Order Approving COSOB Regulation No. 03-01 on the General Regulations of the Central Securities Depository

Order of 18 Rajab 1424 corresponding to September 15, 2003, approving the regulation of the Commission for Organization and Surveillance of Stock Exchange Operations No. 03-01 of 15 Moharram 1424 corresponding to March 18, 2003, on the general regulations of the central securities depository.

The Minister of Finance,

Having regard to Ordinance No. 75-59 of September 26, 1975, as amended and supplemented, establishing the Commercial Code;

Having regard to Legislative Decree No. 93-10 of May 23, 1993, as amended and supplemented, relating to the securities market;

Having regard to Ordinance No. 03-11 of 27 Joumada Ethania 1424 corresponding to August 26, 2003, relating to currency and credit;

Having regard to Presidential Decree No. 03-215 of 7 Rabie El Aouel 1424 corresponding to May 9, 2003, as amended, appointing the members of the Government;

Having regard to Executive Decree No. 95-54 of 15 Ramadhan 1415 corresponding to February 15, 1995, fixing the attributions of the Minister of Finance;

Having regard to Executive Decree No. 96-102 of 22 Chaoual 1416 corresponding to March 11, 1996, implementing Article 32 of Legislative Decree No. 93-10 of May 23, 1993, as amended and supplemented, relating to the securities market;

Orders:

Article 1. — The regulation of the Commission for Organization and Surveillance of Stock Exchange Operations No. 03-01 of 15 Moharram 1424 corresponding to March 18, 2003, on the general regulations of the central securities depository, the text of which is annexed to this order, is hereby approved.

Art. 2. — This order shall be published in the Official Journal of the People's Democratic Republic of Algeria.

Done in Algiers, on 18 Rajab 1424 corresponding to September 15, 2003.

Abdellatif BENACHENHOU.

ANNEX

COSOB Regulation No. 03-01 of 15 Moharram 1424 corresponding to March 18, 2003, on the general regulations of the central securities depository.

The President of the Commission for Organization and Surveillance of Stock Exchange Operations (COSOB),

Having regard to Ordinance No. 75-59 of September 26, 1975, as amended and supplemented, establishing the Commercial Code;

Having regard to Law No. 90-10 of April 14, 1990, as amended and supplemented, relating to currency and credit;

Having regard to Legislative Decree No. 93-10 of May 23, 1993, as amended and supplemented, relating to the securities market;

Having regard to Ordinance No. 96-08 of 19 Chaâbane 1416 corresponding to January 10, 1996, relating to collective investment undertakings in securities (UCITS) (SICAVs and FCPs);

After adoption by the Commission for Organization and Surveillance of Stock Exchange Operations (COSOB) on 15 Moharram 1424 corresponding to March 18, 2003;

Enacts the regulation as follows:

Article 1. — This regulation aims to define, in accordance with the provisions of Article 31 of Legislative Decree No. 93-10 of May 23, 1993, as amended and supplemented, the rules relating to:

— the relations between the central securities depository hereinafter referred to as 'the central depository' and the beneficiaries of its services; — the conservation of securities, the operation and administration of current securities accounts; — the management of the settlement and delivery system for securities.

TITLE I
RELATIONS BETWEEN THE CENTRAL DEPOSITORY AND THE BENEFICIARIES OF ITS SERVICES

Art. 2. — The implementation modalities of this regulation are determined by the central depository and brought to the knowledge of its members. General information, whether periodic or specific, or clarifications relating to securities operations are published in the form of notices to members.

Art. 3. — The admission of a member is subject to a membership agreement binding it to the central depository. This agreement fixes, in particular, the respective obligations and responsibilities of the central depository and the member, as well as service tariffs and payment modalities.

Art. 4. — The specific rules governing the relations, rights, and obligations of the central depository, on the one hand, of entities managing markets, clearing houses, and foreign central depositories, on the other hand, are fixed by convention.

Art. 5. — The central depository establishes an internal regulation including the rules of ethics applicable to persons placed under its responsibility or acting on its behalf. The internal regulation and its modifications are subject to the prior visa of the Commission for Organization and Surveillance of Stock Exchange Operations.

