Georgian Securities Market got a post trade infrastructure upgrade
NBG has been operating automated securities settlement system for government securities since 2010. On December 3rd, 2018 the system got a major upgrade, which allows for operations with both government and private securities. In a new system, all Georgian securities will settle in centralized manner.
The work on a new system has started in 2016, as a large scale joint project of NBG and GCSD, private depository owned by Tbilisi stock exchange, important reform to reshape Georgian capital market landscape. It proved to be a prominent example of a successful official and private sector partnership.
The new System allows for riskless, fast and safe settlement of securities transactions. It offers automated solution for nearly all operations, including issue, secondary market transactions, pledges and Repos, corporate actions and redemptions. Process automation requires less time and manual intervention, thus reducing the cost, duly reflected in lower service fees.
The new System is operated by the Central Bank and hosted on its IT infrastructure. NBG ensures its continuous uninterrupted operation and security. Cash leg settlement is done in another system operated by NBG - RTGS. This allows under integrated model, for DvP settlement for all securities transactions in central bank money, using Banks' RTGS accounts at NBG.
GSSS systems packs a bunch of innovative features. It includes efficient tools for liquidity management, partial settlements, net settlement using optimization algorithms, autocollaterilaziton and intraday loan mechanisms, to name a few.
The new System will be used by brokerage companies, alongside commercial banks. For brokerages it opens up whole new opportunities. GSSS will be interfaced with trading platforms, both Exchange and OTC (Bloomberg). This ensures full STP automation for entire lifecycle of securities trades. With same day settlement, time from trade till settlement completion may take a few minutes only.
With the launch of a new System, existing rules and procedures will undergo significant changes as well. Securities held by investors will be kept in more secure environment than before. Selling, pledging or Repoing out securities, in case of liquidity needs, will become even simpler and more convenient. This should increase attractiveness of Georgian financial markets for domestic and foreign investors alike.
‘NBG pays a lot of attention to capital market development. We invest in infrastructure, create new laws and update existing ones, spend a lot of effort on financial education. In 2010 we have implemented modern systems for securities and cash settlements at NBG. This was crucial for fast advancement of Government securities market in Georgia. This success story has convinced us to share the experience with the rest of capital market. Today we proudly announce that the new system is launched and since December 3rd transactions settle there. It offers market participants entirely new opportunities. Brokerage companies can now trade both government and private securities and settle electronically in a fast and secure manner. The new state of the art system, accompanied with other important reforms, will significantly accelerate development of Georgian financial markets' - Koba Gvenetadze, Governor of NBG, mentioned in his speech.
‘Capital market development is an important task and is treated with utmost priority by the Government. Georgia has a great potential, to become a regional financial center. With this project we've got securities post trade infrastructure reform, with joint efforts by public and private sector. New modern system will attract more investors, as Georgian financial market becomes even more secure and convenient. Without exaggeration, it is a big milestone for capital markets. Let me extend my words of appreciation for National Bank and his staff for excellent accomplishment. Also express my gratitude for the private sector participants. I strongly believe this project sets a benchmark as an excellent example of successful public and private sector partnership' - Ivane Machavariani, minister of finance stated.