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SETTLEMENT BOLSA DE VALORES NACIONAL, S.A. GUATEMALA ACSDA Leadership Forum Gabriela Escamilla, Deputy Chief Executive Officer October 8, 2007.

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Presentation on theme: "SETTLEMENT BOLSA DE VALORES NACIONAL, S.A. GUATEMALA ACSDA Leadership Forum Gabriela Escamilla, Deputy Chief Executive Officer October 8, 2007."— Presentation transcript:

1 SETTLEMENT BOLSA DE VALORES NACIONAL, S.A. GUATEMALA ACSDA Leadership Forum Gabriela Escamilla, Deputy Chief Executive Officer October 8, 2007

2 Contents Current Trade Settlement Trade Settlement using a Payments System – LBTR Settlement for Book Entry Securities Projects

3 BVN Current Trade Settlement BROKER B BANK 1 Customer SEL PURCHASE OF A CASHIERS CHECK BROKER A PRESENTATION OF CASHIER´S CHECK T$ P$ PS TS TRS P$ T$ PS TS TRS55 CURRENT Total = Available + Transit Trade Settlement: Funds: 5 - Securities10 AVAILABLE CURRENT AVAILABLE BVN CONFIRMS THE FUNDS CURRENT AVAILABLE CURRENT AVAILABLE CHECK REQUESTED BY A STOCKBROKER 55 CHECK 00 T$ = Third party Account - Funds P$ = Propietary Account - Funds PS = Propietary Account - Securities TS = Third party Account - Securities TRS = Securities in Transit Account

4 Current Trade Settlement

5

6 Trade Settlement Using a Payments System- LBTR

7 Link with the Payments System - LBTR In 2006 a Real Time Gross Settlement System with the Central Bank (LTBR) was implemented Towards the end of 2006 settlements of Term Certificates of Deposit issued by the Central Bank and traded at BVN started using such system In the short term it is expected that all the securities market transactions will be settled using the LBTR system

8 LBTR Link The LBTR link to BVN’s Electronic Settlement System (SEL) is partial: Currently, funds transfers from LBTR to SEL are manually inputted while the transfer of funds from SEL to LBTR is automatic. The following diagram is duplicated for each type of currency used in settling transactions.

9 BVN Accounts Structure at LBTR LBTR Broker A BANK 2 BANK 1 Broker B $ $ $ DepositAccountDepositAccount Special Settlement Account AMOUNTBroker Account (Own or third party) AMOUNTBrokerBanK Payment Instructions Message whereby a Broker or a customer, in its place and by its own account, instructs a bank participating in the LBTR System so that by charging its account, it will transfer funds pursuant to the information contained in such message. Message whereby a Broker or a customer, in its place and by its own account, instructs a bank participating in the LBTR System so that by charging its account, it will transfer funds pursuant to the information contained in such message. CUSTOMER

10 BVN SEL Accounts Structure SEL Broker A Broker B $ $$ P$ P$ CCF TRF _ transit funds account P$ – Propietary funds account T$ – third party funds account PS – Propietary securities account TS – third party securities account TRS – in transit securities account AS – available securities CCF – account for the consolidation of funds RB y RA – auxiliary receiving account /broker DB y DA – auxiliary delivering account /broker RB $ T$ T$ V V V VPSPS TS TS DA DB RA V V TRS TRS V AS $ TRF $ TRF V AS

11 BVN Transfer of Funds from LBTR to SEL LBTR Broker A BANK 2 BANK 1 Broker B P$ DepositAccountDepositAccount Special Settlement Account INSTRUCTION INSTRUCTION $TRASFERT$ PS TS DA RA PS TRS DB TRS TS T$ P$ RB SEL TRF TRF AS AS

12 SELLER INITIATES BVN Delivery versus Payment Settlement LBTR BROKER A BANK 2 BANK 1 BROKER B P$ DepositAccount DepositAccount Special settlement Account T$ PS TS DA RA PS TRS DB TRS TS T$ P$ RB SEL TRF AS AS TRF

