The Estonian securities settlement system is operated by the Estonian Central Securities Depository, the ECSD. The services the ECSD provides are
- settlement of stock exchange transactions
- matching of notifications of over-the-counter (OTC) transactions
- settlement of free-of-payment (OTC FOP) transactions
- settlement of delivery versus payment (OTC DVP) transactions
- settlement of cross-border stock exchange and OTC transactions
The account holder can be anyone who has securities and the securities accounts are managed by banks, which also provide the ESCD services to the account holders. The account operators are nine banks operating in Estonia:
- AS Citadele Banka
- AS Eesti Krediidipank
- AS LHV Pank
- AS SEB Pank
- Danske Bank AS Estonia branch
- Nordea Bank Finland AB Estonia branch
- Swedbank AS
- Tallinna Äripanga AS
- Versobank AS
In addition to these, there are three insurance companies that provide only the services of the mandatory funded pension
- Compensa Life Vienna Insurance Group SE
- ERGO Elukindlustuse AS
- SEB Elu- ja Pensionikindlustus AS
The account operators use client applications or application programs to submit orders for transactions from the owners of securities accounts to the ECSD. The ECSD settles the settlement instructions if all the conditions for settlement have been fulfilled by the account operators.
Securities are settled in processing cycles that start every full and half hour between 09.00 and 18.00. Exchange, OTC DVP, and OTC FOP securities transfers are all settled at the same time. Settlement is performed trade-by-trade under the gross settlement principle. Money settlement is made in central bank money through accounts opened at the central bank, where the funds needed for the settlement of securities transactions are transferred to the ECSD account in TARGET2 by settlement members and the ECSD returns the balance back to the settlement members at the end of the working day.
The ECSD has set up links with securities depositories in Latvia, Lithuania and Poland. The links with the Latvian and Lithuanian securities depositories allow transfers to be made with securities that are registered in Latvia or Lithuania or in Estonia. The link to the Polish depository only allows FOP transfers of securities registered in Estonia to be made.