commercial banks, which represent an integral part of the GSE
and GCSD clearing-settlement system, became its shareholders
along with the GSE.
PRIMARY FUNCTIONS
The primary functions of the GCSD are:
_ Providing nominee ownership of both corporate
and government securities and performing
clearing and settlement of securities transactions
executed on the GSE;
_ Opening, maintenance, and closing securities
accounts in accordance to its rules;
_ Facilitating settlement of securities transactions
without physical delivery of securities certificates;
_ As an SRO, preparing rules for its members and
supervising compliance with such rules;
_ Appling sanctions provided for in its inner regulations,
rules, and charter against members for noncompliance
issues.
_ Providing settlement of off-stock-exchange
trades (including on DVP basis);
V. Blocking operations:
_ Blocking to retain a pledge;
_ Removal of blocking (except for trades);
_ Blocking to participate in trading;
_ Issuance of an account statement from the blocking
account at the request of an account holder;
_ Issuance of pledge evidence;
VI. Securities transfers not related with Blocking operations
or trading (gifts, inheritances, etc.):
_ Transfer from one safekeeping account to
another.
SERVICES
GCSD provides the following basic services to its
members and other securities market participants:
I. Opening/Maintenance/Closure of the Safekeeping,
Trading, and Blocking securities accounts of the
following types:
PRE- AND POST- TRADING SESSION TRANSACTIONS
GSE requires 100% pre-deposit of cash and securities
through the GCSD prior to submitting offers to buy or
sell securities on the GSE Trading System, in order to
eliminate counterpart/execution risk in the beginning
stages of market development.
ANNUAL REPORT 2004
_ Member's proprietary account;
_ Direct accounts for private and legal persons;
_ Broker-client accounts;
II. Admission/Suspension of securities; review and fulfillment
of related requirements;
III. Import/Export Operations on securities:
_ Providing nominee ownership of securities;
_ Depositing of securities;
_ Withdrawal of securities;
IV. Clearing and Settlement:
_ Providing clearing and settlement of stock
exchange transactions (for any stock exchange) on
DVP (Delivery vs. Payment) basis;
All securities transactions conducted on the GSE are
automatically forwarded to the GCSD for clearing
and settlement. The GCSD has entered into agreements
with four leading Georgian commercial banks
to effect cash settlement of securities transactions
conducted on the GSE. These settlement banks are
the United Georgian Bank, Cartu Bank, Bank of
Georgia, and TBC Bank. The GCSD maintains
accounts with these four banks and requires its members
to open Proprietary as well as Client accounts
with each of these banks (members are required to
segregate their own funds from those of their clients).
Prior to submitting offers to buy securities on the GSE
Trading System, a member has to transfer sufficient
funds to the account of the GCSD. When trades are
concluded on the GSE, the GCSD ensures that the
funds are transferred back to the members'
accounts. This mechanism of clearing and settlement
enables DVP settlement of trades executed on
the GSE practically in T+0.
20 Georgian Stock Exchange JSC
Georgian Central Securities Depository JSC