Ordinance No. 31 of the BNB of 4 October 2007 on Government Securities Settlement

Ordinance No. 31 of the BNB 1

Ordinance No. 31 of the BNB of 4 October 2007 on the settlement of government securities (Published in "State Gazette", No. 85 of 23 October 2007; amended and supplemented, No. 100 of 2013; amended and supplemented, No. 22 of 2022; amended and supplemented, No. 76 of 2023, effective from 11 September 2023; amended and supplemented, No. 109 of 2025, effective from 1 January 2026)

Chapter One General Provisions

Art. 1. (Amend. – SG, No. 109 of 2025, effective from 1 January 2026.) This Ordinance regulates the settlement of transactions with book-entry government securities, issued by the Minister of Finance for the domestic market, hereinafter referred to as "government securities" (GS) in the Bulgarian National Bank (BNB), and the maintenance of individual accounts by sub-custodians of GS in accordance with Ordinance No. 5 of 2025 on the procedure and conditions for acquisition, registration, redemption and trading of government securities (Ordinance No. 5 of 2025).

Art. 2. (Suppl. – SG, No. 100 of 2013.) Settlement of transactions with GS in the BNB is the transfer of GS with or without the transfer of monetary funds based on a request/notification for a transaction submitted through the electronic system for registration and servicing of trading with book-entry GS – ESROT.

Art. 3. (1) (Amend. – SG, No. 109 of 2025, effective from 1 January 2026.) The Bulgarian National Bank establishes and organizes a system for the settlement of GS (SSGS), in which at least three members participate, who may be primary dealers, sub-custodians of GS and other persons – participants in ESROT, determined in accordance with Art. 3 of Ordinance No. 5 of 2025. (2) (Suppl. – SG, No. 100 of 2013, amend. – SG, No. 76 of 2023, effective from 11 September 2023; amend. – SG, No. 109 of 2025, effective from 1 January 2026.) The transfer of monetary funds in transactions with GS is carried out through the TARGET2-Securities platform via special monetary accounts in TARGET.

Art. 4. (1) The Bulgarian National Bank is the settlement agent for government securities. (2) (Amend. – SG, No. 100 of 2013.) The Bulgarian National Bank creates and maintains the systems under Art. 2 and Art. 3, para. 1 with general rules guaranteeing the fulfillment of obligations related to participation in the systems based on an agreement.

2 Ordinance No. 31 of the BNB (3) A request/notification for the registration of a transaction with GS, sent to the ESROT system in accordance with its rules, cannot be cancelled after the moment specified in the system's rules. Actions carried out by a participant in the system or by a third party after this moment, which aim to withdraw or cancel this request/notification for transaction registration, are invalid.

Art. 5. (Amend. – SG, No. 100 of 2013, amend. and suppl. – SG, No. 76 of 2023, effective from 11 September 2023; amend. – SG, No. 109 of 2025, effective from 1 January 2026.) As the settlement agent, the BNB officially carries out the settlement of transactions with GS on the primary and secondary markets via TARGET2-Securities special monetary accounts in TARGET and settlement accounts for GS, maintained in the SSGS system and in the TARGET2-Securities platform.

Art. 6. (1) Settlement of transactions with GS may be:

1. with movement of monetary funds in compliance with the "delivery versus payment" principle (DVP – delivery versus payment), in which the transfer of GS and monetary funds is carried out simultaneously on a gross basis ("DVP – Model 1");
2. (amend. – SG, No. 100 of 2013.) without movement of monetary funds (FOP – free of payment);
3. (new – SG, No. 109 of 2025, effective from 1 January 2026.) payment free of delivery (PFD – payment free of delivery). (2) (Amend. – SG, No. 100 of 2013; amend. – SG, No. 76 of 2023, effective from 11 September 2023; suppl. – SG, No. 109 of 2025, effective from 1 January 2026.) Settlement of transactions with GS is carried out in accordance with the system day schedule of ESROT. (3) (Amend. – SG, No. 109 of 2025, effective from 1 January 2026.) Settlement of transactions with GS, except those under Art. 22, para. 2 and 3 of Ordinance No. 5 of 2025, is carried out in compliance with the principle of bilateral notification – one request for the execution of the transaction from each of the parties. (4) Completed transactions are confirmed in the shortest possible time after the completion of the transactions.

