In financial markets, success is about building a better future

sylvia-b-dopozBy Silvia Buicanescu, CEO, Depozitarul Central

Success is not only about winning or about the award. Success is about working hard, building great teams, dreaming and thinking bigger and, most of all, about joining efforts. This works for sports, business and life.

At Depozitarul Central, we act every day and for every project as though we are a team that is in a competition. It’s always a marathon for self-improvement and for setting higher targets. Every project, from the ones that are part of our current activity to those that are changing the whole architecture of the capital market, engages teams of skilled and dedicated people.

We cannot ignore the increasing pressure coming from innovation and adaptation to the global trends, which are constantly changing. The world is transforming and financial services are following the same trend. They are becoming more diverse and innovative.

Depozitarul Central is permanently connected to the world dynamic, as an important pillar of the Romanian capital market progress and of the upcoming changes. We have managed to put together a stable financial environment, oriented toward innovation that can support a strong, sustainable and balanced growth, not only for the capital market but for the entire financial market.

Therefore, it is not a surprise that we are always keen to evolve and to offer new services that will deliver benefits and will contribute to the development of the Romanian capital market. We are willing to pursue this road, in which progress and stability are realities that characterize us.

We are following the international trends in the financial field, we promote them on the local market and we are always looking for new opportunities to accelerate our integration in the circuit of the emerging and developed capital markets. This motivates us to concentrate all our efforts on building a stronger and safer post-trading environment.

Implementing the progress

Depozitarul Central is implementing the EU Regulation 909/2014 on improving securities settlement in the European Union and on central securities depositories. The new, harmonized EU Regulation of Central Securities Depositories (CSDR) will lead to the alignment of activities, procedures, practices and rules that will contribute to a safe, efficient and competitive post-trade landscape.

In order to ensure that the objectives of the European Union legislator are met, and that the regulatory framework for central securities depositories (CSDs) is implemented, the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) issued a draft of technical regulatory and implementation standards which might be enforceable starting January 2017. All the EU central securities depositories are obliged to be authorized as such by their competent authorities. Also, the European Authorities will issue guidelines and offer technical advice meant to provide equal conditions of competition, a level playing field for CSDs as well as harmonized safety standards across the EU markets.

In this regard, Depozitarul Central follows the process of drafting the EU regulations on technical standards and actively takes part in the European Central Securities Depositories Association (ECSDA) working groups dedicated to contribute to the improvement of the legislative proposals issued by ESMA and EBA (i.e. regulations and guidelines) in order to have a similar understanding as the other European CSDs on the requirements imposed by the CSDR.

Regarding the steps taken so far, Depozitarul Central began the alignment process to the preliminary regulations draft requirements issued for the application of the CSDR level 2 legislation such as governance, improving measures concerning the management of operational risks and the access of other infrastructures to the settlement system managed by the institution.

This is a very important regulatory project for our local capital market and also a proof that a very efficient team can bring home the entire global trend and adapt it efficiently to the local characteristics.

Improving the lending & borrowing service

This year, Depozitarul Central was deeply involved in setting up the new framework applicable to lending and borrowing operations and developed the regulatory and technical support for those operations in line with the new Romanian Financial Supervisory Authority’s regulations.

The improved version of lending and borrowing of securities brings flexibility, meets market requests and ensures the necessary framework to increase liquidity, a requirement of the Romanian capital market which must be met to be upgraded to the emerging market status.

Thus, starting with August 2nd, the lending and borrowing service is available in an updated and flexible regulatory framework, for the benefit of investors. Among the main changes brought, we can identify the extension of the financial instruments categories which may be the subject of the borrowing and lending operations, or of the associated mortgages. Also, the obligation to use the Global Master Securities Lending Agreement has been removed and the purposes for which lending and borrowing operations are allowed have been extended.

This project involved the support and participation of the Financial Supervisory Authority, the Romanian National Bank, Bucharest Stock Exchange and of Depozitarul Central, a joint effort proving that the teams are not only from within the same institution but also from the entire Romanian market, especially when it comes to reaching our major common goal: the development of the capital market.

Better post-trading services, fewer risks

Depozitarul Central takes part in the European Union efforts to harmonize and streamline the securities operational landscape by implementing both the European market standards for corporate actions processing and the T2S corporate actions standards. By February 2017, Depozitarul Central will be able to offer its participants and issuers a competitive and innovative system through which corporate actions will be processed automatically, safely, efficiently and in accordance with the best European market practices and standards.

Implementing new standardized and automated informational flows between issuers and investors, managing the settlement of the cash component of corporate actions in central bank money and processing the corporate actions by complying with the key dates and the intervals recommended by the standards, are only a few of the advantages that Depozitarul Central will pass to the market. Furthermore, the implementation of European standards will eliminate the different interpretations and will improve the communication between the investors and issuers, will facilitate the use of financial instruments’ rights and will reduce the operational risks.

Depozitarul Central is making important steps in the compliance process and is constantly consulting the local capital market entities in order to have a better understanding of market needs and European Union regulatory changes and find the best solution for implementing the corporate actions standards.

Depozitarul Central is working together with the issuers and the participants, currently performing internal testing of the in-house software developed for this implementation. The smooth transition period is meant to prepare the community and to be sure that the systems are compliant with the corporate actions standards, by February 2017.

The highly dedicated members of the national Market Implementation Group for corporate actions and also of the SWIFT National Market Practice Group hold regular meetings and have a close cooperation with external experts, endeavoring to find the best practical solution for adapting the requirements to the specificities of the Romanian capital market and update the regulatory framework. The results of this team-work will be materialized in a more efficient post-trading service, with lower risks.

Looking for a bright future

One of Depozitarul Central’s main targets is to create a strong Romanian capital market, in line with EU standards.

In the past few years, Romania has made many upgrades in its capital-market infrastructure to reach EU levels, and now Romania’s capital market offers the same conditions as any other in Europe. Our capital market is young, flexible and open to rapid evolution. We can offer highly developed services customized to meet the needs of all players in the market. There are many opportunities and advantages to be found in the Romanian capital market, and at Depozitarul Central, we are constantly developing new projects and setting new targets.

In the overall landscape of the financial markets, the post trading systems will always be a very important pillar. This is visible in the international trends, in the major infrastructure projects that take place globally and from the attention paid to those systems by financial institutions. The Romanian market is no exception, and Depozitarul Central is a key element to a capital market operating in the best conditions, and also to its continuous development, in line with the ongoing challenges.

The most important goal is to upgrade the local market as an emerging one and having a modern and efficient post-trading infrastructure is one of the conditions. This is the reason why we will not stop from our marathon. Our team will continue to work hard, to build successful projects and to win. Every single implemented project, small or big, local or global, is an award.

And, let’s not forget what Benjamin Franklin said: “Without continual growth and progress, such words as improvement, achievement, and success have no meaning”. We always keep that in mind at Depozitarul Central and all of our initiatives and efforts make us your partner for success.