Settlement services - Irish equities

24.08.2018

Pre-matching service

The table below summarises CBL's pre-matching service for external settlement instructions, as well as the pre-matching method and start time in the market. For details of CBL's pre-matching services, see Pre-matching services for external settlement instructions.

Service offeredMethod employedStart (local time)
Equities
Immediate Release Flag availableAutomated through CRESTOn receipt of instructions

Connectivity mediumInstruction format
CreationOnline and Xact Web PortalTick to enable the “Immediate Release” option.
Xact via SWIFT and Xact File TransferField :22F::STCO/CEDE/IREL

Procedures for domestic counterparties

Procedure for the domestic counterpartyDeadline
Receipt in CBL
Domestic counterparties must instruct CREST as follows:Market deadline
Deliver to: Citibank Nominees (Ireland) DAC participant number 08XMV
For account of: Clearstream Banking, Luxembourg
In favour of: Account number of CBL customer
Delivery from CBL
Domestic counterparties must instruct CREST as follows:Market deadline
Receive from: Citibank Nominees (Ireland) DAC participant number 08XMV
By order of: Account number of CBL customer

Allowed countervalue difference

A maximum difference in countervalue of GBP 10, EUR 15 or USD 15 is allowed for matching and settlement of against payment transactions with domestic counterparties.

Specific settlement rules / settlement restrictions

Partial settlement

Market practice is that a counterparty is entitled to deliver as much of its stock as it can according to stock availability and receive as much stock as it can according to cash availability in its CREST account. There are no set minimum amounts for partial settlements. A single trade can be partially settled on a number of different value dates depending on when the delivering party obtains the stock or the receiving party obtains the cash.

CBL customers are not allowed to initiate splits, whereas CREST counterparties are allowed to initiate them. Nevertheless, customers’ instructions might be subject to a splitting process initiated by CREST counterparties, in which case the original customer instruction (parent instruction) will automatically be reversed and replaced by the corresponding split instructions (sibling instructions): one settled instruction for the quantity and amount confirmed; and one outstanding instruction for the remaining quantity and amount, which may settle at a different time.

Nationality Declaration

Some Irish equities are subject to Nationality Declaration on transfer in the domestic market.

For holdings of Irish securities subject to Nationality Declaration, the registrar must be informed of the nationality of the beneficial owner. This process allows issuing companies to monitor the level of ownership by foreigners.

Irish equities held in CBL will always be declared to the registrar as held by a Luxembourg national. If a CBL customer purchases such securities but, at the point of registration, is unable to register them because the limit of foreign ownership has been reached, CBL’s custodian will contact the counterparty to arrange for the trade to be cancelled and for any settlement proceeds to be returned. The cash account of the customer will be debited at the point of settlement and will be re-credited only upon receipt of the monies from the counterparty. Back valuation will not be applied to the re-credit of funds.

Note: The breach of the limit does not apply to a CBL customer that is an Irish national. CBL will advise the customer to provide an Irish Nationality Declaration so that the trade can be re-instructed by CBL’s custodian.

CBL will accept no responsibility with regard to any problems resulting from the registration process applicable to securities subject to Nationality Declaration.

The following issues are subject to Nationality Declaration. This list is not exhaustive; it is provided for information purposes only and is correct according to the best information available to CBL at the time of publication. However, CBL accepts no responsibility for any inaccuracies or omissions.

ISINName of Security ISINName of Security
GB0009697037Babcock International Group PLCGB00B0WMWD03Qinetiq Group Ordinary 1p
GB0002634946BAEIE00BYTBXV33Ryanair EUR 0.006
GB00B7KR2P84Easyjet OrdinaryGB00B1VYCH82Thomas Cook Group Ordinary
GB00B192PN10BROKER DIRECT 20PDE000TUAG000TUI AG DI
GB00B4QMVR10Flybe Group Ordinary 1pJE00BN574F90WIZZ AIR HOLDINGS
ES01775420118IAG Common Stock
GB00B054QP30My Travel A ordinary 1p

Penalties in connection with CREST Settlement Discipline rules

The penalties explained hereafter apply to external transactions only and not to internal transactions between CBL customers. For further details, please refer to the Market Profile - Ireland.

Re-submission charges (or fees)

A CREST re-submission charge of GBP 0.50 per day will be levied on all transactions that are eligible for settlement on their intended settlement date plus 20 business days (ISD +20) or later but fail to settle in the CREST system. On receipt of the relevant charges, CBL will debit customers' accounts.

Matching fines

The matching discipline regime includes standard deliveries (DEL), residual deliveries (RES) and stock loans (SLOs) relating to the following security categories:

  • FTSE 100;
  • FTSE mid 250;
  • Irish Equivalent 100;
  • Irish Equivalent 250;
  • Other UK and Irish settlable securities;
  • Residual UK and Irish.

Matching is binding in EUI and, to avoid matching fines, should occur, at the latest, one local business day after the trade date (T+1).

  • For each transaction that remains unmatched at close of business on T+1, a fine of GBP 2 will be charged.
  • For each subsequent day a transaction remains unmatched in EUI, an additional fine of GBP 2 will be charged.

The fine is always charged to the party that was last to input and amend its instruction in the local market.

Unmatched transactions will be subject to fines for a maximum of five local business days, when the instruction will be cancelled in the Clearstream system.

Matching fines are calculated retroactively at the end of each two-month period. On receipt of the relevant charges, CBL will debit customers’ accounts.

