/ CENTRAL SECURITIES DEPOSITORY SYSTEM RULES Bank of Zambia SEPTEMBER, 2014 1 Table of Contents 1 General Principles and Objectives .............................................................................. 6 1.1 General ................................................................................................................. 6 1.2 Role of the Bank of Zambia ................................................................................. 7 1.3 Delivery versus Payment ...................................................................................... 7 2 Eligible Securities ....................................................................................................... 8 2.1 Basic Structure ..................................................................................................... 8 2.2 Issuers ................................................................................................................... 8 2.3 Primary Register ................................................................................................... 8 2.4 Issuance ................................................................................................................ 8 2.5 Redemption .......................................................................................................... 8 2.6 Discount/ Interest /Coupon................................................................................... 8 2.7 Ownership Restrictions ........................................................................................ 9 2.8 ISIN ...................................................................................................................... 9 2.9 Setting Up Standing Data and Payment Events ................................................... 9 2.10 Information for Participants.............................................................................. 9 2.11 Managing Static and Historical Data ................................................................ 9 3 Access Criteria and Conditions ................................................................................. 11 3.1 Categories of Participants................................................................................... 11 3.2 Application for Participation .............................................................................. 13 3.3 Financial Soundness and Requirements ............................................................. 13 3.4 Technical Competence ....................................................................................... 13 3.5 Authorised Officers, Authorised Persons and Security Administrators ............. 13 3.6 Identification of Participants .............................................................................. 14 3.7 Operational capacity ........................................................................................... 15 3.8 Modifying a Participant‟s Details ...................................................................... 17 3.9 Suspension and Termination .............................................................................. 17 4 Security Procedures .................................................................................................. 20 4.1 General Security ................................................................................................. 20 4.2 System Security ...................................................................................................... 20 5 Creation and Maintenance of Users .......................................................................... 21 5.1General ..................................................................................................................... 21 5.2 Request to Issue User Access ................................................................................. 21 5.3 Charging .................................................................................................................. 22 5.4 Creation and Maintenance of User Profiles ............................................................ 22 5.5 Request to Modify a User ....................................................................................... 23 5.6 Request to Disable or Remove a user ..................................................................... 23 5.7 Right of Bank of Zambia to Rely on Instructions ................................................... 23 5.8 Retention of User Records ...................................................................................... 24 6 Accounts ................................................................................................................... 25 6.1 General .................................................................................................................... 25 6.2 Creating Accounts for Beneficial Owners .............................................................. 25 6.3 Synthetic Accounts ................................................................................................. 25 6.4 Analytic Accounts ................................................................................................... 26 2 6.5 Blocking Accounts .................................................................................................. 26 6.6 Restricting Accounts ............................................................................................... 26 6.7 Account Balances.................................................................................................... 26 7 Trading Ceiling ......................................................................................................... 27 7.1 General .................................................................................................................... 27 7.2 Setting and Amending a Trading Ceiling ............................................................... 27 7.3 Trading Ceiling Values ........................................................................................... 27 7.4 Updating Trading Ceiling Values ...................................................................... 27 8 Primary Market Transactions .................................................................................... 28 8.1 Types of Transactions ............................................................................................. 28 8.2 Auctions .................................................................................................................. 28 8.3 Private Placements ............................................................................................. 29 8.4 Coupon/Interest .................................................................................................. 29 8.5 Partial Redemptions ........................................................................................... 30 8.6 Redemption at Maturity ..................................................................................... 30 9 Submission and Validation of Messages .................................................................. 31 10 Secondary Market Transactions ................................................................................ 32 10.1 Classes of Transactions .................................................................................. 32 10.2 Finality of Settlement ..................................................................................... 32 10.3 Short Selling ................................................................................................... 32 10.4 Responsibility for Reporting and Settlement.................................................. 32 10.5 Restricted Accounts ........................................................................................ 33 10.6 Settlement Day ............................................................................................... 33 10.7 Cancellation of Messages and Transactions ................................................... 33 10.8 Messages and Formats .................................................................................... 33 10.9 DvP Sale and Purchase Transactions.............................................................. 34 10.10 Repo and Reverse Repo Transactions ............................................................ 37 10.11 Free of Payment Transfers .............................................................................. 38 10.12 Rediscount Facility ......................................................................................... 38 11 Pledges in favour of Bank of Zambia ....................................................................... 40 11.1 Types of Pledge .............................................................................................. 40 11.2 Secured Loan .................................................................................................. 40 11.3 Loan of Last Resort ............................................................................................... 40 11.4 Zambia Electronic Clearing House Limited ......................................................... 41 11.5 Messages and Notifications ............................................................................ 42 11.6 Pledge End Date .................................................................................................... 43 11.7 Interest................................................................................................................... 43 11.8 Partial Redemptions .......................................................................................