Settlement & Clearing Process

Every transaction executed on BODIVA settles through a delivery-versus-payment (DVP) mechanism on a T+2 cycle – two business days after the trade date – managed by the Central de Valores Mobiliarios de Angola (CEVAMA). This post-trade architecture, operational since 2016 and refined through successive regulatory updates, eliminates principal risk by ensuring that the securities leg and the cash leg of each transaction settle simultaneously and irrevocably. With 10,328 transactions processed in 2024 alone (a 105% year-on-year increase), the system has been tested at scale and has maintained a clean settlement record.

CEVAMA: The central securities depository

CEVAMA serves as Angola’s sole central securities depository (central depositaria de valores mobiliarios), performing functions analogous to Euroclear or DTCC in developed markets, albeit at a fraction of the scale. Established as a subsidiary of BODIVA, CEVAMA commenced operations in 2016 – two years before the exchange’s first government bond trades – to ensure the depository infrastructure was fully tested before live transactions flowed through it.

Core functions

Dematerialization and immobilization. All securities traded on BODIVA exist exclusively in electronic book-entry form (forma escritural). No physical certificates are issued. When a new security is admitted to BODIVA – whether a government bond series, a corporate bond, or equity shares from an IPO – CEVAMA creates a master record (registo global) and allocates individual holdings to the custody accounts of subscribing investors.

Definitive registry of ownership. CEVAMA’s records constitute the legal proof of securities ownership in Angola. In the event of any dispute, the CEVAMA register takes precedence over broker or settlement agent records. This centralized registry model provides transparency for issuers (who can query their shareholder base through CEVAMA) and certainty for investors (who hold legal title directly, not through a nominee chain).

Settlement engine. CEVAMA executes the DVP settlement process for all BODIVA transactions, coordinating the simultaneous transfer of securities and cash between buyer and seller accounts.

Custody account management. CEVAMA administers 58,389 custody accounts (contas de custodia) as of year-end 2024, up from fewer than 660 at launch in 2016 – an expansion of 8,774%. Each account is uniquely identified and linked to a specific investor (individual or corporate), a designated broker, and a settlement agent.

Custody account structure

Understanding the account hierarchy is essential to understanding how settlement works.

Conta de custodia (Custody account)

This is the securities account held at CEVAMA in the name of the investor. It records all securities holdings – equities, government bonds, corporate bonds, and other eligible instruments. The account is opened through a licensed broker or settlement agent, who submits the application to CEVAMA on the investor’s behalf.

Each custody account is classified by investor type:

Conta de liquidacao (Settlement account)

This is the cash account, maintained at the settlement agent (typically a commercial bank), that is linked to the investor’s custody account. Cash for purchases is debited from this account, and sale proceeds are credited to it. The settlement account operates within the Banco Nacional de Angola’s real-time gross settlement system, the Sistema de Pagamentos em Tempo Real (SPTR).

Conta propria vs. conta de terceiros

Licensed intermediaries maintain two types of accounts at CEVAMA:

• Conta propria (proprietary account): Holds securities owned by the broker or settlement agent itself. Only SDVMs (Sociedades Distribuidoras de Valores Mobiliarios) are authorized to hold proprietary positions.
• Conta de terceiros (client account): Holds securities on behalf of clients. These are segregated accounts – client assets are legally separated from the intermediary’s own holdings, providing protection in the event of broker insolvency.

The T+2 settlement cycle

Settlement follows a standardized three-day process from trade execution to finality.

T (Trade date)

1. The investor instructs their broker to buy or sell a security.
2. The broker submits the order to BODIVA’s electronic trading platform, SETIC.
3. SETIC matches the order with a counterparty order (either immediately for market orders, or when the limit price is reached for limit orders).
4. BODIVA generates a trade confirmation (confirmacao de negocio) and transmits it to both the buyer’s and seller’s brokers.
5. BODIVA sends the trade details to CEVAMA for settlement processing.

T+1 (Validation day)

1. CEVAMA receives the trade details from BODIVA and creates a settlement instruction (instrucao de liquidacao).
2. CEVAMA validates the trade: confirming the security exists in the seller’s custody account in sufficient quantity, and that no legal holds or encumbrances prevent transfer.
3. The settlement agents for both buyer and seller confirm cash availability in the buyer’s settlement account and authorize the settlement instruction.
4. Any discrepancies or failures to confirm trigger exception handling procedures. The CMC is notified of persistent settlement failures.

T+2 (Settlement day)

1. CEVAMA executes the DVP settlement simultaneously:
   • Securities leg: The specified quantity of the security is debited from the seller’s custody account and credited to the buyer’s custody account within CEVAMA’s system.
   • Cash leg: The settlement amount (trade price x quantity, plus any accrued interest for bonds) is debited from the buyer’s settlement account and credited to the seller’s settlement account via the SPTR.
2. Both legs settle atomically – if either leg fails, neither settles. This DVP finality eliminates principal risk, the scenario where one party delivers but the other does not.
3. CEVAMA updates its registry to reflect the new ownership position.
4. Settlement confirmations are transmitted to both brokers and, through them, to the end investors.

