CDCP - EURO

EURO

Changeover to Euro

Introduction of the euro currency in the Slovak Republic

On 1 January 2009 the euro currency will be introduced in the Slovak Republic. This section is dedicated to information on introduction of the Euro to activities and services of Centrálny depozitár cených papierov SR, a.s.

CDCP proceeds in change of euro currency in accordance with the Act No. 659/2007 (Coll.) on the introduction of the euro currency in the Slovak Republic and on the change and amendment of certain acts, with the Decree of the National Bank of Slovakia (NBS) No.221/2008 (Coll.) and the Decree of NBS No.240/2008 (Coll.). The change and the dual display is applicable only to issues of securities which are issued in SKK.

Activities of CDCP in connection with execution of provisions of the Act No. 659/2007 (Coll.):

modification of software equipment used by the CDCP:
- to register book-entry securities,
- to register list of shareholders of paper-form registered shares,
- to generate and change ISIN codes of securities,
- for clearing and settlement of trades in securities,
- for processing of data on the economy (financialSW),
preparation for joining and going live on SWIFT
preparation for linking to the payment system TARGET 2
preparation for linking of CDCP‘s registry to the CCBM module
modification of The Rules of Operation – approved by the NBS
training of the CDCP employees targeted at change of the currency to the Euro

Conversion rate
1 EUR = 30,1260 SKK

I. Period from announcing the conversion rate until the introduction of the Euro

In the period before the Euro introduction (1 January 2009) i.e. until 31 December 2008 CDCP will be collecting announcements from issuers about the change of the nominal value of book-entry securities to the Euro. For this purpose CDCP have prepared a form, which the issuers can use to inform about the change (to announce a calculation of the nominal value of securities to the Euro). CDCP asked the issuers of bonds to inform about this change by 1 December 2008, and to enable the CDCP to make preparations for change of the nominal value. CDCP will execute the change of the nominal value of securities issues as of the day of the Euro introduction in case that all necessary documents will be delivered to the CDCP (in case of bonds also without an announcement from an issuer). If an issuer does not inform CDCP about the change of the nominal value by 1 December 2008 than CDCP, during the technology break:

Method of rounding

b) in case of equities, depository will be waiting until the issuer delivers an announcement about the change of the nominal value, whereas the calculation must be approved by the statutory body of the issuer. Unless the nominal value of equities is not changed, CDCP will not register any change of particulars of such security issue. An extract from the Companies Register must be enclosed to an announcement from an issuer about a change of the nominal value, which is an evidence of the date when the change became effective. CDCP, in accordance with the legislation, will provide for the dual display of the nominal value of securities. Such calculation is only indicative and it is not possible to use it as an official conversion of the nominal value.

CDCP is providing for the dual display of the nominal value of securities in the output of the information services (e.g. owner’s account statement) the following way:

Value in the first position = value in SKK which is registered in the registry of securities,
Value in the second position = value calculated to the Euro using conversion rate,
Information on the value of the conversion rate.

CDCP, in accordance with the wording of the Article 18 par. 6 of the Act on the introduction of the Euro:

Will send, in a period from the day of determination of the conversion rate until one month before the day of the Euro introduction, a transaction statement to all owners of book-entry securities whose account was credited with securities based on an agreement on issue of securities concluded with an issuer. The account statement will contain information on issued securities as well as the dual display of the nominal value of securities.

II. Period after the Euro introduction

CDCP will provide for the dual display of the nominal value of securities, while after the day of the Euro introduction for equities applies that:

a. Before execution of the change in the CDCP’s registry based on the announcement from an issuer:

Value in the first position is the value in SKK which is registered in the registry of securities,
Value in the second position will be the value calculated to Euro using the conversion rate.
Information on the value of the conversion rate.

b. After execution of the change in the CDCP’s registry based on the announcement from an issuer:

Value in the first position is the value in Euro stated in the announcement from the issuer.
Value in the second position is the value calculated from Euro, stated in the announcement from the issuer, to SKK using the conversion rate.
Information on the value of the conversion rate.

CDCP will provide for the dual display of the nominal value of securities while after the day of the Euro introduction for bonds, co-operative participation certificates and units of unit trusts applies that:

Value in the first position is the value in Euro as stated in the announcement from the issuer or, in case that the issuer did not deliver the announcement to CDCP, according to calculation made by CDCP.
Value in the second position will be the value calculated from value in Euro announced by an issuer or calculated by CDCP to SKK using conversion rate.
Information on the value of the conversion rate.