Chapter Two Opening, Maintenance and Closing of Settlement Accounts for Government Securities (Title amend. – SG, No. 100 of 2013)

Art. 7. (Amend. and suppl. – SG, No. 100 of 2013.) The Bulgarian National Bank opens a settlement account for GS for the issuer, on which all GS of one issue are reflected upon initial issuance, early redemption before maturity and their maturity. The Bulgarian National Bank guarantees the integrity of each GS issue from the moment of its issuance until its maturity.

Ordinance No. 31 of the BNB 3 Art. 8. (1) (Suppl. – SG, No. 100 of 2013, suppl. – SG, No. 76 of 2023, effective from 11 September 2023.) The Bulgarian National Bank opens and maintains in the SSGS and in the TARGET2-Securities platform settlement accounts for GS, as follows:

1. account "GS owned by participants in the SSGS";
2. account "GS held collectively by clients of participants in the SSGS";
3. account "GS owned by participants in the SSGS with encumbrance imposed";
4. (new – SG, No. 109 of 2025, effective from 1 January 2026.) account "GS mobilized by participants in the SSGS for the purpose of securing credit operations of the Eurosystem". (2) (Suppl. – SG, No. 100 of 2013.) At the discretion of the BNB, other settlement accounts for GS may be opened for participants in the GS settlement system. (3) Blocking of GS in the account under para. 1, item 3 is carried out in:
5. (previous letter "a", amend. – SG, No. 76 of 2023, effective from 11 September 2023.) establishment of a pledge under the Law on Special Pledges;
6. (previous letter "b", amend. – SG, No. 76 of 2023, effective from 11 September 2023.) securing of funds in accounts and deposits of budgetary organizations in banks;
7. (previous letter "c", amend. – SG, No. 76 of 2023, effective from 11 September 2023.) other cases.

Art. 9. The Bulgarian National Bank officially opens the accounts under Art. 8 for each GS issue, acquired on the primary and/or secondary market, based on a submitted written request in the form according to Appendix No. 1.

Art. 10. (1) (Amend. and suppl. – SG, No. 100 of 2013, suppl. – SG, No. 76 of 2023, effective from 11 September 2023; amend. – SG, No. 109 of 2025, effective from 1 January 2026.) The settlement of transactions with GS on the primary and secondary markets is reflected in the opened settlement accounts for GS at the nominal value of the GS subject to the transaction. Settlement of transactions with GS is final after the settlement account for GS of the acquirer is certified in the TARGET2-Securities platform. (2) (Suppl. – SG, No. 100 of 2013.) Information on the status of settlement accounts for GS is provided to the account holder daily upon movement in them and monthly upon request.

Art. 11. (1) Sub-custodians of GS open and maintain individual accounts for GS, accounting for the GS owned by their clients and by clients of participants in ESROT who are not sub-custodians. The opening and maintenance of accounts for clients of a participant in ESROT who is not a sub-custodian is carried out on the basis of notifications from the participant in ESROT to the sub-custodian in accordance with the contract concluded between the participant and the sub-custodian. The responsibility for preparing and transmitting the relevant notifications and their basis lies entirely with the participant in ESROT who is not a sub-custodian. (2) Sub-custodians separate their own GS from those of clients, not being liable to their creditors with GS of clients for whom they maintain accounts under para. 1.

