Role of Central securities depository (CSD)

							**BUK**RG

A Central Securities Depository (CSD) is an institution that takes over the custody of securities
in the form of physical securities. It is also responsible for the settlement of securities
transactions between parties that have an account with the CSD.

If a CSD is not confined to one country but internationally, the abbreviation ICSD is used. There
is usually at least one central depository by country, supporting the operations of the local
bourse.

And sometimes a second, dedicated to the national debt securities market as in the United
States and the United Kingdom, there are two international central securities depositories
(ICSD), Euroclear and Clearstream.

An operation of dematerialization of securities makes new issue in electronic form: instead of
materializing its securities in paper form, the issuer maintains a register of securities issued by
the central depository.

In a system of pure registered shares, the register is kept by the issuer itself. The European
Central Securities Depositories formed a professional association, ECSDA in 1997, mainly to
weigh into the debate on the harmonization of market infrastructure launched by the European
Union.

The two main institutions in Europe include ICSD Euroclear Bank in Brussels and Clearstream
Banking based in Luxembourg. Some CSD settings are: Euroclear in the Netherlands,
Euroclear France (formerly Sicovam), Euroclear UK & Ireland (formerly CREST) in the United
Kingdom and Clearstream Banking - Frankfurt, Germany.

The services a (I) CSD mainly revolve around the actual settlement of securities transactions.
This means, among other things, that a purchase or sale of securities will take place only if the
seller actually receives payment. Whenever necessary the CSD can act as a mediator in the
event the actual settlement occurs in another country, such as the counterparty via a CSD in
another state.

Additionally, a CSD performs other related services which include:

     - Facilitating securities lending and borrowing.
     - REPO.
     - Publishing a new securities issues guide. In this case, the publisher does not give consent
for each individual registration, as regards the issue price and the fixed date.
     - Transfer transactions between third parties.
     - Issuing reports on ongoing operations and the state of the securities accounts

ICSDs are also responsible for assigning ISIN numbers, which are unique identifiers (such as
an ISBN for a book). It is important to distinguish between the actions of a (I) CSD and the
buyers and sellers.

The CSD does not mediate in finding a buyer or seller, and does not grant consent for individual
adjustments, as regards the issue price and the fixed date. As regards the two parties reaching
an agreement, the CSD is only active upon settlement, that is, after both parties have agreed on
what, when and at what price.