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2014 Annual Report Summary

2014 Annual Report Summary - Tunisie Clearing Annual report.pdf2014 Annual Report Summary TUNISIE CLEARING 2 missions Table of Content Innttrroodduuccttiioonn 33 Goouuvveerrnna anncce,,

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Page 1: 2014 Annual Report Summary - Tunisie Clearing Annual report.pdf2014 Annual Report Summary TUNISIE CLEARING 2 missions Table of Content Innttrroodduuccttiioonn 33 Goouuvveerrnna anncce,,

2014

Annual Report

Summary

Page 2: 2014 Annual Report Summary - Tunisie Clearing Annual report.pdf2014 Annual Report Summary TUNISIE CLEARING 2 missions Table of Content Innttrroodduuccttiioonn 33 Goouuvveerrnna anncce,,

TUNISIE CLEARING

2

Table of Content

IInnttrroodduuccttiioonn 33

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YYeeaarr hhiigghhlliigghhttss 55

BBuussiinneessss kkeeyy ffiigguurreess 88

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22001155 PPeerrssppeeccttiivveess 1100

Tunisie Clearing fulfills the following

missions :

The initial recording of securities in a

book-entry system (notary function) and

the central custody of securities. This

mission guarantees the issue integrality

and continuously ensures that issued

securities are equal to securities recorded

on book keepers accounts;

The management of the Securities

Settlement System according to the

Delivery vs. Payment principle in Central

Bank money.

Tunisie Clearing provides other services such

as:

Securities codification;

Registers keeping upon issuers request;

Transfer of information on registers

update ;

The possibility to segregate investors

assets from participants assets.

Page 3: 2014 Annual Report Summary - Tunisie Clearing Annual report.pdf2014 Annual Report Summary TUNISIE CLEARING 2 missions Table of Content Innttrroodduuccttiioonn 33 Goouuvveerrnna anncce,,

TUNISIE CLEARING

3

Introduction

Tunisie Clearing has always striven to create added value for its participants

by providing them with services that better meet their requirements.

Throughout its 20 years of business, the

Tunisian Central Securities Depository has

acquired an important place at the heart of

Tunisian capital markets; Tunisie Clearing has

become a key partner of all market

stakeholders and an important component of

its security architecture.

The celebration of the 20th anniversary of the

Tunisian Central Depository has witnessed: (i)

The change of the CSD name from

“STICODEVAM” to “Tunisie Clearing” which

aimed to enhance the CSD international

identification by reflecting both its business

nature and territoriality; (ii) The adoption of a

new graphic identity that refers to the CSD

central relationship with market stakeholders.

These changes were followed by the launch of

a short and medium terms IT strategy as well

as new projects based of the following pillars:

1. Implement the best

practices and standards in

the field (Classification of

Financial Instruments

« CFI »/ Financial

Instruments Short Name

« FISN »/ Legal Entity

Identifier « LEI »).

2. Meet the market needs with

respect to international

developments.

3. Enhance transparency and

information communication

and exchange.

4. Develop a trade repository

activity.

1. Reduce operational

risk through the

renovation of the

technical infrastructure

and the reinforcement

of the information

system security.

2. Reform the CSD system

to allow its integration

and development.

3. Establish a formal

Business Continuity

Plan in accordance

with the best practices

and recommendations.

1. Strengthen the legal

framework of the CSD

business and relationship

with stakeholders.

2. Enhance the CSD

governance with reference

to the best

recommendations in the

field.

3. Implement a risk

management framework.

4. Assess the CSD business

against the Principles for

Financial Market

Infrastructures.

Business Pillar IT Pillar Organizational Pillar

A trade repository is an entity that collects and centrally maintains records related to OTC (Over the

counter) trades. Trade repositories are a new type of Financial Market Infrastructure that has

recently grown in importance due to its important role in strengthening transparency and

standardizing communication related to OTC trades.

Page 4: 2014 Annual Report Summary - Tunisie Clearing Annual report.pdf2014 Annual Report Summary TUNISIE CLEARING 2 missions Table of Content Innttrroodduuccttiioonn 33 Goouuvveerrnna anncce,,

TUNISIE CLEARING

4

Governance, transparency and risk management

Tunisie Clearing has put in place a set of measures to build a sound risk

management and governance framework.

Acknowledgment of risks:

► Rating report: Tunisie Clearing has fully

reviewed its risk rating report which is

established by the agency « Thomas Murray ».