Art. 12. (1) (Suppl. – SG, No. 100 of 2013.) Settlement accounts for GS under Art. 8, maintained in the name of participants in the settlement, are closed upon receipt of a written request from the account holder (Appendix No. 2). The accounts are closed within two days from receipt of the request, for which the holder is notified. (2) (Suppl. – SG, No. 100 of 2013.) Settlement accounts for GS opened for a GS issue in accordance with Art. 8 are officially closed by the BNB upon the occurrence of the maturity of the GS issue.

Chapter Three Settlement of GS upon Initial Acquisition, Redemption of GS and Interest on Them and Early Redemption or Exchange

Art. 13. (Amend. – SG, No. 100 of 2013, amend. – SG, No. 76 of 2023, effective from 11 September 2023; amend. – SG, No. 109 of 2025, effective from 1 January 2026.) Upon acquisition of GS on the primary market in accordance with Chapter Two of Ordinance No. 5 of 2025, the BNB carries out the settlement by debiting the TARGET2-Securities special monetary accounts in TARGET, indicated by participants in ESROT, with the total value of the GS acquired by them and their clients, certifying the TARGET2-Securities special monetary account in TARGET, opened for the needs of the Ministry of Finance, and simultaneously recording at nominal value the GS acquired by participants in their settlement accounts for GS and in the settlement accounts for GS, accounting for the GS acquired collectively by their clients in the TARGET2-Securities platform.

Art. 14. (Amend. – SG, No. 100 of 2013; amend. – SG, No. 109 of 2025, effective from 1 January 2026.) Upon redemption of GS with due maturity and/or interest on them in accordance with Art. 38 of Ordinance No. 5 of 2025, the BNB debits the TARGET2-Securities special monetary account in TARGET, opened for the needs of the Ministry of Finance, certifies the TARGET2-Securities special monetary accounts in TARGET, indicated by participants, with the amount of the sums due for payment of the GS owned by them and their clients, and writes off from the settlement accounts for GS of participants and from the settlement accounts for GS of their clients in the TARGET2-Securities platform the nominal value of the matured GS.

Ordinance No. 31 of the BNB 5 Art. 14a. (New – SG, No. 109 of 2025, effective from 1 January 2026.) Upon redemption of mobilized GS, for the purpose of securing credit operations of the Eurosystem, with due maturity and/or interest on them in accordance with Art. 38 of Ordinance No. 5 of 2025, the BNB debits the TARGET2-Securities special monetary account in TARGET, opened for the needs of the Ministry of Finance, and certifies the TARGET2-Securities special monetary account in TARGET with the amount of the sums due for payment of the GS mobilized by participants, and writes off from its account the nominal value of the matured GS, provided that this does not lead to a decrease in the total value of the participant's collateral pool below their total credit position.

Art. 15. (1) (Amend. – SG, No. 109 of 2025, effective from 1 January 2026.) Upon early redemption of GS before maturity by payment in accordance with Chapter Six of Ordinance No. 5 of 2025, the BNB carries out the settlement in accordance with Art. 14. (2) (Suppl. – SG, No. 100 of 2013; amend. – SG, No. 109 of 2025, effective from 1 January 2026.) Upon early redemption of GS before maturity by exchange of GS in accordance with Chapter Six of Ordinance No. 5 of 2025, the BNB carries out the settlement by writing off GS from the respective issue from the settlement accounts for GS of participants and recording in their accounts GS from the new issue at nominal value.

Chapter Four Settlement of GS on the Secondary Market

Art. 16. (Amend. – SG, No. 109 of 2025, effective from 1 January 2026.) The Bulgarian National Bank carries out the settlement of transactions with GS on the secondary market, indicated in Art. 15 of Ordinance No. 5 of 2025.

