Central Securities Registry Law Adopted by the Parliament

15.06.2000 TLN

Estonian CSD (ECSD) welcomes the new law on central securities registry, adopted by the Parliament on June 14. The ECSD considers the new law a foundation to further development of a solid, minimum-risk and flexible securities market infrastructure.

"The new law is one of the cornerstones of capital markets regulations, which should increase investors’ confidence in the Estonian securities market," said Jaanus Erlemann, the ECSD Management Board chairman.

"The law marks a major step for Estonia towards the European Union. It is also a good example of a private institution carrying out state’s functions. We look forward to adoption of new Securities Market Act in the near future, to bring the securities market regulations to a whole new qualitative level," Erlemann said.

The new law sets the fundamental principles of securities registry, and regulates the environment on statutory level. The law will create a basis for flexible market development through the order of registry keeping, to be approved by the Finance Minister. According to the law, the state will retain control over the central registry’s price list.

The law on central registry provides grounds to expand the circle of account operators, in a bid to increase competition on the Estonian securities market. Thus far only credit institutions could become account operators; under the new law, however, also other securities market professional participants may provide this service.

The law regulates the use of nominee accounts in accordance with international practices, thus increasing especially foreign investors’ confidence in the Estonian market. The law allows also the local market participants to open nominee accounts. However, the ECSD is of the opinion that regulations on nominee accounts need to be specified, especially in the market transparency related issues with regard to the order of registry keeping and new draft Securities Market Act.

The new law should significantly enhance the transparency of securities market. For instance the lists of shareholders in stock exchange listed companies will become public information; also the information on corporate actions of all registered companies will be available via internet. As of 01.01.2003 all public limited companies registered in Estonia are required to register their lists of shareholders at the central registry. The law will also provide grounds for cross-usage of registries (ECSD and Commercial Registry).

Central securities registry law will become effective as of 01.01.2001; the law is also to be announced by the President. The text of the law in English language will soon be available on ECSD internet homepage.

Additional information:

Jaanus Erlemann
Chairman of the Management Board
Estonian CSD
Tel: +372 6408 800