Boteva & Kantutis Law Office: Newsletter
On 23.10.2007 was published in the “State Gazette” Ordinance № 5 on the terms and conditions for the acquisition, registration, payment and trading in government securities. The purpose of the Ordinance is to define the terms and conditions for the acquisition, registration, payment and trading of dematerialized government securities issued by the Minister of Finance on the domestic market. The regulation does not cover trade in government securities on regulated markets and multilateral trading systems. However, a new regulation was adopted in April 2017 according to which it applies also regarding the registration of transactions in government securities on a regulated market or multilateral trading system. The candidates for participation in the organized electronic system of trading in government securities are admitted by a special Commission appointed by the Fiscal Services Department of the Bulgarian National Bank. Until the amendments of the Ordinance in April 2017 there was no specified period provided within which the Commission shall admit the participation of the candidates in the trading of government securities. Such deadline was introduced in April 2017, which is three months. Within this term is assessed the compliance of the submitted documents of the candidates with the effective legislation and the Principles on Financial Market Infrastructures adopted by the CPMI (Committee on Payments and Market Infrastructures) and IOSCO (International Organization of Securities Commissions).
When transactions for the purchase and/or sale of government securities are carried out on a secondary market through the trading platform participants can be only:
- Primary dealers of government securities approved by the Minister of Finance;
- Sub-depositories of government securities;
- Investment intermediaries from Bulgaria or another Member State who have a license (other than primary dealers under item 1);
- Bulgarian and foreign banks (other than primary dealers and sub-depositories of government securities under items 1 and 2).
A significant contribution to the changes in the referred to Ordinance is the indication of the moment when the government securities transaction is considered concluded. Under the new Art. 16b, para. 3 of the Ordinance, transactions are considered concluded when electronic confirmations are generated and sent by the two parties involved in the transaction. The cancellation of transactions is carried out through an exchange of notifications through the platform between the two parties prior to the closing of the trading session.