Remote Membership on the Ljubljana Stock Exchange

Transcription

1 Remote Membership on the Ljubljana Stock Exchange

2 Content: 1. Becoming a remote member on LJSE LJSE Xetra market model Costs Settlement Settlement of LJSE trades Settlement safeguard mechanisms Settlement services for remote members Banks offering custodian services Information about the companies and securities listed on the LJSE The legal process of becoming a remote member in more detail Application for admission to LJSE membership Application for admission to trading on the LJSE market Additional info and contacts: Appendices

3 1. Becoming a remote member on LJSE The status of a remote member is available to brokerage companies, investment firms, banks or special financial institutions from Member States who would like to trade directly on the LJSE electronic order book. In order to be able to trade on the LJSE market a company from a Member State must: meet all the necessary conditions for admission to LJSE membership, meet all the necessary conditions for admission to trading on the LJSE market, mainly: have communication access to the LJSE market through a Xetra access point, and have settlement provided for its trades executed on the LJSE market. Remote member s operations can start immediately after all the conditions for remote member s admission to membership and trading are met. In case the investment services are performed also in Slovenia, the Securities Market Agency (SMA) in Slovenia has to receive the proper notification from the responsible Member State supervisory authority. Such a notification has to contain the following data: indication of the Member State in which investment services and activities will be provided directly, the business plan with the description of the type and scope of the intended services and activities. In accordance with the Slovene Market in Financial Instruments Act only LJSE members can trade directly on the LJSE regulated market, whereas trading on LJSE for other entities is only possible through a LJSE member. 2. LJSE Xetra market model After Xetra implementation, the LJSE market model is largely harmonized with the Vienna Stock Exchange market model. Some minor differences remain due to local specifics. LJSE Xetra supports the following trading procedures: continuous trading with an opening and an closing auction for more liquid securities, auction trading with one single auction per day for less liquid securities. The LJSE Xetra market model supports the following order types: market order, limit order, market-to-limit order, iceberg order, stop order: stop market and stop limit, immediate-or-cancel order, fill-or-kill order, book-or-cancel order, strike-match, top order, top+ order, orders with trading restrictions: opening auction only, closing auction only, auction only, accept surplus, orders with validity restrictions: good-for-day, good-till-date, good-till-cancelled. The trading hours for main trading at LJSE are 9.30 am 1.00 pm CET. 2

4 The trading hours for block trading at LJSE are 8.00 am 1.00 pm CET. 3. Costs Admission costs: Fee for adopting the decision to admit a member firm to LJSE membership: EUR VAT, Fee for adopting the decision to admit a broker to trading: EUR VAT. Membership fee: Annual membership fee: EUR 2, VAT. Transaction fees: Transaction fees are as follows: Security type Shares Bonds Short term securities Open-end funds Certificates Transaction fee 8.00 bp 3.00 bp 0.20 bp 4.00 bp 8.00 bp Transaction fees in basis points and without VAT. The minimum monthly fee for trade execution on the regulated market is EUR The buyer and seller fee for a single trade amounts to a minimum EUR 0.70 and a maximum EUR Fee for executed block trade: 0.03% of the trade s value (min EUR , max EUR ). Trade cancelation: single trade EUR Operational costs: Operational costs are charged by Vienna Stock Exchange that represents a Xetra access point that is most commonly used by the LJSE members. Manner of trading Services Fees in EUR Directly via First 2 workstations Free workstation Additional workstation * Initial connection set-up 1, Internet connectivity Via interface CEESEG FIX Trading Service per session first two CEESEG ** Markets * The actual fee depends on the type of selected workstation. ** The fees for using the most commonly used interface (CEESEG FIX) by the LJSE members are stated. 3

