A few days ago they informed that discussion is underway between the Central Bank (CB) and NASDAQ OMX on the issue of introducing a centralized register and a new system of storage of securities, which provides for transferring the functions of realizing register of all stock companies (register of securities should be transferred to specialized register structures) and centralized storage of securities (register of property rights) to the Central Depository of Armenia (CDA). CB notes that, given such approach, a more integral and safer storage of data and their automated processing will be secured and the availability of quicker and more trustworthy information will increase.

CDA Director Vahan Stepanyan speaks of the details of the planned system in an interview to Mediamax and Banks.am

- Can you describe the new system of register and storage of securities?

- At the initiative of CDA, a new model of the securities market in Armenia has been elaborated, taking into account the necessity to solve the existing tasks and introduce best international practice in Armenia. The new model represents availability of a centralized software system, where all the operations, which centralized register and centralized data storage consist of, will be realized.

Thus, as a result of introduction of the new system, provision of register and storage services will be realized through mediators. Entities, which render investment services, acting as a counting operator (if the owner of the securities is rendered storage services) and/or an issuer operator (if the issuer is rendered register services), will take up the role of the mediators. Banks and investment companies can be considered such mediators today. On the basis of an agreement, concluded with the Depository, the mediators will be able to render services, based on a software system, which is introduced in CDA and which meets high international security and efficiency standards.  

- What is the goal of introducing the new system? Is there real demand for it?

- The main goal of this model is increase of the availability level for register and storage services both for an ordinary investor and for the issuer, irrespective of location (the matter concerns the entire territory of Armenia). As a result of application of the new model, the investor and the issuer will be able to use the service of the Depository in the local branch of the bank or the investment company.

- What will be the effect of the system on market participants, taking into account the fact that they in fact have no other choice in terms of register and storage of securities?  

- Taking into account the fact of tariff reduction for services, I should note that the offered model will establish competition among mediators, since they will start competing among each other not in the sphere of provision of a particular service (which today is register and etc.), but in the sphere of provision of an integral package of corporate and investment-banking services. In these conditions, the need for investments and other financial expenses will be centralized only in the Depository.

The mediators will become a servicing structure and will not have to make a large volume of investments, as a result of which their services will not increase in price.

They will service customers, using a single system, which will have a higher security level in terms of information and operation. Setting analogous requirements for participants of the market in conditions of the current model would lead to large expenses on risk control and management, and as a result, to increase of tariffs.

- In terms of regulation, the advantages seem obvious here; however we would like to hear out your expert assessment.

- In terms of regulation, an integral secure system of data storage will be provided for and will meet the current international standards. It will allow the Central Bank realizing its control function more efficiently, since the entire data base will be in a single structure, as opposed to the current model, when the data are dispersed among various register structures.  

There are a number of other advantages, like, for instance, the flexibility in terms of legislative and technologic changes, speed of their adaptation and application, automated nature of operations, etc.