Securities Settlement System Reform Begins in Georgia
13 January, 2017
The National Bank of Georgia and the Tbilisi Stock Exchange begin the securities trading and settlement system reform. The project will entail expansion of the securities system of the National Bank and inclusion of a subsidiary of the Tbilisi Stock Exchange – Georgian Central Securities Depositary as a participant. The reform is a part of the Georgian Capital Markets Development Strategy in Georgia developed jointly by the Georgian Government together with the National Bank in 2016.
The settlement of trades in any security issued in Georgia will be possible in a single system at the end of the project. At the same time, the Stock Exchange will purchase the new trading platform from Montran Corporation which implemented current settlement system at the National Bank. It should be noted that the new contemporary trading platform will be integrated with the settlement system.
Today parties signed the agreement and the first meeting of the steering committee which includes the representatives of the National Bank, Stock Exchange, Central Securities Depositary and MONTRAN Corporation, was held.
The NBG Securities Settlement System has been operating successfully since the end of 2010. Its vendor is the US based Company "Montran Corporation". MONTRAN has its systems implemented in more than 30 countries.
The project was co-financed by the USAID in 2010 and covered two components. The second component is the Real Time Gross Settlement (RTGS) System, which currently processes and settles lari interbank payments. The implementation of the new version of the RTGS System is planned within the framework of the current project.
The Current operating system includes transactions related to the securities issued by the Government and the National Bank of Georgia. The new system will ensure automated, swift, secure and convenient processing of any type of Georgian securities (including bonds and equities issued by private companies). The securities settlement will be done through a risk-free DvP method in the new system, on the NBG accounts (settlement in central bank money). The system integration with both the Stock Exchange and Bloomberg trading systems will make the full cycle of securities trading and settlement automated. Payments of coupons, dividends, principals and securities pledging with the NBG or the professional members of the market will be automated as well.
During the project implementation cooperation with ECB, EBRD and Clearstream is envisaged. The project cost will be split between the National Bank and the Stock Exchange. The completion of the first phase of the project is scheduled by the end of 2017.
"The current project is part of larger reforms aimed at the development of capital markets in Georgia. The NBG Securities Settlement System has been operating successfully since 2010. With current project its upgrade is planned and functionality will be expanded. With involvement of the Georgian Central Securities Depositary, the system will serve entire Georgian securities market. It will offer an easy access to the Georgian financial markets to local and foreign financial institutions as the infrastructure of the local market becomes more reliable and modern" - stated NBG President Koba Gvenetadze.
"The joint project with the NBG is an important step forward for developing of the Stock Exchange and the Central Securities Depositary. It will promote the automatization of processes, make easier, more convenient and secure the Stock Exchange and Central Securities Depositary operations and activities, according to current international standards. It will foster an increase in trade volumes on the Stock Exchange and growth of liquidity, appearance of new instruments, investors and issuers on the market which in turn will simplify an access to the capital to local companies" - stated Giorgi Paresishvili, Chief Executiive Officer of the Stock Exchange.