KDPW executes operations on securities on the basis of a request submitted by the issuer accompanied by documents providing the legal basis for the operation and an accounting note describing the details of the operation.
Information is exchanged between the issuer and KDPW using documents in traditional/electronic form.
Operations on securities include:
- exchange of securities
- assimilation of securities
- conversion of securities
- cancellation of securities
- conversion of securities
Exchange of securities involves a change in the quantity of securities recorded in the securities depository and a change in the nominal amount of the securities at an exchange rate defined by the issuer. Securities with the previous nominal amount are deleted and securities after the exchange are recorded on the exchange date. Assimilation of securities involves the issuance of a common ISIN code to securities which were previously recorded in the depository under separate codes. Assimilation is possible provided that the securities to be assimilated are fungible, i.e., all securities with a given code confer the same rights. Securities with a given ISIN code (acquired securities) are deleted and securities with the ISIN code of the acquiring securities are recorded in their place on the assimilation date. Conversion of securities involves the issue of other securities to the owners of securities. In particular, conversion is associated with the deletion of registered securities and the recording of bearer securities in their place, or vice versa.
Cancellation of securities involves the deletion of a certain quantity of securities, specified by the issuer, from the direct participant’s account(s). Direct participants in whose accounts securities are to be cancelled are required to flag the securities subject to cancellation (with a special asset status). Conversion of securities involves the allotment of a certain quantity of securities in exchange for other securities. The operation may involve securities of the same issuer, e.g., when converting bonds into shares, or securities of different issuers, in the case of corporate mergers and demergers. As a rule, when allotted securities are recorded, the converted securities are deleted.
Stages of the securities operations listed above:
- The issuer files the request together with the required documents
- The documents are reviewed
- KDPW decides to execute the operation
- The operation is recorded in the depository system
- Information on the operation is distributed to the direct participants
- The operation is executed in the depository system