Art. 6. — The following may be members of the central depository:

— banks and financial institutions,
— stock exchange intermediaries (IOBs),
— Treasury securities specialists (SVTs), authorized to exercise activities of order execution for third parties, trading for own account, placement and firm commitment, account keeping, clearing, conservation, or administration of securities;

— legal entities issuing securities admitted to the operations of the central depository;

— foreign central securities depositories.

Any other Algerian or foreign establishments whose activities are comparable to those exercised by the establishments mentioned above may also be members.

Art. 7. — Admission to the central depository is subject to the submission of an administrative file comprising, in particular:

— an application for admission;
— the designation of persons authorized to deal with the central depository; — updated statutes.

The central depository fixes the content of the file and the necessary information for the admission of the member.

Art. 8. — The decision to admit a member is taken by the central depository. It is notified to the applicant within two months following the date of receipt of all constituent documents of the file.

Art. 9. — The removal of a member from the central depository occurs in the following cases:

— at its request, either because it abandons the activities for which it joined the central depository, or because, being an account-keeping conservator, it decides to mandate another account-keeping conservator to perform all or part of the tasks related to its conservation activity, or because, as an issuer, the securities it issued have been removed from the central depository;

— at the request of any authority that granted approval, when the member no longer meets the required authorization conditions for the exercise of its activities.

Art. 10. — When a member of the central depository ceases its activities, or when, being an account-keeping conservator, it mandates another account-keeping conservator to perform all or part of the tasks related to its conservation activity, it must inform the central depository by registered letter with acknowledgment of receipt as soon as possible.

Art. 11. — In the event of cessation of activity by the member, the central depository proceeds to the closure of its current accounts as soon as they show a zero balance.

TITLE II
CONSERVATION OF SECURITIES, OPERATION AND ADMINISTRATION OF CURRENT SECURITIES ACCOUNTS

Chapter 1
Admission of Securities to the Operations of the Central Depository

Art. 12. — The central depository may admit to its operations:

— shares and other securities giving or potentially giving access, directly or indirectly, to capital or voting rights, transferable by book entry or tradition; — debt securities representing a claim right against the legal entity issuing them, transferable by book entry or tradition, excluding commercial bills and cash certificates; — units or shares of collective investment undertakings in securities (UCITS); — securities of the same nature issued based on foreign rights.

These securities must be compatible with the operation of current accounts as defined in Chapter 3 below.

Art. 13. — Admission of securities is automatic when they are listed on an Algerian regulated market and are transferable only by book entry pursuant to the law, statutory provisions, or the issuance contract.

Art. 14. — The practical modalities for the admission of different categories of securities are specified by the central depository. These modalities concern, in particular, the obligations of issuers vis-à-vis the central depository regarding securities operations.

Chapter 2
Conservation of Securities

Art. 15. — The central depository records in its accounting books, in an issuance account, the entirety of the securities composing each issuance of book-entry securities admitted to its operations.

Art. 16. — Subject to securities pending allocation and carried to transit accounts, the central depository verifies that the amount of the issuance account is at all times equal to the sum of securities appearing in the current accounts of its members.

Art. 17. — When the issuance of securities admitted to the operations of the central depository is not book-entry, the central depository physically holds in its vaults the securities entrusted to it for deposit.

When they are exclusively registered, these securities are registered in the name of the central depository, which acts in this case as the agent of the beneficial owners.

Art. 18. — When the issuance of securities, admitted to the operations of the central depository, is a foreign issuance, the central depository holds the securities according to their mode of circulation, either physically in its vaults or in an account opened in its name with a foreign central depository or banking establishment.

When they are exclusively registered, these securities are registered, either directly in the name of the central depository, which acts in this case as the agent of the beneficial owners, or in the name of a central depository or banking establishment mandated for this purpose by the central depository.

The central depository specifies, for each of the foreign security issuances admitted, the formalities to be completed to be credited to a current securities account for acquisitions on a foreign market.

Art. 19. — For each of the security issuances referred to in Articles 17 and 18 above and admitted to its operations, the central depository continuously verifies that the total of securities it holds in its vaults or in an account with a foreign organization is equal to the total of assets held in account by its members.

The central depository also carries out periodic verifications in its vaults and controls the accounting documents received from depositary organizations.

Chapter 3
Operation of Current Accounts

Art. 20. — The central depository opens one or more current securities accounts to each establishment whose admission it has accepted. Each current account is assigned a member code reserved for it.

