Report on the Description of the National Settlement Depository Controls, Suitability of Controls Design and Operating Effectiveness,
12 October, 2015
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4. Complementary controls of NSD clients
Various aspects of the internal control environment such as controls, control regulations and
control procedures presented in this report, cover the specific area of the overall structure of the
internal control environment of each of the Company's clients, which pertains to the services
provided by the Company. One should also take into consideration the existence of internal
control elements with specific Company clients in the combination with the Company's general
control framework, as well as the discussed controls in place at the Company.
In addition, the Company believes that its clients should be responsible for availability of certain
controls at their end, which are essential for ensuring efficient, correct and controllable
interaction with the Company.
The Company believes that such controls should be in place at their clients, and therefore, many
of the Company's internal procedures have been developed based on the assumption that the
client also controls its interaction with the Company. Each of the Company's clients should
independently assess its own structure of the internal control environment in order to
determine the existence of the recommended control procedures.
The presented list of controls reflects only those measures that are related predominantly to
information exchange between the client's staff and the Company. Therefore, the list suggested
below should not be considered as an exhaustive list of all potential controls. The list of controls
on the part of the Company's clients, which should be taken into consideration by the clients'
independent auditors when they conduct an overview of the general internal control framework
on the part of the clients, includes, without limitation, the following controls:
The clients comply with and control compliance with the Company's terms and conditions
of depository activities. Information provided by the Company's clients is in compliance
with the contracts for rendering depository and clearing services, as well as with other
contractual obligations between the Company and the client. The clients inform the
Company in a timely manner about any changes in their banking details, addresses, and
telephone numbers.
The clients are expected to implement appropriate control procedures in order to make
sure that the Company receives in a timely manner corresponding notifications about
deposits of securities to the Company's account.
The Company is advised in a timely manner by its clients of any changes pertaining to
their professional license, any changes in the list of authorised representatives entrusted
by the client to pass and to receive instructions from the Company.
The clients are expected to properly control the process of sending and receiving of
messages by electronic communication channels, ensuring appropriate protection of the
information and the systems from any unauthorised access or intervention.
Reports on securities movements and balances, reports on the status of instructions,
notifications on transfers of yields on securities, as well as payment statements on writing
off funds in payment for cash settlement services rendered by the Company, are reviewed
by the clients in a timely manner. Upon detection of any discrepancies, the clients are
expected to duly inform the Company to this effect in written form.
The Company receives on a timely basis instructions pertaining to the issuers' corporate
actions.
In accordance with their contractual obligations, the clients control on a daily basis the
content of the Company's website for any requests from the issuers and registrars for the
