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Central Depository AD is the only organization in Bulgaria providing settlement of corporate securities in book-entry form.

Central Depository AD (CDAD) was established as a joint-stock company on the 13th of August 1997, under the terms of Art. 91 of the Securities, Stock Exchanges and Investment Intermediaries Law (SSEIIL). CDAD Shareholders are the major Bulgarian commercial banks that play an active role in the securities market.

FSC Financial Supervision Commission, BNB and MF directly control CDAD’s operations. The ordinance clearly lays out the services offered by CDAD as well as the manner of reporting and the form of control those institutions have over CDAD’s operations.

A five-member Board of Directors is the operational body which implements the management control over CDAD. The Board of Directors appoints one of its members as a Chief Executive Officer who leads and manages the daily activities and reports to the rest of the Board members at least once a month.

Regarding the settlement of a trade between investment intermediaries, CDAD has implemented the standard settlement period recommended by the Group of 30 and the World Bank that is T+2. Within the 2-day period after the transaction was made, the securities ownership will be transferred and the payment will be finally completed. The execution priority for processing the transfer orders is as follows:
  • Stock Exchange trades always before OTC market transactions
  • trades on behalf of the investment intermediaries clients always before trades on behalf of the investment intermediaries themselves.

This is in conformity with the already accepted gross standard for payments in Bulgaria, and is the only way to reduce the risk inherent in the payment process since a determined risk management system in Bulgaria still does not exist. The settlement cycle is in the following succession which is the same for stock exchange and OTC market trades. It is possible on the OTC market when indicated by the selling party to process a delivery-free-of-payment (DFP) transaction, i.e. securities delivery only outside of the payment system.

National Registry of all 1053 joint-stock companies, privatized under the Mass Privatization Program (MPP)

To this regard, accounts were opened automatically (over 1,000,000) for all the shareholders, who acquired shares in the MPP.The registry is updated automatically when a trade is executed between investment intermediaries, or when a transfer of shares is performed as a result of inheritance, gift, and any other action between individual participants. In other words, CDAD is not only a central registry, but it also is a transfer agent. This is necessary because in the particular circumstances present in Bulgaria today, enterprises neither have the experience nor the capacity to work as a "normal" joint-stock company with many shareholders which requires the management of dematerialized shares which itself requires very accurate shareholder books. CDAD took the responsibility as a transfer agent for the purpose of securing shareholder confidence and safety of ownership. In this way CDAD is the institution where all the ownership transfers are performed, and consequently CDAD updates the companies’ registries. This guarantees to all the investors that their records will be accurately and properly entered into the Shareholders’ Book, and it ensures safety regarding the ownership of the shares received. For the purpose of providing greater opportunities for the individual investor who would like to transfer shares between themselves directly, CDAD, in cooperation with two of the major Bulgarian banks - United Bulgarian Bank and Bulgarian Post Bank - has developed a system of "co-registration agents". Both of the banks have an excellent branch system all over the country which is the primary reason for CDAD to co-operate with them. The services they provide to individual investors are transfer of shares due to inheritance, gift, or any other transfer where payment is not required. In these cases a transfer is completed within 10 working days.


It is very important to give all the institutions the possibility to use custody banks to keep their securities portfolio. Currently, there is no legal or regulatory environment for custodial services, however CDAD provides the banks - Bulgarian and foreign, members of the depository - the possibility to offer their clients this kind of service. This is possible because of the unique account structure that CDAD maintains, that is a CDAD member will have a global account within the depository and its clients will have sub-accounts opened for their portfolio positions as well. Within CDAD the two functions of national registry and electronic settlement allows the registry to be organized on a beneficial shareholder principle. This account structure allows the usage of custody banks without problems. When performing a trade a client will "deposit" his securities with a custodian and use a broker to conduct a trade. The only condition is that the broker must inform the custody bank to transfer the securities on the depository registries for the trade with shares from the investor’s portfolio deposited at the custody bank. To date, it is still not legally possible to have a true "nominee" organizational concept for the banks and depository institutions.

Securities Settlement System for trades between depository members

This is an electronic system for settlement of trades of investment intermediaries executed either on their own behalf or on behalf of their clients. To finish a transaction, either on the Stock Exchange floor, or on the OTC market, the investment intermediary is obliged to inform CDAD of the account debited and the account credited. The communication is performed either by modem link, or by physical diskette delivery to the CDAD offices.

System for organizing the payments for securities traded
The purpose of this system is to ensure the finality of a trade, meaning the securities delivery and the relevant payment process. This is the only way to meet international DVP standards. On the 16 Oct. 1997, the Bulgarian national Bank approved a Bank Unified Standard "Interbank and Intrabank Payments in Respect of DVP Transactions in Corporate Securities". Based on the BNB approval, CDAD sends orders and requests into the integrated interbank payment system in Bulgaria - BISERA, to ensure the necessary payment for the securities on every agreed transaction. CDAD performs these operations in co-operation with BankService AD, the interbank cash settlement system operator. The current payment system in Bulgaria, controlled by BNB, allows the banks to act as settlement banks to their clients - non-banks brokerage houses that trade with securities on the Bulgarian capital market.