The report review was undertaken by a

working group with the participation of

concerned departments and the general

management. The report is being reviewed by

the agency. The current rating is « A-» which

refers to a low level of risk. The rating

components are the following:

Transparency :

► Redesign of the website: The redesign of the

website was mainly related to the review of

disclosed data including statistics and

bulletins: 3 monthly bulletins organized by

topic were implemented in addition to daily,

weekly and annual bulletins.

The website is available in 3 languages: Arabic,

French and English.

► Questionnaire of the Association of Global

Custodians: In accordance to the best

international practices in terms of

transparency, Tunisie Clearing has made

publicly available its responses to the AGC

questionnaire. The questionnaire responses

were reviewed and updated by a working

group before being published on Tunisie

Clearing website.

Gouvernance :

► Establishment of a code of conduct

applicable to employees: Tunisie Clearing has

implemented a code of conduct governing

professional duties and ethical rules applicable

to its staff. This code aims to ensure an

independent, efficient and accurate execution

of business and to identify and manage

conflicts of interests. The code also endeavors

to prevent any conduct in violation with the

system transparency, the protection of

participants and the orderly execution of

services.

Internal Control & Compliance

8 missions were run by the internal control

and compliance structure. The missions

were related to business operations and IT.

Staff development and training

Tunisie Clearing organizes trainings which

are either objective-driven or general.

Trainings covered topics such as repo and

Central Bank monetary policy.

Page 5: 2014 Annual Report Summary - Tunisie Clearing Annual report.pdf2014 Annual Report Summary TUNISIE CLEARING 2 missions Table of Content Innttrroodduuccttiioonn 33 Goouuvveerrnna anncce,,

TUNISIE CLEARING

5

Year highlights

► Implementation of a new billing software.

► Update of procedures manuals and

operational guidelines.

► Study of ISO 18774 standard (« Financial

Instrument Short Name/FISN »).

► Participation to the 19th meeting of Africa

and Middle East Depositories Association

(AMEDA) held in Oman.

► Launch, in collaboration with the Central

Bank of Tunisia, of a project on the

implementation of Delivery Vs Payment

principle to banks refunding operations.

► Participation to the 2nd Salon of Stock

Exchange and Financial services

« INVESTIA ». A presentation was delivered

under the theme « Central Securities

Depository and capital markets ».

► Definition of a process related to national

bonds subscription and settlement.

Standardization of securities accounting

Since April 2014, a committee of Tunisie

Clearing has started working on the

establishment of securities accounting

standards which define accounting

principles, nomenclature and classification

and aim to:

→ Implement a securities accounting

manual applicable to all bookkeepers in

the market.

→ Ensure the traceability of operations

between participants.

→ Automate reconciliations between

Tunisie Clearing and participants.

→ Protect investors rights and assets.

The work was based on a study of

international practices and is currently

being finalized.

Page 6: 2014 Annual Report Summary - Tunisie Clearing Annual report.pdf2014 Annual Report Summary TUNISIE CLEARING 2 missions Table of Content Innttrroodduuccttiioonn 33 Goouuvveerrnna anncce,,

TUNISIE CLEARING

6

Year highlights

► Tunisie Clearing capital increase from

3 748.275 TND to 4 414.635 TND.

► Implementation of an energy control system

which allowed an energy economy of 30%.

► Test of the ANNA Service Bureau new files

structure.

► Update and disclosure of the CSD responses to

the Association of Global Custodians (AGC)

questionnaire.

► Tunisian Central Bank Governor approval on

the implementation of Delivery vs. Payment

principle for refunding operations.

► Launch of a consultation to participants on

turnaround trades.

► Launch of a fees recovery procedure based on

automated bank debit to be applied in 2015.

Finalization of Tunisie Clearing draft rules

With reference to international

recommendations regarding the

implementation of a strong legal

framework, Tunisie Clearing has started

since 2013 the preparation of draft rules

that cover the following items:

→ Defining the CSD missions’ fundamentals

as well as key operational concepts such

as settlement finality and irrevocability.

→ Framing the CSD relationship with

participants by setting their respective

rules and obligations.

→ Reinforcing the CSD governance and

implementing the basics of a sound risk

management framework.

→ Fixing participation and securities

admission criteria.

In July 2014, the draft rules were studied

and discussed within a market committee

supervised by the Market Council.

These draft rules were translated to Arabic

and English in September 2014 and

published on Tunisie Clearing website.

In December 2014, the Market Council

College has launched a public consultation

in order to collect participants’ views and

establish final draft rules to be submitted to

the Ministry of Finance.

Implementation of the IT strategy

Tunisie Clearing has defined a short and

medium terms IT strategy that aims to

ensure business continuity, enhance IT

operations and strengthen the CSD system.

