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DEMATERIALIZED PROMISSORY NOTES
Main Statistics 2014 Participants:
–347 Issuers and 198 Depositors.Assets Under Custody
–Value on deposit at December, 2014–USD 176.3 Billion – 94.9% dematerialized
Total Number of Transactions (both sides): 3.3 MillionValue Transferred : USD 379.7 Billion
Mission:To contribute to the development of the Colombian capital market, and to facilitate the growth of the markets in which we interact.
Vision:To efficiently manage the securities and other financial instruments life cycle in the financial market.
Deceval - Overview
Shareholders • Banks: 66.17%• Colombian Stock Exchange BVC: 22.98% • Trust Companies: 6.64%• Financial Corporations: 3.67% • Brokers: 0.25%• Others: 0.29%
What is a Dematerialized Promissory Note?
A new asset class in the CSD custody business subject to the dematerialization process in Colombia´s financial market. The Dematerialized Promissory Note is a debt security electronically created (by virtue of the Law 527 of 1999) with an unconditional promise to pay an amount of money from writer or subscriber in favor of a particular person at a particular time and whose movement and trading is performed by book-entry.
The Market Needs
Efficiency Cost Reduction Risk of physical
certificates Legal Certainty
Electronic
Document
Book-entry
operations
Logistic value
chain cost
transformation Minimizing fraud
and certificate
losses
Electronic
Document
equivalent to
physical certificate
Systems Development
Value Proposition
Culture Change
Culture Change
Drivers
Transformation
Challenges
Our Principal Drivers
Preparing the CSD for new
product development
Competition
Income Diversification
Responseto the need of the Users
New Value Proposition|
The Most Important Impacts
• Hours of operation: Not only financial and capital markets hours : Extended time
• Work Days: 365 days a year: Originators work seven days a week. We need to have the system available on weekends and holidays.
• Support teams need to be available during all hours of operation
• Training, training and training: An important need for all stakeholders - New culture with a move away from physical securities
• Systems resilience: The debtor needs to sign when doing business (Retail stores sales - Retail store credit cards – bank backed
Business Requirements for the CSD
• Law 27 of 1990: Legally acknowledges the functional equivalence of the circulation and trading of the securities issued, or their immobilization by means of book entry when they fulfill the conditions established under this law.
• Law 964 of 2005: Legally acknowledges legal certainty and the probative value and the authenticity of the certifications issued by DECEVAL for rights represented by the book entry. Also authorizes deposits to keep titles not registered in the national registry of securities and issuers (RNVE)
• Law 527 of 1999: Legally acknowledges the equivalence of data messages and the enforceability they have in front of the documents issued physically, when the assumptions established in this law are fulfilled.
• Law 3960 of 2010: Makes it possible to dematerialize other financial instruments as securities titles - Credit content or participation.
Legal Framework
Business View
Issuers and debt originator
Banks CooperativesMutual Funds
Trust CompaniesEmployee Funds
Enterprises Retail store financing
Issuer Benefits
•Liquidity •Securitization•Collateral management •Unfreeze capital commitments
•Debt purchases•Debt sales•Securitization – Primary securities issuance •Garnishments•Rights transfers•Redemptions•Legal collection certificates
Transactions
Value Proposition
Facilitates lifecycle management of the promissory note.Facilitates custody, trading and collections.Eliminates geographical barriers of your business.Improves promissory notes liquidity management
Facilitates approval process and credit disbursement .Facilitates Credit Process: self-management.Reduces credit processing costs.
Mitigates risk management of physical promissory note.Eliminates the probability of loss of the promissory notes.
USE
EFFORT
RISK
Depository Certifications
Document review
Dematerialized Promissory
Notes
Instructions Letter
Portfolio
Massive Services
Reports
Endorsements (purchases, sales, exchange
depositors, garnishments)
Transfer of rights
Cancelations
Electronic Signature of the dematerialized promissory
note
Custody
Creation of the debtor and the promissory note
ISSUANCE AND DEMATERIALIZATION
OF THE PROMISSORY NOTES
TRANSACTIONS ON THE
PROMISSORY NOTES
INFORMATION SERVICES
Processes of the Operation
Notification of disbursement service
Cancellation service
Redemption service
Sign out notification service
Debtor creation service
Promissory note creation service
Signature service
BASIC WEB SERVICES
EXTRA WEB SERVICES
Conn
ectio
n bu
sine
ss –
to b
usin
ess
(B2B
)
Thro
ugh
the
Info
rmati
on S
yste
m o
f Dec
eval
(B2C
)
Information on dematerialized
promissory notes service
DIGITAL SIGNATURE FROM THE FINGERPRINT
Identity check up by a credit institution
Signs with FINGERPRINT by the Debtor