DVP: Why it matters

The delivery-versus-payment principle is not merely a technical feature – it is the foundational risk management mechanism of the post-trade infrastructure. In a non-DVP environment, a buyer could transfer cash but fail to receive securities (or vice versa), creating exposure to counterparty default. DVP eliminates this risk by making both transfers conditional on each other.

CEVAMA operates what is classified as a DVP Model 1 system under the Bank for International Settlements (BIS) taxonomy: gross, trade-by-trade settlement of both securities and cash, with finality occurring simultaneously for each individual transaction. This is the most conservative DVP model, minimizing both settlement risk and systemic risk, albeit at the cost of higher liquidity requirements compared to net settlement systems.

For a market as young as Angola’s, the choice of DVP Model 1 is prudent. It provides maximum safety while the market develops the track record and institutional trust necessary to eventually consider more efficient (but riskier) netting arrangements.

Settlement agents: Role and responsibilities

Twenty-one settlement agents (agentes de liquidacao) are licensed by the CMC to participate in the cash leg of the settlement process. In practice, all settlement agents are commercial banks, and most also hold brokerage licenses, creating a vertically integrated model.

Settlement agent responsibilities include:

• Cash management: Maintaining client settlement accounts with sufficient funds to cover pending purchases.
• Instruction confirmation: Affirming settlement instructions received from CEVAMA on T+1, certifying that the client has authorized the transaction and that funds are available.
• SPTR interface: Transmitting payment instructions through the BNA’s real-time gross settlement system.
• Corporate actions processing: Distributing dividend payments, interest coupons, and bond redemption proceeds to custody account holders.
• Reporting: Providing clients with settlement confirmations, account statements, and tax documentation (including IAC withholding certificates).

The list of licensed settlement agents overlaps heavily with the broker list – most major banks (BAI, BFA, Standard Bank Angola, BIC, Banco Millennium Atlantico) serve in both capacities. For the full directory, see the market participants page.

Settlement for different instrument types

While the T+2 DVP framework applies across all BODIVA-traded instruments, some operational nuances exist:

Government bonds (Obrigacoes do Tesouro and Bilhetes do Tesouro)

Government bonds constitute the vast majority of BODIVA settlement activity. Settlement follows the standard T+2 cycle. For bonds with accrued interest (obrigacoes with coupon), the settlement amount includes the clean price plus accrued interest calculated on an actual/365 day-count basis. The BNA, acting as agent for the Ministry of Finance, manages the primary issuance registry within CEVAMA, with secondary market transfers handled through the standard DVP process.

For details on government debt instruments, see the treasury bonds section.

Equities

Equity settlement follows the same T+2 DVP cycle. Settlement amounts are calculated as price x quantity, with no accrued interest component. Dividend entitlements are determined by CEVAMA’s ownership registry as of the record date (data de registo), which is typically set two business days before the payment date to align with the T+2 settlement cycle.

Repos (Acordos de recompra)

Repurchase agreements – which accounted for 72% of total value traded on BODIVA in 2024 – settle on a bilateral basis between the two counterparties, with CEVAMA managing the securities leg (temporary transfer of bond collateral) and the settlement agents managing the cash leg. The repo opening leg settles at T+2, and the closing leg settles on the agreed maturity date.

Failed settlements

Settlement failures (falhas de liquidacao) are rare but governed by clear CMC rules. If the seller’s custody account does not contain sufficient securities, or if the buyer’s settlement account does not contain sufficient cash, the settlement instruction fails.

Consequences of failed settlement include:

• Mandatory buy-in: If a seller fails to deliver securities by T+2, the buyer’s broker may initiate a compulsory purchase (compra obrigatoria) in the market, with costs borne by the failing seller.
• Financial penalties: CEVAMA applies a per-diem penalty on failed settlement instructions, calculated as a percentage of the transaction value.
• Regulatory reporting: Persistent settlement failures are reported to the CMC, which may impose sanctions on the responsible intermediary, including license suspension in severe cases.

The low failure rate reflects both the DVP mechanism (which prevents one-sided exposure) and the conservative pre-validation process conducted on T+1, which catches most potential failures before settlement day.

Technology infrastructure

CEVAMA’s settlement system interfaces with two critical technology platforms:

• SETIC (Sistema Electronico de Transaccoes e Informacao de Cotacao): BODIVA’s electronic trading platform, which transmits trade data to CEVAMA in real time following order matching.
• SPTR (Sistema de Pagamentos em Tempo Real): The BNA’s real-time gross settlement system, through which all cash movements related to securities settlement are executed with immediate finality.

This dual interface – receiving trade instructions from SETIC and routing cash through SPTR – gives CEVAMA the operational backbone necessary to guarantee DVP settlement with intraday finality. The systems operate on standard business days (Monday to Friday, excluding Angolan public holidays), consistent with BODIVA’s trading calendar.