Central Securities Depository Of IRAN

background

 

 

Introduction

 

NetFlow system - aka Net Clear - was launched in 2011 by Central Securities Depository of Iran to offer efficient and prompt services in the field of clearing and settlement of securities. In the latest version, a number of technical features and capabilities were added to the system and its name changed to NetFlow. The system is to clear and settle transactions as well as to apply changes in clients and their assets.

NetFlow's duties include netting, clearing, and settling all types of securities, as well as providing non-paper (electronic) certificates to investors. The system consists of two subsystems, NC-Main and NC-Web.

NC-Main transfers transactions data and certificates from the post-trade system to NetFlow. On the other hand, NC-Web issues electronic certificates and provides specific reports for brokers, clearinghouse, and other beneficiaries. 

The system creates electronic notices and certificates of transactions with the help of an electronic reporting system and is able to prepare custom reports on settlement, fees and financial statements. 

Using this system, brokerage firms can view their custom reports through “Brokerage Firms Reporter” software, which is designed to generate and filter reports.  Issuers can also print their shareholder certificates using Cert Reporter software. 

In fact, the reporting section of the system is powered by the NC-Reporters module, which is designed to generate reports with custom filters.

Previously, the operations related to the clearing and settlement of securities were performed manually and applicants had to refer to the relevant departments at CSDI in-person to receive their desired reports.

 

 

Service Provider CSDI
Beneficiaries

1. Clearinghouse

  • Risk management
  • “Credit Limit” control and supervision
  • Fund-based clearing and settlement for clients
  • Full STP (Straight Through Processing)

2. Supervisory Body and Executive Body

  • Global standards
  • Centralized database providing more efficient supervision
  • Modifying regulations

3. Banks

  • More transparency
  • Diversification in services
  • Connecting to clearing and settlement platforms of capital market   

4. Brokerage firms

  • Decreasing expenditures
  • Using extended branches of banks instead of having their own
  • Competition for offering better services to the clients 

5. Traders

  • Using different type of financial instruments in capital market
  • Using fully offered services in banks
  • More access to service channels
  • Opportunity of using funds
Participants 
  • Clearing Banks
  • CSDI Virtual Bank
  • FundClear System
  • Risk Management Unit
  • Unified Cash Interfacing System
Objectives

1. To introduce new domains and improve coherency

2. Re-engineering of all monetary processes in the whole market

3. Overcoming challenges and limitations:

  • Following the relationship between brokerage firms and shareholders
  • Limited time, human and financial resources
  • Different financial instruments, settlement periods and transaction fees

4. To prevent risk spreading from brokerage firms to clients

5. To prevent risk spreading from participants to all market

6. Centralized credit risk management of brokerage firms

Unveiling date The first version of NetClear was launched in 2011. In 2012, the ability of settlement of multi-currency transactions was added to the system. In 2014, the possibility to settle transactions simultaneously on Iran Energy Exchange and rolling settlement was launched. In 2017, the Beta version of the system was created. Finally, In July 2020, it was replaced with the NetFlow system. 

 

 

 

 

 

Specifications

 

  • Improved accuracy and flexibility
  • Step by step implementation
  • Design and development of value-added services based on new foundations
  • Creation of risk management subsystems
  • Full STP but using 4-Hand checks for meaningful controls
  • Design and development of decision support systems: (for banks and brokerage firms in order to devote credit / In a real time manner)
  • Stateless architecture: Possibility to restore files during crisis (Disaster Recovery)
  • Time-based rules
  • Separation of programming from management affairs
  • Possibility to refer to past (Backward Compatibility)
  • Offering services to banking system and Settlement Guarantee Fund (SGF)
  • Virtual markets

 

 

Features

 

1. Ability to settle securities with various currencies

  • Transaction price
  • Settlement price
  • Fees

2. Exchange currencies either directly or with proxy

3. Bartering with exchanges (refusing too many checks)\

4. Ability to dynamically define currencies and new markets

5. Ability to settle each market separately

6. Ability to settle and barter in any currency

7. Ability to barter in all markets

8. Ability to support daily settlement in Rials

9. A totally rule-based system in function

10. Very high speed (20,000 transactions per minute)

11. Non-paper (electronic) reports on fees, daily clearing, notices and certificates

12. Ability to receive reports in the shortest time possible

13. Brokerage firms no longer need to visit in-person to receive reports

14. Ability to create electronic archive and record keeping

15. Ability to use electronic files in brokerage firms' back office

16. Ability to announce changes regarding clients in each brokerage firm to them and their supporting companies

17. Management of the liquidity risks

  • Brokerage firms
  • clients
  • Clearinghouse

18. Centralized management and supervision on credit limits 

  • Ability to quickly and, if necessary, retrieve documents from the electronic archive since system startup
  • Ability to recover previous files for submitting to relevant legal and tax authorities
  • Ability to keep historical records related to program changes such as changes in fees, taxes, etc.
  • Ability to integrate reports related to one branch of a brokerage firm with the original branch, considering their accounting system being centralized
  • Ability to receive reports in the shortest possible time
  • It is cost-efficient

 

 

The information and reports in the system is only available to brokerage firms, Markets Settlement Departments at CSDI, Market Research & Development Fund, and the Central Bank of Iran. Each applicant has its specific username and passcode used to sign in the system and access to the reports and data.

All institutions and organizations that are among the beneficiaries of the system can send a request letter to the management of the Issuers' Affairs Department at Central Securities Depository of Iran, and ask for a username and passcode. They can then refer to the website address NF.csdiran.ir and access the required information.

 

 

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