CONTENTS CONTENTS 1 About the Zagreb Stock Exchange 2 Trading Hours How to Become a Remote Member

Transcription

1 REMOTE MEMBERSHIP

2 CONTENTS CONTENTS 1 About the Zagreb Stock Exchange, 3 2 Trading Hours, 3 3 How to Become a Remote Member, 3 4 Organisational, Personnel and Technical Requirements for Membership, Organisational requirements, Personnel requirements, Technical requirements, Settlement of on-exchange transactions, 4 5 Admission to Membership Procedure, Admission to membership resolution, Membership agreement and other contracts with the Exchange, Proof of providing for clearing and/or settlement, Technical requirements for access to the trading system-it, Inclusion of member in trading, 5 6 Costs and Fees, 5 7 Clearing and Settlement of on-exchange Transactions, Contractual settlement, Default on liabilities to the CDCC, Failure to deliver securities to the CDCC, Use of the Guarantee Fund, Risk management, Individual settlement, Membership of the CDCC, 7 2

3 1 About the Zagreb Stock Exchange The Zagreb Stock Exchange had its roots back in The Exchange operated with a few interruptions until 1941, but a final and lasting resumption of exchange trading did not occur until Electronic trading was introduced in Member firms with telecommunications links to Exchange headquarters trade in real time; trading is open between 9:00 and 16:30 each working day, except public holidays listed on the Exchange website. Trading results and daily securities prices are available to all interested parties in daily newspapers, from specialist financial information vendors, as well as on the Exchange website and via LSE Monitor, the exchange information distribution system. Shares, bonds, commercial paper, rights and certificates are traded on the Zagreb Stock Exchange which, in addition to a regulated market, also operates a Multilateral Trading Facility. The Zagreb Stock Exchange uses the X-Stream (NASDAQ OMX) trading platform, implemented since Trading Hours Exchange trading takes place between 9:00 and 16:30 hours. More information about trading hours and duration of individual trading sessions is available in the Trading Manual, on the Exchange website at: userdocsimages/legal/trgovinski-prirucnik-listopad.pdf. 3 How to Become a Remote Member An investment company or a credit institution or a special financial institution from a Member State which meets the criteria defined in the Capital Market Act (hereinafter: CMA) and Exchange Rules may become a remote member of the Exchange. An applicant for remote membership shall: meet any organisational, personnel and technical requirements for admission to membership stipulated by the Rules; meet any criteria stipulated by the Rules for participation in trading and enabling access to the trading system, in particular: provide any technical prerequisites necessary for access to the trading system; submit proof of providing for the clearing and settlement of any transactions concluded via the trading system. A remote member may embark on the provision of investment services and performance of investment activities in the Republic of Croatia on meeting all the criteria stipulated by the Rules, and on receipt by the Croatian Financial Services Supervisory Agency (hereinafter: Agency) of an appropriate notification of the competent authority of the Member state in which the investment company is domiciled. REGULATED MARKET Prime Market Official Market Regular Market MULTILATERAL TRADING FACILITY (MTF) MTF - Fortis MTF -Alter MTF - X Zagreb Stock Exchange Markets Structure 4 Organisational, Personnel and Technical Requirements for Membership 4.1 Organisational requirements Remote members shall meet organisational requirements for the provision of investment services and for the performance of investment activities and ancillary services defined by the CMA and the regulations adopted pursuant to that Act or by the regulations adopted by other competent authorities, depending on the type, scope and complexity of business of the remote member, as well as the type and scope of investment services and activities provided or performed by the remote member. 4.2 Personnel requirements Remote members shall employ at least one broker or investment adviser licensed by the competent authority and trained to use the trading system. In addition, each remote member shall designate a person responsible for supervising the remote member's computer system, and a person responsible for the performance of other obligations stipulated by the Rules. 4.3 Technical requirements Remote members shall have a computer system which is technically aligned and connected to the Exchange trading system via appropriate data links. Remote members shall arrange for data links with a telecommunication provider selected by the Exchange. Data links shall meet Exchange requirements relating to the bandwidth, reliability and other stipulated technical characteristics. The Exchange shall enable access by each remote member to the trading system via a trader work station or application programming interface or another appropriate protocol stipulated by the Exchange. Remote members' application software used for data exchange with the trading system shall be approved by the Exchange. Remote members shall ensure that the application software complies continually with the requirements set forth in the technical documents of the Exchange and the protocols used for communication with the trading system, as well as with any amendments to the technical documents and protocols stipulated by the Exchange. Computer and communication equipment of remote members shall constantly function in a manner that enables connecting to and maintaining a stable and reliable data link to the trading system. 3