The current account of a member is divided into separate accounts for each value held. When the member holds securities, partly bearer and partly registered, the account is subdivided into a bearer securities account and a registered securities account.

The current accounts of issuers track the registered securities holdings whose holder has entrusted administration to the issuer itself.

The current accounts of account-keeping conservators record the bearer and registered securities holdings whose holder has entrusted administration to the account-keeping conservator.

Art. 21. — The assets of members in the books of the central depository must be distinguished according to the various categories of holders defined by the commission.

This distinction is achieved by subdividing the current account of a member into several sub-accounts.

Art. 22. — Issuers, or their agents acting as centralizers or domiciliaries, may request the opening of special accounts to facilitate operations on the securities they issue or have issued.

These are essentially:

— either accounts for the provision of new securities to be placed with account-keeping conservators; — or receptacle accounts for securities to be cancelled.

Art. 23. — Accounts are credited with securities transferred to the benefit of the member holding the account or deposited by the latter with the central depository.

Accounts are debited with securities transferred by the member to the benefit of another member or withdrawn at its request.

Art. 24. — Account-to-account transfer orders are, as the case may be:

— either issued directly by the holder of the account to be debited; — or generated automatically by the settlement and delivery system for securities, managed by the central depository, under the conditions defined in Title III below.

Art. 25. — The central depository communicates daily to each member the statement of operations accounted for in its current accounts.

The statement indicates, for each account moved, the previous balance, the characteristics of the movements recorded to its debit or credit, and the new balance resulting therefrom.

Chapter 4
Operation of Registered Securities Accounts

Art. 26. — The provisions of this chapter apply only to book-entry securities of entities under Algerian law, when they are registered and their holder has entrusted administration to an account-keeping conservator. This intermediary accounts for the assets corresponding to the securities registered with the issuer in individual accounts identical to those held by the issuer.

Art. 27. — The central depository ensures the transmission of registered information relating to security holders between administrative intermediaries and issuers.

The practical modalities for the transmission of registered reference slips are specified by the central depository.

Art. 28. — In the event of a change of holder of administered registered securities, the administrative intermediary sends to the issuer, through the central depository, the references of the former holder, those of the new holder, the name of the account-keeping conservator chosen by the latter, and the form under which it intends to obtain the securities. Once the slip is accepted, the issuer updates its accounting.

Art. 29. — When administered registered securities are subject to conversion to bearer form or vice versa, the administrative intermediary transfers them to the issuer's account and notifies the issuer, via the central depository, of the holder's references and the new form under which the holder intends to hold its securities by means of a registered reference slip.

Art. 30. — Any change of administrative intermediary for registered securities is notified to the issuer through the central depository.

Chapter 5
Administration of Accounts

Art. 31. — The central depository may collect, in an account opened with a banking establishment, directly from the issuer or its agent, on behalf of its members, the sums due to them for the payment of dividends or interest, the redemption of debt securities, or any other product related to the assets they hold in current accounts.

The central depository may also open dividend or interest coupon accounts, debt security redemption accounts, or accounts for any other product related to the assets they hold in current accounts, for its members.

Art. 32. — In the course of securities operations whose purpose is limited to the distribution of securities, free or not, or the exchange of securities, the exercise of rights related to securities deposited in current accounts is carried out by presenting the rights to the issuer or a mandated establishment by means of transfer orders recorded in the accounting of the central depository.

When the modalities of such operations allow, the exercise of rights can be treated automatically by the central depository, without intervention of its members.

Art. 33. — Issuing companies that have statutorily provided the option to identify at any time the holders of their securities conferring immediately or ultimately the right to vote at shareholders' meetings may request the central depository to collect this information from its members who are account-keeping conservators.

The conditions for implementing this identification are specified by the central depository, which defines, in particular, the identification elements to be provided and the deadlines to be respected.

Art. 34. — The central depository may issue certificates representing rights related to securities deposited in current accounts. These numbered certificates serve as presentation of the securities or coupons and give rise to the establishment of a summary list intended for the issuer or its agent for endorsement as necessary.

