Digit —  Articles —  Interview with Vahan Stepanyan, CDA

Interview with Vahan Stepanyan, CDA


“We are open for new partnerships and ready to present the attractiveness of our market and technological opportunities to interested financial institutions and investors”

The CDA was founded in mid 90's, tell us what tasks the company faced at that time and how they have transformed in the present.

In the 1990s, as a post-Soviet country, Armenia was between planned and market economies, and a number of actions were carried out through planned reforms, including the privatization of state assets, as a result of which joint stock companies were established. Considering the possible risks and the need to protect the interests of shareholders, the legal predecessor of today's Central Depository- the National Centralized Register- was created. The main purpose of the structure was to conduct the registry keeping, including registration of joint stock companies, shareholders and changes. All registrations were initially made on paper (there was no electronic system, no mechanisms were developed, the procedures were not improved). Later, considering the system requirements in line with the leading expertise, it was improved, and by evolving, it became what we have today․ The Central Depository of Armenia carries out functions of following international best practices, provides complete packages of depository services to both issuers and investors.

How is CDA developing today? What global trends and processes of the local economic development have influenced the company over the past decade?

During the past decade Central Depository of Armenia (CDA) has stepped into the path of continuous development. One of the prior tasks for us was the complete change of the Depository model, succeeding the introduction of Depend software - a new system of securities registration and settlement. To understand the scale of impact it brought, Central Depository of Armenia, having no branch at all accessed over 400 front-desks by creating a unified model, intermediated by Account Operators - banks and investment companies via their branches. Additionally, CDA became the registry keeper of funded pension system and custodian of pension system assets.

In the last decade CDA has gained a number of valuable and productive partnerships with Clearstream Banking Luxembourg and National Settlement Depository (NSD), Central Depositories of Belarus, Ukraine and Kazakhstan, has expanded its international links joining SWIFT, becoming a member of Association of Eurasian Central Securities Depositories (AECSD) and Association of National Numbering Agencies (ANNA). In 2017 Raiffeisen Bank opened securities nominee account at the CDA, which expanded the geography and opportunities of potential investors in the Armenian capital market.

Last year CDA in partnership with NSD created the opportunity for listed companies on Armenia Securities Exchange to cross-list on MOEX. Due to our long-term consistent endeavors CDA successfully gained ISO 9001:2015 and ISO/IEC 27001:2013 international certificates and now works on complying its policy with IOSCO (International Organization of Securities Commissions), Enterprise Risk Management model and ISO31000.

What impact did the pandemic have on your work? How did you transform your business? What are your future expectations?

Considering the ISO standards and risk management policy, Central Depository was ready for such a force majeure situation, thanks to effective business continuity policy. The Central Depository is constantly improving and testing its BCP, so the services provided to our customers have a high level of security.

After all, we can state that despite all the challenges we faced last year, the financial system not only remained stable, but also matured and is ready for further development.

What is the company's strategy today?

Currently, we are keen on developing opportunities for investors to do business without leaving their homes, the result of which was CDA Online web & mobile application.

We have other plans, the pivotal of which is to create a centralized system of government bonds under the management of CDA; to take the complete function of administering funds. In the future, we plan to introduce tri-party repo transactions, settlement services, as we work on Central Counterparty availability.

CDA continues its strategy of facilitating the access to depository services for market participants and investors. We are open for new partnerships and ready to present the attractiveness of our market and technological opportunities to interested financial institutions and investors.

Which countries and markets do you focus on today to develop your international cooperation? Which services do you see as a major growth area?

One of our main goals is to be properly represented in the international financial market and to present the privileges of Armenia to investors. Accordingly, our target is international depositories and central depositories and effective cooperation with them. We are focused not on one specific market or country, but on the entire international market where Armenian investment instruments will be available abroad, and the instruments of those countries will be available for Armenian investors.

Which priority areas of cooperation with other central depositories of AECSD would you highlight and why?

The Central Depository of Armenia is open and cooperates with all partners. Significant projects are being implemented with each of our partners, we have reciprocal foreign nominee accounts with a number of depositories, including Russia, Kazakhstan, Belarus, Ukraine. Memorandums of cooperation have been signed with various partners which enables experience sharing.

CDA diversifies its business and develops innovative financial services. Tell us about these services. What is their strategic value for the company and financial market participants?

The development of Central Depository of Armenia is robust and dynamic. We are currently implementing the main part of the pension services introduced in Armenia. These include registry keeping of funded pension participants (opening of pension accounts, maintaining, issuance of shares and redemption, reflection of issued shares on retirement accounts and provision of information to participants) and pension system assets custody (fund asset maintenance and accounting, asset transaction service, surveillance on transactions and investment restrictions, and checking the calculation of share values). All processes are automated, go through several security control systems. In addition, within the framework of the registry keeping services, the participants can manage their accounts through the Account Operators, "My Account" application, Web and mobile applications of a number of partners.

At the same time, CDA Online platform, which has entered the final implementation phase and soon will be available, will allows users to make online transfers, check their funded pension account balance, deposit account, participate in general meetings and voting, and in case of questions contact their account operator. Moreover, e-voting is a novelty for our region.

The Central Depository of Armenia provides fund administration services, which is also a novelty for depositories. We also provide quality services through Depend and Ampis systems that allow to change the geography of access to all depository services (all services are accessible to all users through account operators). This is also a technological novelty. Many depositories run it through branches, but we, having no branch, make the services available all over Armenia.

What is your vision of the AECSD current status and its future? How the Association should develop to adapt to the new challenges and circumstances.

During almost two decades of its existence, the association has shown its effectiveness and can serve as an example of active cooperation, mutual assistance and exchange of expertise. It is an effective platform for sharing the best practices, joint events, seminars and working groups.

In the future, I expect that, keeping the best traditions, we will develop the cooperation within the scope of modern and innovative implementations.

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