Art. 17. (Amend. – SG, No. 109 of 2025, effective from 1 January 2026.) Settlement of participants' accounts in transactions with GS, concluded in accordance with Chapter Three, Section II of Ordinance No. 5 of 2025, is carried out as follows:

1. (amend. – SG, No. 100 of 2013; amend. and suppl. – SG, No. 109 of 2025, effective from 1 January 2026.) in transactions with movement of monetary funds, the TARGET2-Securities special monetary account in TARGET, indicated by the acquirer, is debited and the TARGET2-Securities special monetary account in TARGET, indicated by the transferor, is certified with the amount indicated in the transaction request, and simultaneously the settlement account for GS of the transferor in the TARGET2-Securities platform is debited and the settlement account for GS of the acquirer in the TARGET2-Securities platform is certified with the nominal value of the GS subject to the transaction;
2. (amend. – SG, No. 100 of 2013; suppl. – SG, No. 109 of 2025, effective from 1 January 2026.) in transactions without movement of monetary funds, the settlement account for GS of the transferor in the TARGET2-Securities platform is debited and the settlement account for GS of the acquirer in the TARGET2-Securities platform is certified with the nominal value of the GS subject to the transaction.

Art. 18. (Suppl. – SG, No. 100 of 2013; amend. and suppl. – SG, No. 109 of 2025, effective from 1 January 2026.) In transactions with GS, concluded in accordance with Chapter Three, Section III of Ordinance No. 5 of 2025, settlement of participants' and their clients' accounts is carried out by debiting the settlement account for GS of the transferor in the TARGET2-Securities platform and certifying the settlement account for GS of the acquirer in the TARGET2-Securities platform with the nominal value of the GS subject to the transaction.

Art. 19. (Amend. – SG, No. 100 of 2013; amend. and suppl. – SG, No. 109 of 2025, effective from 1 January 2026.) The Bulgarian National Bank carries out the settlement of GS in transactions under Chapter Four of Ordinance No. 5 of 2025, by debiting/certifying settlement accounts for GS in the TARGET2-Securities platform owned by participants in ESROT, and certifying/debiting their settlement accounts for GS under Art. 8, para. 1, items 3 and 4 in the TARGET2-Securities platform at nominal value.

Chapter Four "a" Unsuccessful Settlement of GS on the Secondary Market (New – SG, No. 22 of 2022)

Art. 19a. (New – SG, No. 22 of 2022, suppl. – SG, No. 76 of 2023, effective from 11 September 2023; amend. and suppl. – SG, No. 109 of 2025, effective from 1 January 2026.) In case settlement cannot be carried out on the scheduled date due to lack of GS or monetary funds, the BNB initiates re-instructions for settlement of GS daily, within the timeframes determined in accordance with the rules of the TARGET2-Securities platform.

Art. 19b. (New – SG, No. 22 of 2022)(1) (Amend. – SG, No. 76 of 2023, effective from 11 September 2023; amend. – SG, No. 109 of 2025, effective from 1 January 2026.) Article 19a does not apply in the case of transactions with GS indicated in Art. 15, para. 1, items 2 and 3 of Ordinance No. 5 of 2025, if the value date of the repo transaction and the value date of the maturity of the loan are on a date earlier than the timeframes determined in Art. 19a. (2) (Amend. – SG, No. 76 of 2023, effective from 11 September 2023.) Participants in ESROT may bilaterally cancel already matched settlement instructions, which are part of the same transaction and whose settlement was unsuccessful within the timeframes specified in Art. 19a.

Art. 19c. (New – SG, No. 22 of 2022.) (1) For each settlement instruction on which settlement was unsuccessful, the BNB charges penalty interest to the participant who caused the unsuccessful settlement.

Ordinance No. 31 of the BNB 7 (2) (Amend. – SG, No. 76 of 2023, effective from 11 September 2023.) Penalty interest under para. 1 is accrued and withheld at the end of each working day on which settlement of the settlement instruction was not carried out within the timeframes specified in Art. 19a. (3) Penalty interest is collected officially by the BNB and transferred to the participant affected by the unsuccessful settlement. (4) Penalty interest under para. 1 is calculated as follows:

