Settlement process - Bulgaria
Settlement cycles
- Equities and investment funds traded on BSE-Sofia: T+2
- Corporate, mortgage and municipal bonds traded on BSE-Sofia: T+2
- Government securities: T+0 or as agreed between the counterparties
- OTC: T+0 (free of payment) or T+2 (against payment)
Settlement flow
All times in this document are local time (that is, CET+1).
Equities, investment funds and corporate, mortgage and municipal bonds
- Settlement of BSE-Sofia trades at CDAD
SD-2:
18:30 – 19:00 (after the ending of the trade session at the BSE-Sofia)
CDAD receives information from the BSE-Sofia about executed trades Local custodians receive instructions and pre-match them with the broker either electronically or by telephone.
SD-1:
by 18:00
CDAD participants submit their settlement instructions to CDAD.
In hourly batches CDAD compares the information received from BSE-Sofia with that received from its participants. Any discrepancies are notified to the participants within the hour and any amendments should be executed by 17:00.
In order to assure settlement on time, corrections of settlement instructions can be sent on an exceptional basis until 09:00 on SD.
SD:
08:00
CDAD checks availability of securities in the accounts at CDAD and if positive, blocks the securities for settlement and informs its members.
by 9:30 (first settlement session)
by 11:30 (second settlement session) and
by 14:10 (third settlement session)
Securities are blocked as they become available, from 08:00 and no later than the times quoted in the left column.
by 10:30 (first settlement session)
by 12:30 (second settlement session) and
by 15:00 (third settlement session)
CDAD members confirm the available cash position to CDAD. CDAD calculates net cash settlement amounts and sends a cash settlement request to the BNB (RINGS). by 10:30 (first settlement session)
by 12:30 (second settlement session) and
by 15:10 (third settlement session)CDAD transfers securities from the seller’s account to the buyer’s account and confirms the settlement to its members.
If either securities or cash are not available or instructions cannot be matched, the transaction remains pending until T+7 during which penalties are due. After T+7 the trade is considered as failed.
Settlement of against payment OTC trades at CDAD
OTC settlement is performed and maintained by the CDAD. Against payment transactions are settled on T+2. If both counterparties submit their settlement instructions to the CDAD on the trade date and the instructions are successfully matched, the settlement will occur on the settlement date predefined by the counterparties.
If transactions are not matched in CDAD's system on trade date, CDAD's system recognises the actual date when the instructions match as trade date and consequently the settlement of an OTC/DVP transaction may be delayed accordingly, following the T+2 settlement rule.
Government securities - Settlement of secondary market trades at the BNB
In accordance with the market practice secondary market trades in the BNB system that primary dealers (that is participants to the BNB system) perform for their clients settle free of payment only. Primary dealers submit the settlement instructions to the BNB system on settlement date. BNB makes preliminary checks of the formats of the instructions and if the check is successful, the trade will be accepted for matching. Once the trade is matched it will settle immediately and becomes final and irrevocable. Matched trades cannot be cancelled.
Trades that have not settled (for example, because a counterparty is lacking securities) remain pending in the BNB system until the end of the settlement day and if not settled will automatically be cancelled when the system closes.
BNB suspends settlement two business days prior to the income payment date for government bonds not denominated in BGN and one business day prior to the income payment date for government bonds denominated in BGN.
Cash clearing
Bulgaria has a Real-Time Gross Settlement System (RINGS) that is owned by the BNB. RINGS performs irrevocable and unconditional settlement of all payments in the national currency of Bulgaria, i.e. BGN. Through the settlement at the BNB, the liabilities originating from transfers of funds and securities transactions payments are settled with finality.
Registration
Registration happens automatically upon settlement at the CDAD or the BNB in the name of the account holders.
Stamp duty
Stamp duty is not applicable in the Bulgarian market.
Penalties
Buy-ins
Buy-ins are not market practice in Bulgaria.
Cash penalties
Penalties will be calculated and applied on matched settlement instructions that fail to settle, in full or in part, on and after their intended settlement date (ISD), if both the settlement instruction and the relevant financial instrument are subject to cash penalties.
Instruments subject to cash penalties
Any financial instrument listed in the Financial Instruments Reference Data System (FIRDS) database maintained by ESMA will be subject to cash penalties. However, cash penalties will not apply to shares listed in the Short Selling Regulation (SSR) exemption listed in the Short Selling Regulation (SSR) exemption list.
Guarantee funds
The Settlement Guarantee Fund established and maintained by CDAD, according to the Rules of procedure of CDAD, guarantees the settlement of exchange transactions for which there is a settlement delay. The Settlement Guarantee Fund does not cover OTC transactions, regardless of the manner of their announcement.
CDAD also maintains a Guarantee fund, which covers the liabilities of CDAD resulting from its activities. Fund assets shall be used for compensation of damages occurred in the course of the activity of CDAD.