→ Different actions were taken including a

study on the IT infrastructure

renovation.

→ A mission was conferred to the firm

« Eurogroup Consulting » regarding the

assessment of Tunisie Clearing system

development. The firm established 3

scenarios of which the acquisition of a

new CSD system.

Preparation of new functioning rules

Tunisie Clearing has launched in

September 2014 the preparation of new

functioning rules with the aim to

implement rules that better describe its

operations and processes.

These rules were prepared on the basis of

a study of international practices and took

into consideration the measures provided

by the CSD draft rules as well as Tunisie

Clearing current functioning rules and

practices.

Page 7: 2014 Annual Report Summary - Tunisie Clearing Annual report.pdf2014 Annual Report Summary TUNISIE CLEARING 2 missions Table of Content Innttrroodduuccttiioonn 33 Goouuvveerrnna anncce,,

TUNISIE CLEARING

7

Year highlights

Cooperation with stakeholders

► Tunisie Clearing has delivered trainings in

collaboration with the Training Institute of

the Stock Exchange (IFBT). Topics included

repo operations and Tunisie Clearing new

services. Other trainings were delivered to

participants (1 bank and 2 brokers).

► Participation to the round table entitled

«Repo: a new opportunity for collective

investment» and to the Tunisian Central Bank

trainings on repo.

► Participation to the meetings of the stress

tests committee which is established and

directed by the World Bank.

► Participation to a meeting organized by the

Central Bank of Tunisia regarding the

strengthening of the Tunisian-British financial

cooperation.

International relations

► 3 Due Diligence visits of Global Custodians

were held at Tunisie Clearing premises.

► Tunisie Clearing hosted representatives from

the Central Bank of Congo and the Algerian

Insurance and Reinsurance Company.

► A meeting was held with the European Bank

for Reconstruction and Development during

which Tunisie Clearing gave a presentation on

its services as well as the main features of the

Tunisian Bonds market, while the EBRD

presented its activities, financial results and

financing strategy.

► Tunisie Clearing hosted the CEO of Maroclear

to study cooperation opportunities between

both Tunisian and Moroccan markets.

► With regards to the MoU signed between

Tunisie Clearing and MKK/Takasbank, a visit

to the Turkish marketplace was conducted by

a delegation of Tunisie Clearing and the

Financial Market Council.

Queries

Tunisie Clearing has responded to 27 queries received from AMEDA members and other entities.

Qu

erie

s o

f A

MED

A

me

mb

ers

(26

%) CSD insurance policies;

Pledge and lien fees ;

System maintenance ;

CSD representation in the Stock

exchange Board of directors, …

Oth

er q

uer

ies:

dat

a p

rovi

der

s an

d

con

sult

ing

firm

s (

74%

)

Punctual corporate actions

features (capital increases and

dividends payments) and

corporate actions general

processing principles (50%).

Codification of securities and

reuse of ISIN codes (20%).

Market functioning and market

making.

Implementation of the

assessment methodology and

disclosure framework for

Financial Markets

Infrastructures.

Launch of 5 new services

In November 2014, Tunisie Clearing has

launched 5 new services of which the

following:

→ Identification of local and foreign

investors at the CSD level.

→ Segregation of assets managers’ assets

from those of their depositories.

→ Management of repo operations.

Page 8: 2014 Annual Report Summary - Tunisie Clearing Annual report.pdf2014 Annual Report Summary TUNISIE CLEARING 2 missions Table of Content Innttrroodduuccttiioonn 33 Goouuvveerrnna anncce,,

TUNISIE CLEARING

8

Business key figures

Assets under custody:

28.9 Billion TND

Market capitalization:

► The market capitalization value is

17.3 Billion TND.

► 1.3% of the market capitalization is held by

collective investment.

Government securities outstanding:

► The government securities outstanding

value is of 9 441 Million TND.

► 63% of Government Bonds outstanding are

held by banks as own assets.

► 3 252 Million TND of Treasury bonds issues.

► 959 Million TND of national bonds issue.

Corporate bonds outstanding:

► 59% of corporate bonds outstanding are

held by collective investment.

► 333 Million TND of new corporate bonds

issues.

Settled operations with cash

movement: 9.5 Billion TND

► Except Central Bank operations, operations

without cash movement have a total value

of 7.7 Billion TND.

► Operations without cash movement

executed between the Central Bank of

Tunisia and banks have an average daily

value of 4.8 Billion TND.

► 4 247 operations of securities transfers

were settled with a value of 5.8 Billion TND.