4 4.4 Settlement of on-exchange transactions Remote members may provide the settlement of on- Exchange transactions in one of the following ways: 1. through membership in the clearing and/or settlement system used for settling on-exchange transactions, or 2. by a contract concluded with a member of the clearing and/or settlement system providing for the settlement of on-exchange transactions for the account of the respective remote member. 5 Admission to Membership Procedure Any person intending to become a remote member of the Exchange (hereinafter: applicant) shall submit an application for membership to the Exchange on the prescribed form of the content defined by the Exchange (Form 1). Any applicant for membership which is an investment company or credit institution from a Member State shall also enclose the following with Form 1: copy of an extract from the register of the competent court or other official records, including the latest changes; copy of a decision of the competent authority granting licence to provide investment services and perform investment activities; brief overview of past operations and plans for future activities on the capital market; document proving that it holds a member seat or that it will acquire it in a timely manner; document proving that it is a member of one or several other exchanges. An applicant for membership which is a special financial institution from a Member State, entitled to engage exclusively in proprietary trading, shall also enclose the following with Form 1: copy of an extract from the register of the competent court or other official records, including the latest changes; brief overview of past operations and plans for future activities on the capital market; document proving that it holds a member seat or that it will acquire it in a timely manner; financial statements for the past 3 (three) business years; copy of documents proving that it possesses appropriate licences for work issued by competent regulatory authorities or, if no such documents exist, proof that there are no final convictions against the applicant and/or management board member for certain criminal offences listed in the Rules or for a serious misdemeanour constituting a violation of any regulations within the scope of activities of the Agency or other competent authority; document providing an overview of the risk management system, commensurate with the type, scope and complexity of the services and activities performed by the applicant, including a description of the system of internal controls it has in place; statement confirming that it has conducted more than 10 (ten) transactions a month on the capital market in the past 3 (three) business years, including other relevant proof; statement confirming that its portfolio of investments in financial instruments, including cash deposits, exceeds HRK 3,500,000.00; document proving that it is a member of one or several other exchanges. Any documents enclosed with the application shall be in Croatian or English, using the Latin script. If such documents are not issued in Croatian or English, using the Latin script, they shall be translated to Croatian and/or written in Latin script by a court-certified sworn translator. The existence of an effective possibility of preventing and detecting market abuse, as a circumstance determined by the Exchange, is a special requirement for admission to membership. In addition to these documents, the applicant for membership may be invited to also submit other documents at the request of the Exchange. 5.1 Admission to membership resolution The Exchange shall decide on admission to membership on determining that all the requirements set forth in item 3 of this Manual have been met. Within a period of no more than 3 (three) months from the issue of a resolution by which it is admitted to membership, the Member firm shall: sign a membership agreement and other contracts to regulate its relations with the Exchange; submit proof of providing for the clearing and/or settlement of on-exchange transactions; provide any technical prerequisites necessary for access to the trading system; ensure that it has at least one person trained to use the trading system; submit proof of paid fees, according the Price list. The Exchange shall post the resolution on admission to membership on its website, and shall notify other members and the Agency of it. 5.2 Membership agreement and other contracts with the Exchange The remote member and the Zagreb Stock Exchange, Inc. shall conclude a membership agreement and other contracts regulating the rights, obligations and responsibilities of both parties. 4