5 4. Settlement 4.1. Settlement of LJSE trades Clearing and settlement services for LJSE trades are provided by the Slovene Central Securities Clearing Corporation (KDD). The settlement period for trades is T+2, with the BIS DVP Model 2 (netting on the cash side, gross securities transfers) being used to settle trades executed on LJSE and the settlement is mandatory. Post-trade data enters the KDD settlement system no later than at 4.30 p.m. on a trading day. KDD conducts multilateral technical netting on the cash side and informs settlement members on final calculation of their claims/obligations afterwards. No later than at a.m. on T+2, net-to-pay settlement members have to arrange for the fund transfers to the fiduciary cash account of KDD. The final cash settlement is executed at approximately 1.00 p.m., when KDD transfers the received funds from its account to the net-to-receive members clearing accounts. Securities transfers are processed on a gross basis in the same timeframe (T+2) by KDD transferring securities from the seller s account directly to the buyer s account. Securities are not transferred via KDD s fiduciary securities account, which is only used in a special buy-in/sell-out procedure in case of a settlement member s default. KDD does not act as the principal or assume any credit risk, since any default of a settlement member would be covered by the Guarantee Fund. The Guarantee Fund is formed for such purposes from payments of all settlement members and therefore serves as the main risk mitigation tool. KDD thus provides for reliable settlement of securities by having appropriate risk mitigation measures in place Settlement safeguard mechanisms Risk management measures in case of non-delivery KDD does not allow short (negative) positions on securities accounts. Default on the securities delivery obligation occurs if the end-seller s account is not credited with the securities at a.m. on T+2. Any and all of the following risk management measures, which are mostly used in connection with the Guarantee Fund, may be imposed in order to prevent securities delivery failures or to mitigate exposures in case of such failure: withholding the right of a potential net payment claim of a defaulting settlement member, partial settlement and cancellation right of buyer settlement member, pledge of securities held by the defaulting settlement member on its proprietary account, advance payment of the defaulting settlement member to cover buy-in costs, buy-in procedure, contractual penalty levied on the defaulting settlement member, temporary (partial) disconnection of settlement member from the settlement information system. Risk management measures in case of non-payment Default of the payment obligation occurs if the net debtor settlement member does not pay its net payment obligation to the KDD fiduciary cash account with TARGET2 on the settlement day (T+2) at a.m. at the latest. 4

6 Any and all of the following risk management measures, which are mostly used in connection with the Guarantee Fund, may be imposed in order to prevent payment failures or to mitigate exposures in case of such failure: obligation to pay liquidity reserve on T+1, withholding right of the securities where net debtor settlement member acts as buyer settlement member and sell-out procedure thereof, netting of the payment obligation with potential payment claim of the same settlement member, pledge of securities held by the defaulting settlement member on its proprietary account, temporary (partial) disconnection of settlement member from the settlement information system Settlement services for remote members A remote member can ensure the settlement of its LJSE-executed trades in the following ways: settlement services are provided by a custodian bank that is also a KDD member; or the remote member becomes a registry or settlement member of the KDD, and can carry out the settlement of exchange trades itself. Registry and settlement members must meet the following conditions (KDD website): Remote members usually choose to use the services of a custodian bank (a settlement member). The main issues to be considered when settling through a settlement member are: Accounts: Remote members can only use the accounts designated by the settlement member. Remote members must keep two separate sets of securities accounts for securities they own for their own account and for securities they own for their clients accounts. Information on trades: LJSE provides data on the remote member s executed trades to the settlement member and also to a remote member (via WBAG) on a daily basis. Actions in case the remote member does not comply with its obligations: There are standard KDD procedures and regulations in case of non-compliance: Guarantee Fund, buy-in and sell-out procedure and the possibility of disconnection of the settlement member. Settlement members are fully liable for the fulfillment of obligations arising from exchange trades. Given that KDD may disconnect a settlement member from the settlement information system partly or completely, the detailed responsibilities of remote members should be stipulated in the contract between a remote member and a settlement member. Settlement members may inform LJSE in case a remote member does not comply with its obligations. In such an event a settlement member may suspend the remote member from trading on the Exchange or can request LJSE to perform such suspension. 5

7 4.4. Banks offering custodian services Settlement/clearing member Contact 1. NLB, d. d. Čopova Ljubljana T: F: Mrs. Sanja Breznik Head of Custody Services T: sanja.breznik@nlb.si 2. Raiffeisen Banka, d. d. Zagrebška cesta 76, 2000 Maribor T: F: Mrs. Vesna Grgič Custody sales Custody and Correspondent Banking T: vesna.grgic@raiffeisen.si 3. SKB Banka, d. d. Ajdovščina Ljubljana, Slovenia T: F: Mr. Vojislav Kecojević Head of Custody T: M: vojislav.kecojevic@skb.si 5. Information about the companies and securities listed on the LJSE LJSE members regularly receive the official stock exchange price list as well as notifications on the suspension of members from trading and on delistings, along with all data that LJSE provides to the public. All LJSE announcements are available on SEOnet: SEOnet is a public electronic information dissemination system operated by LJSE, which provides business information on the LJSE-listed companies as well as public announcements made by LJSE and by other capital market institutions. 6