Corporate actions: 3 Billion TND

Redemptions: 2 Billion TND

► 394 Million TND of corporate bonds

redemptions.

► Government securities redemptions value is

of 2 091 Million TND.

Dividends: 0.2 Billion TND

Interests payments: 0.6 Billion TND

► 503 Million TND of Government securities

interests payments.

► 503 Million TND of corporate bonds

interests payments.

The turnaround rate of Treasury bonds is

18% on the OTC market and 1% on the

stock exchange.

55 settlement fails in 2015.

Page 9: 2014 Annual Report Summary - Tunisie Clearing Annual report.pdf2014 Annual Report Summary TUNISIE CLEARING 2 missions Table of Content Innttrroodduuccttiioonn 33 Goouuvveerrnna anncce,,

TUNISIE CLEARING

9

Financial key figures

Balance sheet total: 8 149 thousand TND

Assets

► Noncurrent Assets: 2 315 thousand TND

► Current Assets: 5 834 thousand TND

Equity capital and liabilities

► Equity capital: 6 216 thousand TND

► Noncurrent liabilities: 867 thousand TND

► Current liabilities: 1 066 thousand TND

Income statement

► Revenue : (+18%) ► Operating expenses : (+18%) ► Financial revenue: (+91%) ► Net profit : (+42%)

Revenue:

► Fees on custody : 2 407 thousand TND

► Fees on settlement: 632 thousand TND

► Punctual fees: 85 thousand TND

Operating expenses :

► Employees expenses : 1 452 thousand TND

► Remuneration of intermediaries and fees:

114 thousand TND.

Profit before tax: 1 365 thousand TND

Net profit: 1 057 thousand TND

In thousand TND 2013 2014

Assets

Noncurrent Assets 2 496 2 315

Current Assets 4 808 5 834

Equity capital and liabilities

Equity capital 5 152 6 216

Noncurrent liabilities 1 096 867

Current liabilities 1 056 1 066

Total balance sheet 7 304 8 149

In thousand TND 2013 2014

Revenue

Fees on custody 2 002 2 407

Fees on settlement 516 632

Punctual fees 125 85

Operating expenses

Employees expenses 1 229 1 452

Other expenses 678 798

Profit before tax 993 1 365

Net profit 625 1 057

Page 10: 2014 Annual Report Summary - Tunisie Clearing Annual report.pdf2014 Annual Report Summary TUNISIE CLEARING 2 missions Table of Content Innttrroodduuccttiioonn 33 Goouuvveerrnna anncce,,

TUNISIE CLEARING

10

2015 Perspectives

Strengthening organizational pre-requisites to upgrade the Tunisian Central

Securities Depositories in the international environment.

Consolidate achievements and enhance business activities according to the

best practices in the securities field.

Legal framework Governance Risk management

► Training directors on best

governance practices.

► Training heads of

departments on

management skills

development.

► Establishment of a

directors chart.

► Establishment of an audit

committee within the

Board of directors.

► Preparation and

implementation of a risk

management framework

that mitigates custody and

settlement risks and which

assesses risks related to

money laundering and

terrorism financing.

► Adoption and

implementation of the

CSD draft rules

provisions.

► Finalization of accounting

standards and their study

within a market

committee.

► Finalization and

implementation of new

functioning rules.

Standardization Services Transparency

► Implementation of the

Delivery vs. Payment

principle for refunding

operations.

► Study of the

implementation of

reconciliation procedures

between the CSD and

book-keepers.

► Enhancement of the billing

application.

► Study of the Association

of National Numbering

Agencies (ANNA) new

ISIN guidelines.

► Registration with the

Internal Revenue Service

(IRS) regarding the

Foreign Account Tax

Compliance Act (FATCA)

and study of the related

reporting obligations.

► Disclosure of a report on

risk management which

includes factors that justify

the CSD rating.

► Publication of Frequently

Asked Questions.

► Enhancement of published

reportings.

► Strengthening cooperation

with foreign CSDs.

Page 11: 2014 Annual Report Summary - Tunisie Clearing Annual report.pdf2014 Annual Report Summary TUNISIE CLEARING 2 missions Table of Content Innttrroodduuccttiioonn 33 Goouuvveerrnna anncce,,

TUNISIE CLEARING

11

2015 Perspectives

A new era which strategic orientations focus on Information Technology.

Technical Infrastructure

► Implementation of short term strategy

actions:

- Redesign of the safeguard policy.

- Separation of environments (production

and test).

- Decision on the use of outsourcing.

CSD system

► Documentation of the members’ area.

► Preparation of specifications in order to

redesign the CSD system and launch of

the process.