5 5.3 Proof of providing for clearing and/or settlement The remote member may organise transaction clearing and/ or settlement in one of the followings ways: by direct membership of the CDCC Inc. (copy of a decision on admission to membership of the CDCC Inc.), or by concluding an agreement with a member of the clearing and/or settlement system to provide for the settlement of on-exchange transactions for the account of the remote member (copy of a statement signed by the remote member and the clearing and/or settlement system member). 5.4 Technical requirements for access to the trading system-it A procedure to meet technical requirements for access to the trading system will commence on passing of an Exchange Resolution on admission to membership (item 5.1 of this Manual). The project shall be managed via the IT collaboration website ( The Zagreb Stock Exchange uses the site to publish all requisite information, manuals and instructions and for the supply of its software. Under a separate project to be opened for each new user, the Exchange will supply a document detailing the type and kind of communication equipment to be used by the prospective member for connecting successfully to the trading system, the connection communication models (data links), as well as the the kind of trading software supplied by the Zagreb Stock Exchange and a description of the interface which prospective users must have in case they wish to develop their own applications. Person trained to use the trading system The remote member shall have at least one person, a broker or an investment adviser, trained to use the trading system, as proved by: a copy of the licence granted by the competent authority, or a certificate of the passed broker or investment adviser exam, and an Exchange certificate or member statement that the designated person is trained to use the OMX X-Stream trading system. In addition, the remote member shall designate a person responsible for supervising the member's computer system, and a person responsible for the performance of other obligations stipulated by the Rules. 5.5 Inclusion of member in trading On establishing that the requirements referred to in item 4.1 of this Manual have been met, the Exchange will issue a resolution to include the member in trading and enable access by the member to the trading system. The Exchange will include the remote member on the list of member firms posted on its website. 6 Costs and Fees Costs of admission to membership are as follows: one-time admission fee for acquiring the status of Exchange member firm of HRK 10, VAT, member seat fee of HRK 390, VAT, or admission fee of HRK 8, VAT payable for the member seat transfer if the member seat is acquired from another person which has a member seat. The membership fee is HRK 3, (with accounting done on a quarterly basis). Transaction costs (commission): The remote member shall pay commission for any transactions concluded in dependence of the type of financial instrument and total daily turnover: the commission in respect of shares ranges between 0.08% and 0.02%, and in respect of debt securities it ranges between 0.015% and 0.002% of the total daily turnover. For detailed information about Exchange services, please refer to the Price list of Exchange services published on: 5

6 7 Clearing and Settlement of on-exchange Transactions On-Exchange transaction clearing and settlement services are provided by the Central Depository & Clearing Company Inc. (hereinafter: CDCC). The usual settlement cycle is T+2, where transactions may be settled both through a contractual settlement and individual settlement process, depending on the terms of each individual transaction. The CDCC provides this service to participant member brokers (B). The daily clearing and settlement operation schedule is as follows: Time 07:30 18:00 07:30 16:00 08:00 Operation Real-time settlement of transactions categorised for the individual settlement process, with no cash payment and trade for trade (TFT) settlement; Real-time settlement of transactions categorised for the individual settlement process, with cash payment; First periodic processing round of individually settled transactions, with or without cash payment and TFT settlement; Start of payment processing in respect of transactions settled in the individual settlement process; 08:30 First daily contractual settlement cycle processing round; 11:00 12:30 Checking of outstanding cash liabilities on contractual settlement cash accounts of participant members; Second daily contractual settlement cycle processing round (CDCC delivers securities); 14:30 Third daily contractual settlement cycle processing round; 16:00 Last periodic processing round of individually settled transactions, with cash payment; Close of payment processing in respect of transactions settled in the individual settlement process; 16:30 19:00 Receipt of transaction data from the market; Last periodic processing round of individually settled transactions, with or without cash payment and TFT settlement; 18:00 Close of receiving payments to the CDCC system; Prohibition of direct system access to individual participant members. 6