13 BVN Transfer of funds from SEL to LBTR LBTR BROKER A BANK 2 BANK 1 BROKER B P$ DepositAccountDepositAccount Special Settlement Account T$ PS TS DA RA PS TRS DB TRS TS T$ P$ RB SEL TRF TRF ASAS

14 Book-Entry Securities Settlement

15 The Bolsa de Valores Nacional, based on the Securities Market and Merchandise Law developed the rules, procedures and systems for the issuance, trade and settlement of securities recorded by book-entry. Currently, the book-entry issuance is not mandatory. The system developed by BVN consists of three registries: –Auxiliary registration by the Issuer (RAE) –General Book-Entry registration (RGAC) –Specific Book-Entry registration (REAC) System of private auctions: a service that is offered to issuers who use book-entry Book-entry

16 Legislation on Book-Entry Issuance of Securities –Article 54 – Securities that are recorded using the book- entry system are set by virtue of the relevant entry in the issuer’s accounting books. The basis for the accounting entry is the legal instrument authorizing the issue. –Article 56: The person who is registered in the issuers accounting books shall be assumed to be the legitimate beneficial owner of the securities that are recorded in the relevant book-entries, and that person shall exercise the entitlements which said securities confer.

17 A register which appears in the issuers accounting, and in which all book-entries are recorded using a chronological order. This is an informative register, in such a manner that the issuer cannot insert nor modify the information. The issuer that is part of the same system has access to the following detailed information: –Placements –Terms –Maturity –Schedule of payments –Investors Auxiliary Registration by the Issuer (RAE)

18 General Book-Entry Registration (RGAC) The registration is handled by BVN, in which the balances of the stockbrokers are held. The RGAC has the general information of all securities placed by the stockbrokers with separate accounts: one for its own accounts and another one for third parties.

19 A registration handled by each separate paying stockbroker, which includes a detailed identification of the beneficial owners in the respective book-entries. The stockbroker is the one who inserts the identity of beneficial owner of the securities. The ownership and amount inserted in the REAC are fed automatically into the RAE. Specific Book-Entry Registration (REAC)

20 STOCK BROKER ISSUER ISSUER’S AUXILIARY REGISTRATION DEBTS BVN TRADING SYSTEM BVN’S CSD REAC– SECURITIES, INC. ISSUE $.100 MILLION RGAC DETAILED RGAC 1.An operation is registered at the Stock Exchange. The Exhange’s electronic system generates a copy of the registry of such operation. 2.The operation is sent to the settlement system. 3.The buying stockbroker designates the account to which the securities shall be credited (Negociations system /Settlement system). Securities, Inc buys $.3 million from this issue on behalf of its client, John Doe. SOLD $.3 MILLION PENDING $.47 MILLION SECURITIES INC, OWN – 0 SECURITIES INC, CLIENTS – $.3 MILLION 4.The buying stockbroker proceeds to deliver the funds. 5. Simultaneously: The system affects both the RGAC and the REAC. The selling stockbroker receives the funds. The RGAC proceeds to print the Certificate of ACquisition. The Issuer’s RAE is affected. JOHN DOE – $.3 MILLION 6.Inmediately, BVN’s CSD will deliver a copy of the Certificate of Acquisition to the buying stockbroker, who shall give it to its client 7.The seller stockbroker delivers the funds to the Issuer CERTIFICATE OF ACQUISITION SOLD $.3 MILLION (Securities Inc.; John Doe) PENDING $.47 MILLION CERTIFICATE OF ACQUISITION JOHN DOE – $.3 MILLION

21 Projects

22 Separation of the Central Securities Depository and open it to new shareholders Registration of Foreign Shares and ETF’s so that they may be traded and settled through the Stock Exchange Certification of the systems being processed

23 SETTLEMENT BOLSA DE VALORES NACIONAL, S.A. GUATEMALA ACSDA Leadership Forum Gabriela Escamilla, Deputy Chief Executive Officer October 8, 2007


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