From the day of the introduction of the Euro in the Slovak Republic – 1 January 2009, CDCP will be publishing in periodic press publishing stock exchange information and also on the CDCP’s web page a list of securities issues for which the change of the nominal value was executed and registered in the CDCP’s registry. After 1 January 2009, the list of securities issues, for which the change of the nominal value to Euro was executed, will be updated after each registration of the change. Information will contain:

Business name of an issuer and IČO (Company Identification Number),
Identification of securities, e.g. ISIN and type of securities
Nominal value of securities in the Slovak currency before the change,
Nominal value in the Euro after the change,
Date from which this change is effective, (bonds: 1 January 2009, equities: date of registration to the Companies Register),
Conversion rate,
Way of rounding used in the calculation.

CDCP, in accordance with wording of the Article 18 par. 6 of the Act on the introduction of the Euro:

Within three months from introduction of the Euro the CDCP will send an account statement to all owners of securities who, on the day of issue of the owner’s account statement, have in the account securities from issues issued in the period from the day of determination of the conversion rate until the day of the Euro introduction. The same is also applicable to securities issues which were not credited in full to owner’s accounts by the day of meeting this duty.

Change of the currency and financial settlement of transactions in securities:

In case of settlement of free of payment transfers there is no change for both the transferor and the transferee.
In case of settlement of delivery versus payment transfers (OTC trade or trade closed at the Bratislava Stock Exchange) it will be changed to the payment system TARGET 2 on the day of the Euro introduction.

Methods of rounding applied to automatic change of the nominal value of securities

In case that an issuer of bonds, co-operative participation certificates and units of the unit trust does not inform the central depository on a change of the nominal value of the securities from SKK to the Euro, than the central depository will convert the nominal value to the Euro automatically on 1 January 2009. The central depository will use two methods of rounding for conversion using conversion rate: Rounding method “UP” and “MATHEMATIC”.
Description of rounding method “UP”: if the digit following the rounding digit is other than zero, the rounding digit is increased by 1.
Description of rounding method “MATHEMATIC”:
- if the digit following the rounding digit equals to 0,1,2,3 or 4, the rounding digit is the same
- if the digit following the rounding digit equals to 5,6,7,8, or 9, the rounding digit is increased by 1.

Category of Securities	Activity
Bonds	The nominal value will be converted from SKK to the Euro Calculation rules: - accuracy upto: 2 decimal places - rounding method: MATHEMATIC
Government bonds	The nominal value will be converted from SKK to the Euro Calculation rules: - accuracy upto: 2 decimal places - rounding method: UP
Units of Unit Trusts	The nominal value will be converted from SKK to the Euro Calculation rules: - accuracy upto: 6 decimal places - rounding method: MATHEMATIC
Participation Certificates	The nominal value will be converted from SKK to the Euro Calculation rules: - accuracy upto: 6 decimal places - rounding method: MATHEMATIC

EURO – FAQ

Does a duty of dual display of values apply to the central depository?

Yes, the duty does apply. CDCP will provide for the dual display of the nominal value of securities in such a way, that the value in the first position is the value stated in SKK registered in the securities register and the value in the second position is the value calculated to the Euro using the conversion rate. CDCP, after the Euro introduction until the end of the year 2009, will be executing the dual display of the nominal value of securities in accordance with the rules valid for dual display after the day of the Euro introduction. The dual display and the change of the currency to the Euro will apply only to those securities issues that are issued in SKK.

What are the rules for dual display of the nominal value of securities after the introduction of the euro currency?

CDCP will provide for the dual display of the nominal value of securities after the day of the Euro implementation, while:

For equities, with exception of co-operative units and units of open-ended units trust, it applies that until the change is executed in the CDCP’s register, based on a notice on the change of the currency to the Euro from an issuer, the value in the first position is stated in SKK, which is registered in the register of securities, and the value in the second position will be the value calculated to Euro and the conversion rate will be used. After the change in the CDCP’s register based on the issuer’s notice is done, the value in the first position is the value in Euro according to the notice from the issuer and the value in the second position will be the value calculated to SKK from value in Euro announced in the notice, while the conversion rate is used. For bonds, co-operative units and units of open-ended units trust it applies that the value in the first position is the value in Euro announced in the issuer’s notice on the change of the currency to Euro or from calculation performed by the CDCP in case that issuer did not deliver a notice, and the value in the second position will be the value calculated from the value in Euro announced in the issuer’s notice or calculated to SKK by the CDCP, at the conversion rate.

How will I learn that securities in my owner’s account were converted to the euro currency?