7 7.1 Contractual settlement Any transactions categorised for the contractual settlement process are subject to individual multilateral netting by the CDCC of securities delivery vs. payment obligations. The CDCC is the central counterparty in contractually settled transactions and guarantees transaction settlement on the scheduled settlement date to contractual parties (participant members) performing their obligations to the CDCC. Cash payment is done via the Croatian Large Value Payment System (Cr. Abbreviation: HSVP). 7.2 Default on liabilities to the CDCC If a remote member defaults on its liabilities by 8:30 a whole working day after the scheduled settlement date (S+0, S+1), the CDCC will suspend the member and conduct an enforced sale of securities. 7.3 Failure to deliver securities to the CDCC Participant members are required to deliver securities no later than 8:30 three working days after the scheduled settlement date (S+0, S+1, S+2, S+3). If a member fails to deliver securities by that time, the CDCC will suspend the member and conduct an enforced sale of securities. 7.4 Use of the Guarantee Fund If a remote member cannot cover its debt balance immediately on completion of the enforced purchase and enforced sale initiated by the CDCC, the Guarantee Fund will be used to repay proceeds of the credit line. Any funds which might be necessary will be drawn down from the Guarantee Fund in the following order of priority until credit line proceeds are repaid: 7.5 Risk management Any transaction prepared for contractual settlement represents a certain default risk for the market in the settlement process. Since the CDCC guarantees securities delivery to the contractual parties which have performed their obligations up to the amount of freely transferable securities delivered, and cash funds to the amount of guarantee funds, the CDCC has established a Guarantee F und for participation by all members using the transaction clearing and settlement services in contractual settlement. The calculation of the Guarantee Fund contribution size and the manner of using funds are stipulated by a CDCC Instruction in the section relating to the Methodology of risk management and calculating contributions to the Guarantee Fund, and to the payment and use of Guarantee Fund contributions. 7.6 Individual settlement Any transactions categorised for the individual settlement will be settled only after both contractual parties have performed their obligations. The CDCC is not a counterparty and does not guarantee transaction settlement on the scheduled settlement date. 7.7 Membership of the CDCC Any remote member which concludes transactions on the Exchange shall also be a member of the CDCC. A participant member broker (B) who uses a set of services related to buying/receiving and selling/delivering securities in its name and for its own or someone else's account, and to portfolio management services for the account of clients will be admitted to membership. For more information on the CDCC and the services it provides see with cash funds of the participant member which has a debit on the contractual settlement cash account, and by collection under a bank guarantee of the member or other forms of collateral accepted by the CDCC; the residual amount necessary to cover the cash amount will be distributed among other contributing participant members, in proportion to their current contributions to the Guarantee Fund. Members will be invited to pay the cash amount distributed among them without delay. In the event that a member fails to pay the amount allocated to it within three working days from the call for payment, cash funds of the member in the Guarantee Fund and bank guarantee will be used until final collection of the total amount allocated to the member. The member's contribution to the Guarantee Fund will diminish automatically for the amount of cash funds collected and payment under the bank guarantee. Additional information and contacts For additional membership related information please contact us at: Markets Department trzista@zse.hr IT and Technology Development Department tech-support@zse.hr

8 This publication was prepared and published by the Zagreb Stock Exchange Inc., Ivana Lučića 2a/22, Zagreb (hereinafter: Exchange). The publication is intended to provide information to the public and shall not be deemed to constitute an offer or invitation to buy or advice on trade or investment in financial instruments or opinion on the terms of the purchase or sale of any financial instrument mentioned therein whether favourable or not, nor should it be relied on as a substitute for own judgement or assessment by any user of this publication. The Exchange waives responsibility and liability for any damage which might arise out of the use of information contained therein. Further use of information available in this publication is permitted by the Exchange provided that the source is cited. The Zagreb Stock Exchange Inc. Ivana Lučića 2a Zagreb Croatia Tel: Fax: May,