1. (amend. – SG, No. 76 of 2023, effective from 11 September 2023; amend. – SG, No. 109 of 2025, effective from 1 January 2026.) in case of unsuccessful settlement due to lack of GS – 0.10 basis points of the total market value of the undelivered GS for the timeframes specified in Art. 19a, subject to the transaction;
2. (amend. – SG, No. 76 of 2023, effective from 11 September 2023; amend. – SG, No. 109 of 2025, effective from 1 January 2026.) in case of unsuccessful settlement due to lack of monetary funds – the official overnight credit interest rate charged by the European Central Bank, with a lower limit of 0, on the total market value of the undelivered GS for the timeframes specified in Art. 19a on the market value of the GS subject to the transaction. (5) (Amend. – SG, No. 109 of 2025, effective from 1 January 2026.) In case there is no market value for the respective GS issue, the nominal value of the GS is used in the calculation of penalty interest under para. 4.

Art. 19d. (New – SG, No. 22 of 2022.) The Bulgarian National Bank annually publishes on its website data in accordance with Appendix III to Delegated Regulation (EU) 2018/1229 of the Commission of 25 May 2018 supplementing Regulation (EU) No 909/2014 of the European Parliament and of the Council with regard to regulatory technical standards for settlement discipline in the case of unsuccessful settlement and reports them to the Ministry of Finance.

Chapter Five Exclusion of a Participant from GS Settlement

Art. 20. (Amend. – SG, No. 76 of 2023, effective from 11 September 2023; amend. – SG, No. 109 of 2025, effective from 1 January 2026.) Requests/notifications are not processed and settlement of transactions with GS is not carried out when participation in ESROT is terminated in accordance with Art. 6 of Ordinance No. 5 of 2025.

Art. 21. (Amend. – SG, No. 109 of 2025, effective from 1 January 2026.) Settlement of accounts accounting for the collectively held GS by clients of a participant against whom a measure under Art. 20 has been applied is carried out in accordance with Art. 39, para. 2 of Ordinance No. 5 of 2025.

Art. 22. The withdrawal of a license from a participant in the SSGS, as well as the opening of insolvency proceedings against another participant in the system, do not affect the obligation of the system to process and carry out settlement of instructions for registration of transfer submitted by that participant, as well as the validity and opposability to third parties of such instructions, if they were accepted by the system in accordance with its rules.

Chapter Six Correction of Errors

Art. 23. (1) (Amend. – SG, No. 76 of 2023, effective from 11 September 2023.) Upon establishment of data on incorrect entries in ESROT, the BNB carries out an immediate check in accordance with Ordinance No. 15 of 4 October 2007 on control over transactions with government securities (Ordinance No. 15 of 2007). (2) In case it is established during the check that the incorrect entry in ESROT was carried out by the BNB, it carries out official corrective operations with current value, notifying the participant(s) thereof. (3) (Amend. – SG, No. 109 of 2025, effective from 1 January 2026.) In case it is established during the check that the incorrect entry in ESROT is the result of an executed request/notification from participants in ESROT, sent in accordance with Ordinance No. 5 of 2025, the BNB carries out corrective operations with current value based on a received request/notification from participants in accordance with Chapters Three and Four of Ordinance No. 5 of 2025.

Art. 24. The Bulgarian National Bank is not liable for damages related to the registration and settlement of transactions with GS, caused as a result of incomplete, false or inaccurate information provided by participants in ESROT.

Supplementary Provisions

§ 1. For the purposes of this Ordinance:

1. (amend. – SG, No. 100 of 2013; amend. – SG, No. 109 of 2025, effective from 1 January 2026.) "Settlement account for GS" is an account used for storing government securities, which can be certified or debited with government securities.
2. (amend. – SG, No. 100 of 2013; amend. – SG, No. 76 of 2023, effective from 11 September 2023; repealed – SG, No. 109 of 2025, effective from 1 January 2026.)
3. (amend. and suppl. – SG, No. 100 of 2013.) "Request/notification for transaction" is an instruction of a participant in the GS settlement, transmitted electronically to the BNB, for the purpose of transferring GS to a specified settlement account in the SSGS, with or without movement in the settlement accounts for monetary funds.
4. (suppl. – SG, No. 100 of 2013.) "Transferor" is a person transferring GS from their settlement accounts for GS.
5. (suppl. – SG, No. 100 of 2013.) "Acquirer" is a person acquiring GS to their settlement accounts for GS.
6. (amend. – SG, No. 109 of 2025, effective from 1 January 2026.) "Transaction confirmation" is the accounting document sent to participants for the settlement carried out in the transaction.
7. (new – SG, No. 22 of 2022.) "Unsuccessful settlement" is the lack of settlement of a transaction with government securities on the scheduled date for settlement due to lack of GS or monetary funds, regardless of the reason for this lack.
8. (new – SG, No. 22 of 2022.) "Scheduled settlement date" is the date on which the parties to the transaction have agreed that the settlement must be carried out.
9. (new – SG, No. 22 of 2022; amend. – SG, No. 109 of 2025, effective from 1 January 2026.) "Market value" is a concept within the meaning of Art. 7 of Delegated Regulation (EU) 2017/389 of the Commission of 11 November 2017 supplementing Regulation (EU) No 909/2014 with regard to parameters for calculating monetary penalties for unsuccessful settlement and CSD operations in the receiving member states.
10. (new – SG, No. 76 of 2023, effective from 11 September 2023.) "TARGET" is the Trans-European Automated Real-time Gross settlement Express Transfer system of the new generation (TARGET – Trans-European Automated Real-time Gross settlement Express Transfer system).
11. (new – SG, No. 76 of 2023, effective from 11 September 2023; amend. – SG, No. 109 of 2025, effective from 1 January 2026.) "TARGET2-Securities special monetary account" is an account for monetary payments in connection with the settlement of securities, opened in a system component of TARGET.
12. (new – SG, No. 109 of 2025, effective from 1 January 2026.) "Mobilized GS" are GS owned by a participant in ESROT, which are transferred without change of ownership from an account for GS owned by the participant in ESROT to an account of the BNB for GS, used for securing credit operations of the Eurosystem.
13. (new – SG, No. 109 of 2025, effective from 1 January 2026.) "Credit position" is the amount of credit provided to a counterparty by the central bank of origin, including the reserved special purpose collateral value in the collateral pool.
14. (new – SG, No. 109 of 2025, effective from 1 January 2026.) "Collateral pool" is the sum of the collateral values of assets and monetary funds that the counterparty has mobilized and holds.
15. (new – SG, No. 109 of 2025, effective from 1 January 2026.) "Total market value" is calculated by multiplying the nominal value of the undelivered GS by the market value.

Transitional and Final Provisions

§ 2. This Ordinance is issued on the basis of Art. 36, para. 3 of the Law on State Debt, adopted by Decision No. 113 of 4 October 2007 of the Board of Governors of the BNB and enters into force from 1 November 2007.

§ 3. This Ordinance repeals Ordinance No. 31 on the settlement of GS (SG, No. 70 of 2003).

10 Ordinance No. 31 of the BNB Appendix No. 1 to Art. 9 (Amend. – SG, No. 109 of 2025, effective from 1 January 2026) To the Bulgarian National Bank, Directorate "Fiscal Services" Name of the Participant REQUEST for opening settlement accounts for GS Open to – (name of the participant, for whose benefit the accounts are opened) Seat and address Correspondence address Settlement accounts for GS under Art. 8 of Ordinance No. 31 of 2007 Maintained in the SSGS and the TARGET2–Securities platform The accounts may be disposed of by – (full names and positions of the persons representing the participant and who can dispose of the accounts, as well as other persons authorized by them to sign documents for carrying out transactions with GS): We are aware of and the conditions under Ordinance No. 31 of 2007, Ordinance No. 5 of 2025 and Ordinance No. 15 of 2007 are mandatory for us.