1. KDD QuickClear Information System for CSD - General Presentation 2nd AECSD Conference, Moscow, October 2005
Davor Pavič
Deputy President & COO
KDD d.d.
Ljubljana, Slovenia

2. General information on the IS
Successfully implemented on and since then is fully supporting all of the KDD operations
Result of 10 years of experience in the CSD business
In-house developed
Is a product based on latest Microsoft technologies
Composed of 3 main components (Client CSD, OrderEngine, Database)
Asynchronous system messaging is being used
XML data messaging system implemented
Transactional and data STP supported

3. General information on the IS
Compliant for the usage in the ESCB monetary operations
ISO 6166 (on ISIN codes assignment), ISO (on CFI instruments), ISO 4217, ISO 3166, ISO 13616, ISO 10383, ISO 9362 compliant
Implemented standards (HTTP, SSL PKI, XML, WebServices, Digital Signatures, IBAN,..)
High degree of standardisation= lower costs for all the participants in the pre and post-trade processing chain!!!

4. IS and the Business Environment
Regulatory bodies
Brokers
Stock Exchange
Customer
Banks
CSD
Issuers
Central Bank
Investment funds, pension funds

5. WebServices
Data transfers from the IS are downloadable on-line in real time to all the system participants through WS
A variety of standardized WS already offered (list of securities issued, list of member securities accounts, list of members accounts positions, list of member transactions, list of member trades on the stock exchange, list of member third party rights, member fees,..)
Easy and fast scalability of WS in accordance to the business needs= cheap and customized reporting, as demand for various information from CSD systems can also be seen as a interesting business oportunity.

6. CSD Client structure CSD Functionality Navigator Functionality window
Messaging window

7. Supported functionalities
CSD System functions and related services include:
Basic functions and services;
Services related to the non-organized market;
Functions and services related to the organized market;
OTC – DVP transactions;
Takeover functionality;
Corporate actions processing;
Fees calculations;
Inquiries and data transfers.

8. Supported functionalities
Basic functions and services are:
Identification Master File (in the IS all the identification parameters of parties, security holder, members, issuers,.. are maintained by the unique identification master file so changes of any parameter occur just through the single point of entry)
Instruments - the IS supports securities issues:
In dematerialized form,
In immobilized form, with vault functions - deposits/withdrawals.
Securities Accounts Maintenance - the IS supports securities accounts management (opening, closing, updating) and standard account structures (IBAN standard - ISO 13616) and numbering.
Register of Securities Holders – the IS provides a sharebook and book of debenture holders evidence maintenance.

9. Services related to the non-organized market
1. Securities Transactions supports transfer orders for:
Intra Account Movements (between the accounts of same securities holder),
Inter Account Movements (to the account of the new securities holder),
Third-party rights,
Disposal limitations.
All the transfers are processed in real time.
2. Third-Party Rights and Disposal limitations
Third Party Rights:
- Pledge,
- Usus Fructus,
- Redemption Right,
- Preemptive Right,
- Dispose Denial Right,
- Block Inventory.
Disposal limitations:
- Interim Order,
- Supervisory Order,
- Handover Decree,
- Claim Enforcement,
- Tax Execution,
Pledge Realization Interim Order.
3. Certificated Securities

10. Functions/Services Related to the Organized Market
IS supports two basic functionalities related to the “organized securities market”:
Calculation of net cash clearing positions deriving from securities trades concluded on the organized market.
Settlement of securities on a gross basis.
In addition IS supports:
Risk Management functions
Registry codes functionalities

11. OTC-DVP Transactions
IS provides RTGS OTC-DVP settlement mechanism to settle large value transactions with intraday finality.
A Bank for International Settlements Model 1 (gross securities and funds settlement, with delivery occurring at the same time as the payment) DVP settlement mechanism.
As the securities transactions occurring conditionally upon delivery of funds, the principal risk is eliminated
OTC-DVP services comprise:
Direct bilateral trade matching;
Three step order processing (post, confirm, execute);
Simultaneous final settlement (DVP);
Real-time settlement processing.

12. Takeover Functionality
IS System provides complete functionality on the basis of the risk minimization by adopting DVP mechanism in the takeover acceptance and securities transfers process.

13. Corporate Action Processing Functions
Basic functionality related to any corporate action in the CSD System is performed by:
- securities cancellation and removal from the central registry,
- interim calculations of new securities positions and eventual partial rights,
- securities issue and creation of new securities,
- eventual transfer of third party rights and limitations of disposals to new securities.

14. Fees Calculations
Fees calculation means functions for automatic and dynamic real-time calculation according to the pre-set formulas, service tariff and quantity of service.
Real-time calculations are provided for market, off-market and OTC-DVP transactions with online inquiries for the CSD operator and CSD members.

15. Inquiries and Data transfers
The IS System includes standard list of inquiries.
In addition the IS System includes data transfers through Web services.

16. Conclusion Second generation CSD system
Complete Paralell running and Data migration know-how available.
Complete IS documentation offered (for example Functional overview of the system, On-line help integrated into the IS, Error Message Guide, Operation Guide, Installation Guide, Technical Architecture).

17. Q&A Thank you for your kind attention.
KDD- Central Securities Clearing Corporation, Ljubljana, Slovenia