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Cooperative Works between UzSCSD and KSD. December 14, 2001 Tashkent, Uzbekistan James J.W. KIM. Integration & Convergence. Competition. Market Trends. Shift to…. Building a stable, efficient, and reliable Securities Infrastructure. Front-Office Vs Back-Office. Front-Office

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cooperative works between uzscsd and ksd

Cooperative Works between UzSCSD and KSD

December 14, 2001

Tashkent, Uzbekistan

James J.W. KIM

market trends

Integration & Convergence


Market Trends

Shift to…..

Building a stable, efficient, and reliable

Securities Infrastructure

front office vs back office
Front-Office Vs Back-Office
  • Front-Office
    • Monopoly  Global competition
    • Under pressure to be more specialized, competitive
  • Back-Office
    • Increase in settlement costs & risks resulting from large-volume transactions
    • Global Standardization
    • In the process of integration

 Economy of Scale & More Efficiency

  • Overview of Uzbekistan securities market & deposit and settlement system
  • Issues to be dealt with further
  • What we can expect from this project?
uzbekistan securities market
Uzbekistan securities market
  • RSE Toshkent & Elsis-Savdo
    • Not as active as other off-exchange markets
  • Listed companies : approximately 1,200
    • Daily average of transactions : 8.2
    • Daily average of trade volume : 28,000 shs.
deposit settlement system
Deposit & Settlement system
  • Settlement Cycle
    • Toshkent : T+5 / Elsis-Savdo : T+2
    • Preliminary requirements
    • Blocking of the securities from disposal
  • Many institutions related to the settlement process
    • UzSCSD – Securities Delivery
    • Elsis-Kliring – Clearing
    • Commercial Banks – Cash Transfer
    • 2nd Level Depositories - Custody
    • Brokers - Intermediation
  • Entitlement Processing
issues to be dealt with further

Issues to be dealt with further

Settlement Cycle

Complicated Settlement Process

Implementation of Entitlement


settlement cycle
Settlement Cycle

T+5 ???

  • Higher Settlement Risk due to Longer Settlement Period
  • G-30 Recommendations
    • T+5 by 1990
    • T+3 by 1992
  • ISSA Recommendations
    • T+1 in a form that does not increase operational risk
  • Essential for foreign investment
complicated settlement process
Complicated Settlement Process

Cash Transfer

  • Simultaneous Settlement
    • BIS, G-30, ISSA
  • Cash Settlement
    • Final, Irrevocable, Immediately available to Investors
  • Settlement Fund through Central Bank
    • ISSA Recommendations 2000

Settlement Bank

(Commercial Bank)

Transfer Instruction

Transaction Data

Transaction Data




Clearing Data /

Settlement Instruction


Blocking & Delivery


Blocking &

Delivery Instruction

Trade Order

2nd level Depository


ongoing move for integration linkage
Ongoing move for Integration & Linkage

Intensive Competition

Independent & Specialized

from trading part

Integration of back-office sector

Economy of

Scale & Scope

current status of back office integration




  • Integration of settlement related organizations dealing with stocks, corporate bond, ABS, and MBS into DTC
  • DTC-initiated integration of DTC and NSCC into DTCC(1999)
  • System integration of two organizations is to be completed by the first quarter of 2003
  • Ongoing integration of settlement-related organizations dealing with Government
  • Bond(GSCC), MBSCC and Emerging Market Bond(EMCC) into DTCC


- Integration of WCCC(Clearing House) and WCDTC(Deposit and Settlement

Entity) into CDS(1996)


- Integration of various Deposit and Settlement Entities into DBC(1989)

- Integration of DBC(CSD) and Cedel International(ICSD) into Clearstream(2000)


-Transfer of Government Bond settlement system(Saturne) of Central Bank to Euroclear France (CSD)(1995)


- Transfer of the Deposit and Settlement system covering Government Bond and short-term financial instrument to CRESTco(June, 2000)



- Integration of SEGA(CSD) and Intersettle(Cross-Border Settlement Entity)

into SIS SegaIntersettle


- Integration of the Deposit and Settlement Entities divided by types of

securities into JASDEC(CSD) (2005)


- Transfer of Custody operation by the Central Bank to HKSCC(CSD)

Current Status of back-office integration
comparison of settlement costs between european and u s markets
Comparison of Settlement Costsbetween European and U.S Markets

Source : Merrill Lynch(1999),


implementation of entitlement processing
Implementation of Entitlement Processing

Distribution of Bonus Issues

Subscription to Rights Issues

Stable Entitlement

Processing System

Essential for

Foreign Investment

Dividends Payment

Beneficial Owners Information

what we can expect from this project
What we can expect from this project?

Vitalization of

Stock Market





Strong & Efficient Infrastructure for Deposit & Settlement System

Funding from

Issuing Market


Financial Status


Uzbek Economy

future development
Future Development
  • Memorandum of Understanding
  • Mutual visits between UzSCSD and KSD
    • Final Consultative Report
    • Training Program