What is Central Securities Depository and Clearing House?

The Central Securities Depository and Clearing House (CSD) is a unique institution in Serbia entrusted with keeping a registry of the lawful owners of securities and rights stemming from the ownership status, as well as the rights of the third parties over securities. The Central Securities Depository also performs clearing and settlement operations pertaining to the trade in securities, meaning that it carries out transfer of ownership over securities with simultaneous transfer of funds, in order to eliminate the possibility for the selling party not to receive the money counter-value of the sold securities.

How can I open an account with the Central Securities Depository?

The operations of the Central Securities Depository and Clearing House are based on the indirect access principle, meaning that the end-users (issuers of securities and securities’ owners) sign agreements with a CSD Member (broker or dealer companies or banks) in order to be provided with the services of the Central Securities Depository and Clearing House. The CSD services include opening and administration of securities accounts, issuing orders to the CSD in order to perform a range of operations in the name of the clients, etc. That is to say that end users may not open accounts with the CSD directly, but only by making use of over 100 CSD Members. The list of CSD Members is posted and updated on the CSD web page: In order to open a securities account, a user needs no more than an ID card or some other identification document in order for the CSD Member to enter the data on the user into the clients’ database.

Who may become a CSD Member?

The Law on the Market of Securities and Other Financial Instrument lists eligible parties for CSD membership. The Law prescribes that the CSD members must be only juridical persons, broker or dealer companies, or otherwise banks, fond management organizations, stock exchange companies, foreign clearing and deposit institutions, as well as the Republic of Serbia and the National Bank of Serbia.

Why is it important that the securities be registered with the CSD?

Pursuant to Article 11 of the Law on Market of Securities and Other Financial Institutions, the rights of the lawful owners of securities become effective on the moment of entering such securities into the Central Securities Depository and Clearing House. The owners of securities are fully protected and may exercise their entire set of rights over securities only after such securities have been entered into the account that the owners had previously opened.

How are the securities entered into the CSD?

The securities are first assigned identification markers: the CFI code (Classification of financial Instruments) and the ISIN number (International Securities Identification Number). The CFI code is assigned according to the type of security, whereas the ISIN number represents a unique identification number of the security. The following step is to update and reconcile the information on the shareholders (e.g. current address, correction of unique numbers, etc.) and after that the company is finally entered into the CSD database.

Who may submit a request for the registration of securities with the CSD?

The request for the registration of securities with the CSD may be submitted by any person, provided that the person had previously signed an agreement with one of CSD Members who provide services of intermediaries between the CSD and securities’ owners. This means that applicants may be the management of a company, shareholders, creditors, employees, etc.

Who may receive data on the owners of securities?

Each CSD Member has its own database on its clients. The clients may request statement of their securities accounts any working day. Apart from that, the CSD discloses clients’ data only in the cases envisaged by legal regulations and relevant by-laws. A complete Book on Shareholders containing owners’ identification data as well as number of shares and votes based on shares is provided to the issuer for the purpose of organizing the Shareholders’ Assembly. However, in case of Takeover bid competition the bidder is provided only with the list of shareholders with owner’s identification data (name, surname, address), but without disclosing the number of shares that each shareholder owns.

How safe are the data provided to the CSD?

Access to the CSD IT system is fully automated. The access is allowed only to authorized persons employed with the CSD Members. The Membership Agreement provides for the Member’s authorized personnel to use a personalized digital identification SMART card following a special operational training provided by the CSD for accessing the CSD software application.

What does takeover bid stands for?

A takeover bid is an offer issued by a company for the acquisition of shares so that the acquirer obtains 25% of the shares and assumes voting power in the company. Following the announcement of the takeover bid, the shareholders may deposit their shares to the temporary deposit account with the CSD. The bid approved by the Securities Committee may not last longer than 21 days during which period shareholders may choose to deposit their shares. In case when the bid concludes successfully all CSD members are notified of the outcome.

What kinds of securities are registered with the CDS?

The Central Securities Depository and Clearing House provides the possibility for registration for various kinds of securities: shares issued by companies or banks, bonds issued by companies, banks and other financial institutions, RS bonds, NBS bills, Federal Foreign Currency Bonds issued to settle frozen foreign currency savings, etc.

Why is it prudent to require payout of dividends via the CSD?

Payout of dividend is performed on issuer’s request submitted via a CSD Member. Together with the request, the issuer submits a Decision on the Payout of Dividend. The CSD transfers the funds for the settlement of dividends to the bank accounts of owners of shares. This procedure eliminates the possibility that the company chooses to which owners of shares to pay dividends, and provides for equal treatment to all shareholders.