Finland: Euroclear Finland new system for bonds to be launched - reminder
Customers are reminded that effective
Monday 2 February 2015
the Finnish CSD, Euroclear Finland (EFI), will implement the first phase of its adaptation to TARGET2-Securities (T2S).
In this first phase (Release 1), EFI will launch a new platform, called Infinity, that replaces the RM system for bonds.
In the second phase (Release 2), planned for May 2016, the OM system for equities and corporate bonds will be replaced by Infinity and the third phase (Release 3) in February 2017 the outsourcing of the settlement activity to T2S will take place.
EFI will apply an earlier settlement deadline on 30 January 2015. Consequently, customers are requested to send their settlement instructions to Clearstream Banking1 at the latest by 10:30 CET.
Customers should also note the update regarding the use of Common Reference as optional matching field. This field will NOT be forwarded to Infinity.
Impacts on customers
In the context of the Release 1, CBF customers are not required to make any changes to their settlement instructions with counterparties in Finland sent to CBF. CBF continues to access the Finnish market via Clearstream Banking S.A. (CBL) who remains a direct participant in Infinity and Nordea Bank Finland continues to operate CBL’s account.
Customers should, however, be aware of some changes to current market practices for bonds and align with their counterparties accordingly, where relevant.
Note: Release 2 is expected to have an impact on customers’ settlement instructions and further details will be communicated in 2015.
EFI will implement the T2S matching rules in Release 1. As a consequence, certain fields may, if present, be matching criteria, as indicated herebelow:
The Opt-out indicator field specifying no market claim processing will not be mandatory but, when one of the counterparties provides a value for it in its instruction, the other counterparty must provide the matching value:
CBL will opt out from automatic market claim processing and the above field will be included in each settlement instruction sent on behalf of CBF customers for settlement on the CBL account in Infinity.
The customer must, therefore, ensure that their counterparty indicates the same opt-out at instruction level; otherwise, the instructions will not match.
Common Trade Reference
EFI will introduce the optional matching field Common Trade Reference which can be omitted by either counterparty but must match when provided by both counterparties.
Customers who may include this optional matching field in their instructions sent to CBF should note that it will not be forwarded to Infinity. Customers should inform their counterparties accordingly.
Hold and release
EFI will introduce the T2S hold/release service in Infinity. EFI counterparties can put their instruction on hold provided that the customer’s instruction is not yet provisioned and released to the market. For CBF customers the hold/release functionality remains unchanged.
If the EFI counterparty has placed its instruction on hold, we will report status/reason SETT//PENx PENx//PRCY in SWIFT.
EFI will adopt the standard T2S recycling rules in Infinity such that:
- Unmatched instructions will be recycled for 20 business days (starting from the initial settlement date), after which they will be cancelled.
- Unmatched cancellation requests will be recycled for 20 business days (starting from the date of receipt).
- Matched instructions will have no cancellation limit and will be recycled until a business rule is violated (for example, security reaches maturity); bilateral cancellation continues to be required for matched instructions.
We will advise customers of the cancellations performed by EFI upon execution.
New cash tolerance
Currently, EFI applies a unique cash tolerance (allowed countervalue difference) of EUR 25. With the implementation of Release 1, EFI will apply the cash tolerance that will be in effect in T2S, as follows:
- EUR 2 for transactions with an amount less than or equal to EUR 100,000; and
- EUR 25 for transactions with an amount greater than EUR 100,000.
If there be a discrepancy with the counterparty instructions, the customers will be advised accordingly.
CBF will not support the new T2S instruction types RWP (receipt with payment) and DWP (delivery with payment) in the context of Release 1.
Although EFI will accept already matched payment free of delivery (PFOD) instructions (that is, against payment instructions with a zero quantity), CBF will, as today, reject such instructions received from customers.
Counterparty identification and procedure for domestic counterparties
Counterparty identification in the settlement instructions will continue to be mandatory but will not be part of matching criteria in Infinity. Counterparty matching is performed only at the level of the CSD participant.
Customers are requested to inform their local counterparties of the following details to be used for instructions with CBF customers settling on the CBL account in Infinity:
DEAG / REAG:
BIC of CBL: CEDELULL
BUYR / SELL:
BIC of CBF customer
All transactions that have been entered into to the RM system on/before 30 January 2015 and that have not settled will be transferred in the new Infinity EFI platform by Nordea Bank Finland.
Transactions sent on/after 2 February 2015 will immediately be sent for matching and settlement in Infinity.
For further information, customers may contact Clearstream Banking Client Services or their Relationship Officer.
1. This Announcement is published by Clearstream Banking AG (CBF), registered office at Mergenthalerallee 61, 65760 Eschborn, Germany, registered with the Commercial Register of the District Court in Frankfurt am Main, Germany, under number HRB 7500.