TITLE III
THE SETTLEMENT AND DELIVERY SYSTEM FOR SECURITIES

Chapter 1
General Organization

Art. 35. — The settlement and delivery system for securities managed by the central depository allows for the automatic and simultaneous realization of the settlement and delivery of securities that have been the subject of operations between authorized intermediaries.

Art. 36. — Cash settlement is ensured by the Bank of Algeria. The participation of the Bank of Algeria in the settlement and delivery system is the subject of a convention with the central depository.

Art. 37. — The settlement and delivery system processes, on the one hand, the settlement and delivery operations of securities traded on a regulated market, and, on the other hand, settlement and delivery operations that do not have their direct origin in trading on a regulated market.

Art. 38. — The settlement and delivery system revolves around two main functions:

— the validation of operations;
— the accounting of operations in the current securities accounts of the central depository and in the current cash accounts of the Bank of Algeria.

These functions are ensured, on the one hand, by two operation validation sub-systems: the sub-system for adjustment between authorized intermediary negotiators and order givers, and the sub-system for matching between parties to a transaction; on the other hand, by the settlement sub-system.

Art. 39. — By derogation from Article 38 above, settlement and delivery operations between negotiators intervening on regulated markets are transmitted to the central depository in the form of validated movements, directly taken charge of by the settlement sub-system.

Art. 40. — The settlement and delivery system for securities operates every day the central depository is open.

Art. 41. — Members of the central depository may participate in each of the validation sub-systems corresponding to their activities.

Art. 42. — Members who choose to mandate another participant for the delivery of their securities or the management of their cash must sign a convention to this effect with the mandated members. These conventions must be notified to the central depository.

Chapter 2
The Adjustment Sub-system

Art. 43. — The adjustment sub-system allows order-collecting intermediaries and negotiators to agree on orders executed on regulated markets.

Art. 44. — For any negotiation, the negotiator transmits an execution notice to the order-collecting intermediary, which responds with a message of agreement or refusal.

The order-collecting intermediary must introduce its response within a standardized time limit shorter than the delivery time in force. In the absence of a response within the time limit, the execution notice is validated by default by the system.

Negotiators are informed daily by the central depository of the status of their execution notices: accepted, pending validation, or refused by order collectors.

Agreement on an execution notice recorded by the system is irrevocable. It gives rise to the issuance by the system, on behalf of the two parties concerned, of a delivery against payment order.

Delivery against payment orders are transmitted to the settlement sub-system upon their issuance.

Art. 45. — When a member of a market has mandated another member to ensure the settlement of its operations, the adjustment sub-system automatically substitutes its mandate as the counterparty of the order-collecting participant for the settlement of its operations.

The adjustment sub-system notifies the mandate of the validated execution notices that had been issued by the mandator to inform it of the securities and cash movements that will affect its accounts.

Art. 46. — When an order-collecting member who is an account-keeping conservator has mandated another member for the conservation of its securities and has chosen to participate in the adjustment sub-system to agree on its operations itself, the sub-system automatically substitutes its mandate as the counterparty of the market member participant for the settlement of its operations.

The adjustment sub-system notifies the mandate of the execution notices validated by the participant under conservation mandate to inform it of the securities and cash movements that will affect its accounts.

Chapter 3
The Matching Sub-system

Art. 47. — The matching sub-system allows the reconciliation of symmetrical settlement and delivery instructions relating to operations concluded between two parties outside a regulated market.

The central depository is not required to ensure the substantive regularity of the instructions, nor the power of the participants to carry out the operations for which the instructions are communicated to it.

Art. 48. — The sub-system admits two categories of operations:

1. Routine over-the-counter operations between participants:

   • primary market operations,
   • subscriptions and repurchases of shares and units of collective investment undertakings in securities,
   • purchases or sales of securities,
   • temporary transfers of securities,
   • re-deliveries of securities following negotiations.

2. Particular operations carried out with the Bank of Algeria:

   • operations relating to monetary policy interventions,
   • intra-day liquidity requests.

The list of operations processed, including those relating to monetary policy interventions determined by the Bank of Algeria, is disseminated by the central depository.

Art. 49. — Settlement and delivery instructions must be filled in with the settlement date agreed upon by the parties.

The matching sub-system accepts participant instructions for a settlement agreed upon on the same day or at a date within a time limit fixed by the central depository.

Instructions must also be filled in with a reference date considered by the settlement sub-system as an operation date.