Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 1

Securities Systems* have a primary responsibility to their users** and other stakeholders. They must provide effective low cost processing. Services should be priced equitably.

* Securities Systems = depositories, settlement and clearing systems
** Users = customers of the securities system, and all other parties to whom the securities system owes a duty of care

1.	Is the board that governs the depository answerable to its users?	Yes. The main segments of Latvian financial market are represented on the board of directors of LCD. The board consists from directors appointed and elected by LCD shareholders - custodians, stock exchange and privatization agency.
2.	Does any single organisation, or sector (e.g. brokers, custodians, Stock Exchange) have a large voting position at the board of the depository?	LCD is owned by 5 custodian banks, Riga Stock Exchange and Privatization Agency in following proportions: 1. Riga Stock Exchange 2. Privatization Agency 3. Latvijas Unibanka (bank) 4. Latvijas Krajbanka (bank) 5. Hansabanka (bank) 6. Latvijas Hipoteku un Zemes Banka (bank) 7. Merita Bank Plc. Riga branch (bank) 27.03 % 18.92 % 10.81 % 10.81 % 10.81 % 10.81 % 10.81 %   Each shareholder is represented on board and all board members have equal voting positions.
3.	Is there cross subsidisation of products (e.g. international services subsidised by local ones or transaction costs subsidised by asset servicing charges)?	Revenues of LCD are generated mainly through custody and transactions fees, as well as fees for management of corporate actions. Services are usually not cross subsidised.
4.	What process is in place at the depository to ensure that it meets the needs of all its stakeholders (e.g. institutions, broker dealers, retail investors, issuers)?	The board of directors approves the strategic plan of LCD development. The plan is developed by executive board according to the tendencies on securities market, needs of market participants and best practice. All new projects and strategic steps of LCD are being discussed with market participants at first to ensure the fulfilment of market requirements. Periodically LCD makes client surveys for different client groups focused on quality of provided services and needs for launching of new ones.
5.	What is the communications strategy of the depository to its stakeholders and how is this run?	Stakeholders are informed about all main LCD decisions and development stages directly or through their representatives at the board of directors. Annual reports and financial plans for the future development are approved directly by shareholders on GAM. LCD uses different types of communication related with current services and development of new projects. All important information is sent via mail, e-mail or fax to market participants and is published on LCD Web site. Daily communication of LCD specialists with representatives of the market segments and organization of open discussions and working groups are also broadly used. Mass media is used to increase public awareness of LCD activities. Marketing tools as direct advertising, services brochures and conferences are used for launching the new services or presenting changes of existing systems.