8 6. The legal process of becoming a remote member in more detail The legal process of becoming a LJSE remote member consists of two main phases: admission to LJSE membership, and admission to trading on the LJSE market. The legal application can be drawn up in the Slovene or English language. The documentation supplemented to the application can be written in Slovene or English language. Should the documentation supplemented be in a language other than Slovene or English, it must be filed together with a certified translation of the documentation into Slovene or English Application for admission to LJSE membership In accordance with the LJSE Articles of Association and the Rules, the applicant for a remote member files the requisite application form for admission to stock exchange membership (Form 01/MT), enclosing: copy of the extract from the register of companies or other official registers where the applicant is incorporated, containing any latest changes, copy of the decision or license to provide investment services, issued by the competent supervisory body, along with a certificate issued by this same body or by a notary, confirming the copy s identity with the original. The application form is enclosed to this document, along with the documentation checklist. The member and LJSE must enter into a CEESEG membership agreement, which includes parties obligations, responsibilities and main contact information. The LJSE announces the new LJSE member to other LJSE members, the Securities Market Agency and to the public Application for admission to trading on the LJSE market After admission to membership, the new member proceeds to provide the requested documentation for admission to trading on the LJSE market: 1. Evidence of having ensured communication access to the LJSE Xetra trading system: Members can ensure communication access to the LJSE Xetra trading system by connecting to the LJSE market through a Xetra access point (e.g. Vienna Stock Exchange). In this case all the connectivity forms are submitted to the Vienna Stock Exchange (Xetra Connectivity form of WBAG and Xetra System configuration form of WBAG). To evidence the established communication connectivity to the LJSE market, members need to submit to LJSE a confirmation statement, signed by the Vienna Stock Exchange. 2. Evidence of ensured settlement: Remote members can arrange the settlement of their trades by: entering into an agreement with a settlement member (this could be evidenced through a confirmation statement, signed by a remote member and a settlement member), or becoming direct members of KDD (this could be evidenced through a copy of the resolution of being admitted to KDD membership). 7

9 In case LJSE would need to implement a special protocol for sending remote members trades for settlement to KDD (different from normal protocol defined in the LJSE Rules), additional settlement protocol would need to be signed by a remote member, a settlement member, KDD and LJSE. 3. Evidence of having paid the annual membership fee The membership fee is to be settled for the corresponding part of the year. 4. Authorization of traders A remote member needs to have at least one trader authorized for trading on the LJSE market. Traders are given authorization using the Form 03/MT, enclosing: a copy of the traders valid license, and evidence of familiarity with LJSE Rules and trading on Xetra system: Xetra exam, or statement by the member that the trader is familiar with LJSE Rules and trading on Xetra. Traders should be familiar with the following functional documentation: Ljubljana Stock Exchange Rules, Ljubljana Stock Exchange Instructions for Trading, Ljubljana Stock Exchange Instructions for Admission and Monitoring of Member Firms and Brokers, J-Trader and/or CEE Trader Users Guide (depending on the type of trading station that will be in use), LJSE Xetra Market Model. 5. Authorization of J-Trader supervisors A remote member needs to have at least one J-Trader supervisor authorized for administrating it s users. Member supervisors can be authorized using the Form 04/MT, and should be familiar with the authorization concept for trading on the LJSE market. 6. Authorization of members electronic interface If a remote member decides to connect to the LJSE Xetra market though an electronic interface, this should be reported to LJSE on the Form 05/MT. 7. Authorization of members info users A remote member needs to inform the LJSE about the Xetra info users on the Form 06/MT. After the documentation is submitted and all the conditions are met, the LJSE adopts a resolution admitting traders to trading, admitting the member s electronic interface to trading and finally admitting the member to trading. Detailed instructions on the legal process are available in the Ljubljana Stock Exchange Rules on our website: 7. Additional info and contacts: LJSE website: Remote membership page: For further information regarding membership, please contact: 8

10 Ljubljana Stock Exchange: Ms. Darja Jermaniš Assistant Director Market Operations T: E: darja.jermanis@ljse.si Vienna Stock Exchange: Mr. Hannes Schoenegger Head of International Business Development T: E: johannes.schoenegger@wienerborse.at 8. Appendices Application to membership of LJSE documentation checklist Application form for admission to membership (Form 01/MT) 9