CDCP will send, one month before the day of Euro introduction at the latest, transaction statements to all owners of book-entry securities for which it administers an owner’s account at the CDCP level, and which were credited with book-entry securities as a result of issuing the issues of book-entry securities. The transaction statement will contain information on issued securities together with the dual display of the nominal value of securities. CDCP will send, within three months after the Euro implementation, an account statement to all owners of securities who, at the day of issue of an account statement, have on their account securities from issues of securities which were issued in the period from determination of the conversion rate till the Euro introduction. Except for that, after the day the Euro introduction, the CDCP will be publishing information on execution of change of the nominal value of securities in periodical press that is publishing a stock exchange information and on it’s web page.

What is the duty of the issuer in order to have its securities converted to euro currency?

Duties of issuers connected to the change of the nominal value are stipulated in the Act No 659/2007 Coll. on the introduction of the euro currency in the Slovak Republic and on changes and amendments to certain acts ("Act on the Euro implementation").

Issuers of book-entry securities are obliged, with respect to the CDCP, to submit a notice on the change of currency to the Euro, which is a result of decision of the statutory body of the issuer. Information about a form of the notice will be stated in the CDCP’s Rules of Operation, respectively a form will be published on the CDCP’s website. The change, as such, in the register of securities will be executed by the CDCP continuously after the euro currency enters into force.

CDCP, during a technology break at the turn of the year 2008, will assure processing of all notices from issuers of book-entry bonds, units of open-ended units trust and co-operative units that will be delivered to the CDCP’s mail room on 1 December 2008 at the latest. Concurrently, during the same time, the CSD will perform automatically, in accordance with the Law on the introduction of the Euro (Article 14, par. 4), the calculation of the nominal value of bonds, co-operative units and of units of open-ended units trusts of those issuers who did not deliver the notice.

Issuers of equities with exception of co-operative units and units of open-ended unit trusts must enclose with the notice on the change of the currency to the Euro an extract from the Companies Register, which in case of shares and temporary certificates, is an evidence of the date when the change became effective. CDCP will register (free of charge, the is a possibility to charge the service after the statutory term) the change of the currency of shares and temporary certificates to the securities register with the date when the change entered into force as stated in the Companies Register.

CDCP will be publishing information on execution of the change of the nominal value of securities in periodical press that is publishing stock exchange information and on it’s web page.

How will the migration to the euro currency be displayed in the Register of pledge rights?

In case of contractual pledge right, participants of the contract are obliged to submit an order for registration of the change of the pledge right in the Register of pledge rights, i.e. change in value and currency (if denomination is in SKK) of receivables. CDCP, pursuant to the Article 173i of the Law No 659/2007 Coll. on the introduction of the euro currency in the Slovak Republic and on the change and amendment of certain acts, will perform in the period of 3 (three) months after the day of the implementation of the Euro the change of the currency of the receivable in the Register of pledge rights, separate register of transfers as collateral and in the owner’s account in the CDCP’s register open at the CDCP level.

Will the CDCP provide for the dual display also in the register of shareholders of registered paper shares?

Yes, the CDCP will provide for the dual display of values voluntarily also in the register of shareholders of registered paper shares.

What if an (security) issue is issued in the euro currency or CZK or in a currency other than SKK?

CDCP, in case of securities issues issued in currency other than SKK, will not display the nominal value in a dual system, and the same applies to the value of receivables in case of pledge or transfers as collateral

What if an issuer will never submit a notice about the change of the nominal value of equities to Euro, with exception of co-operative units and units of open-ended units trust?

CDCP will maintain the SKK currency in its registry also after the implementation of the Euro. At the same time, according to the Act on the Euro implementation, such issuer of equities is not allowed to submit a proposal or order for registration of any other change in the CDCP´s register.

How will the CDCP ensure its duty stated in the Article 14 (3) of the Law on the implementation of the Euro, i.e. execution of entry of the change of the currency to the Euro not only to issuer’s registry but also in concerned owner’s accounts, client’s accounts, holder’s accounts in cooperation with the CDCP members?

CDCP performs this activity in accordance with the provisions of the Rules of Operation that state that the CDCP executes a technical realization of the change of the currency in stated accounts automatically.

Will the CDCP check the calculation of the currency in a notice delivered by an issuer?

No, CDCP will not, because an issuer is responsible by law for calculation of the currency. Of course, in case that it is obvious that calculation is not correct, the CDCP will notify the issuer to make a correction.

Central Securities Depository of the Slovak Republic