The “Settlement Agent for Securities Clearing and Settlement Model” allows the Settlement Agents - commercial banks to make cash settlements on the securities market. This model is aimed at more efficient management of the securities market’s liquidity in Azerbaijan, optimize the settlement regimes and further development of the country’s securities market as a whole. The Settlement Agent model is regulated by the “Joint agreement on clearing and settlement of securities and derivatives” concluded among National Depository Center, Central Bank of the Republic of Azerbaijan (CBAR), Settlement Agents and 8 investment companies currently operating in the market.
According to the model, CBAR is a settlement bank that renders settlement services between Settlement Agents for cash obligations arising from the transactions concluded on the Baku Stock Exchange (BSE).
The Settlement Agents are the banks operating in the Republic of Azerbaijan, which determines the trading limit for investment companies to conduct transactions and executes respective cash obligations.
Settlement agents shall meet the below-mentioned requirements:
- to be a member of the Real Time Gross Settlement System (AZIPS);
- to have a high level of financial stability.
Functions of the Settlement Agent are the following:
- providing trading limits to the investment companies that Settlement Agent cooperates with on a contract basis;
- execution of cash settlements of investment companies;
- opening accounts for investment companies;
- opening of temporary accounts for issuers of investment securities.