11 ADMISSION TO MEMBERSHIP ADMISSION TO TRADING Remote Membership on the LJSE MEMBERSHIP APPLICATION TO LJSE DOCUMENTATION CHECKLIST (February 2015) NECESSARY STEPS FOR ADMISSION TO LJSE MEMBERSHIP MANDATORY 1.0 Application for admission to LJSE membership (»Form 01/MT«) Excerpt from the court register or other official registers where the applicant is incorporated, containing any latest changes 2.0 (Copy of the excerpt) Licence to render investment services, issued by the authoritative supervisory body 3.0 (Copy of the licence, certified by the authorative body or notary) 4.0 CEESEG membership agreement LJSE Evidence of ensured access to the Xetra trading system Confirmation statement by an Xetra access point 5.1 Xetra Connectivity form of Wiener Börse AG 5.2 Xetra System configuration form of Wiener Börse AG Evidence of ensured settlement Membership in KDD (copy of formal resolution of acceptance to KDD membership) or Agreement with a settlement member 6.1 Confirmation statement - settlement (signed by the remote member and a settlement member) 6.2 Special settlement protocol for trades transfer to KDD (optional; signed by the remote member, settlement member, KDD and LJSE) 7.0 Evidence of having paid the annual membership fee Authorization of traders (»Form 03/MT«) Copy of the traders valid licence (or confirmation latter that the trader is adequately licensed ) and Evidence of familiarity with LJSE Rules and trading on Xetra system (Xetra exam or statement by the member that the trader is familiar with LJSE Rules and trading on Xetra) Authorization of J-Trader supervisors (»Form 04/MT«) Authorization of member s electronic interface (»Form 05/MT«) Information user registration (»Form 06/MT«) Formal LJSE resolution of accepting the traders and member s electronic interface to trading LJSE 13.0 Formal LJSE resolution of accepting the member to trading LJSE * The application process shall be drawn in the Slovene or English language. ** Should the documentation supplemented to the application be in a language other than Slovene or English, it must be filed together with a certified translation of the documentation into Slovene or English. 10

12 APPLICATION FORM FOR ADMISSION TO MEMBERSHIP ON LJSE (Form 01/MT) Please note that only duly completed, legible and duly signed forms with original signatures can be accepted. Even if you fax or the form, the original signed form nevertheless has to be sent by regular mail as well. This form is a component part of the Membership Agreement. To Ljubljana Stock Exchange Slovenska cesta Ljubljana SLOVENIA Member (full name of company and location/branch) (date filed) (date received completed by LJSE) In accordance with Article 198 (2) (3) of the Ljubljana Stock Exchange Rules ( Rules ), the undersigned applicant hereby applies for the following company to be admitted to membership: Applicant firm Registered office and address Management Telephone, fax and address 1. The following documentation is enclosed to the Application Form: extract from the register of companies or other official register where the applicant is incorporated, containing any latest changes; certificate of duly paid fee for adopting decisions, in accordance with the Fee Schedule. 2. In case of an applicant from Article 84 (1) of the Rules, the following documentation must also be enclosed to that from point 1 above: copy of the decision or licence to render investment services, issued by the authoritative supervisory body, along with a certificate issued by this same body or by a notary, confirming the copy s identity to the original. 3. In case of an applicant from point 3 of Article 84 (2) of the Rules, the following documentation must also be enclosed to that from point 1 above: financial statements for the last 3 business years, drawn up under Chapter 6 of the Slovene Markets in Financial Instruments Act and the provisions of the Slovene Banking Act on books of account, annual reports, auditing and disclosure, statutes or partnership agreement, in the form of a notary record, annual report, including an organizational chart of the company and documents evidencing the applicant meets the conditions from point 2 of Article 85 of the Rules. 4. Planned first trading date: 11

13 Applicant s representative: (Name and surname of representative) (Representative s signature and applicant s seal) Note: In accordance with Articles 198 and 200 of the Rules, the Application Form for Admission to Membership of the Ljubljana Stock Exchange Inc. constitutes only a part of the full application on the basis of which the Exchange may adopt the decision to admit a member firm to membership of the Exchange. The full application includes the completed and duly signed Application Form for Admission to Membership and the Membership Agreement signed by the applicant. The Membership Agreement is available at the Exchange. 12