Settlement fines for failed deliveries

Each external delivery that remains unsettled in the local market after its intended (contractual) settlement date will incur a settlement fine. Such fines are charged by CREST per CBL account with CREST.

The settlement fine will be calculated based on the average market value of the number of all unsettled transactions that do not reach specific settlement performance targets.

The settlement performance target is linked to the number of days a transaction remains unsettled after its contractual settlement date (S). The settlement fine will amount to either GBP 5 or an advalorem fine of 0.05% per unsettled transaction, whichever is higher.

The criteria for the calculation of the settlement fines are as follows:

DateSettlement performance targetDateSettlement performance target
S85%S+10 to S+1598%
S+190%S+16 to S+2099%
S+2 to S+995%

In line with local market practice, settlement fines for failed deliveries will only be calculated up to 20 local business days after the contractual settlement date.

Penalties are charged on the basis of periods of two months. On receipt of the relevant charges, customers may be charged.

Interest charges for failed receipts and interest credits for failed deliveries

A matched against payment external receipt instruction that remains unsettled in the domestic market after its contractual settlement date, due to lack of cash or credit, will, according to CREST rules, be subject to interest charges.

A matched against payment external delivery instruction that remains unsettled in the domestic market after its contractual settlement date, due to the counterparty’s lack of cash or credit, will give rise to interest credits.

The interest charge is based on the prevailing LIBOR one week borrowing rate of the transaction currency (EUR or GBP) and is due ten local business days after the contractual settlement date.

CBL will book interest charges or credits on the account of the respective customer when charged or credited by the local market.

Back-to-back processing

Back-to-back processing is available for transactions in dematerialised securities eligible in the CREST system. Customers can increase same-day turnaround of instructions by “linking” one domestic receipt to one domestic delivery.

The settlement deadline for back-to-back instructions is 15:00 CET on SD -1. Customers must ensure, together with the respective counterparty, that the receipt and delivery instructions will match on SD-1.

Customers should be aware that where one or other of the transactions to be linked fails to match, the linking process will not take place.

The CREST system prioritises individual transactions over linked transactions and, therefore, the linking of two transactions may not guarantee settlement.

CBL will bear no responsibility with regards to failure of a linked transaction. By sending a back-to-back instruction in the Irish market, customers are deemed to indemnify CBL for any costs, penalties or loss that CBL may incur.

To benefit from this functionality, customers must ensure that their back-to-back instructions are formatted as follows, according to the connectivity medium used:

Connectivity mediumPool ID formatField(s) to be used
CreationOnline16x a
and
Turnaround
Pool Reference

Type of Settlement Transaction
Xact via SWIFT and Xact File Transfer:POOL//16x a
and
:SETR//TURN
Field :20C: sequence A1

Field :22F: sequence E

a. The reference (16x) must neither start nor end with a single slash ’/’ nor must it contain two consecutive slashes ’//’.

Management of failed instructions

  • CREST matched receipt and delivery instructions with domestic counterparties that have not settled on SD will remain pending until they settle or until they are cancelled by both parties in CREST.
  • CREST matched instructions, for which a cancellation request has been sent to the market, remain blocked for settlement in the CREST system until the cancellation is matched by the counterparty.
    Where the cancellation request is not matched by the counterparty, CBL will exceptionally accept an authenticated free format message from customers to reverse the cancellation request in CREST and reactivate the instruction in the system for further settlement.
  • CREST instructions that remain unmatched by the requested settlement date are reported to CBL as pending. CBL reserves the right to cancel instructions with domestic counterparties that have not been matched by the fifth business day after the requested settlement date.
  • Non-CREST instructions that remain unmatched by the requested settlement date are reported to CBL as pending. CBL reserves the right to cancel such instructions by the 15th business day after the requested settlement date.

Irish stamp duty

Unless an exemption applies, transactions in Irish equities are, in principle, subject to Irish stamp duty (“stamp duty”). The standard rate of stamp duty is 1% of the stampable consideration amount (see below). Unless an exemption applies, stamp duty is payable by the receiving customer.

Charge to stamp duty

  • External transfers
    Stamp duty, charged at the rate of 1% on the stampable consideration amount (see below), applies when the title to Irish equities is transferred electronically via CREST. In CBL, unless an exemption applies or the delivering party (that is, the transferor) is accountable for payment, stamp duty is due on external receipts of Irish equities. For deliveries to an ADR agent, stamp duty is generally applicable to the delivering party as the Irish Revenue Agency considers the stock as leaving the Irish market. Nevertheless, shares converted into ADR form with no change of beneficial ownership and no prior contract to sell such ADRs are not liable to stamp duty on the conversion. In such cases, to avoid stamp duty to be charged, the settlement instruction should include the no change of beneficial ownership flag.
  • Internal transfers
    No stamp duty is due from CBL on internal transfers of Irish equities between CBL customers. Customers, other intermediaries or beneficial owners may, however, be liable or accountable for payment of stamp duty on internal transfers and should consult their tax advisers to ensure that they comply with Irish stamp duty regulations.

Accountable and liable person

In accordance with Irish stamp duty regulations, the person purchasing the securities (that is, the transferee) is accountable and liable for payment of stamp duty on a transfer of Irish equities through CREST. If the delivering party is accounting for the stamp duty, then the ultimate liability rests with the receiving party (that is, the purchaser).

Stampable consideration amount

The amount of stamp duty charged is calculated as 1% of the stampable consideration amount, which is one of the following:

  • If the securities are being transferred for consideration in money or money’s worth, the amount or value of the consideration; or
  • In other cases, the value of the securities.

Input of Irish stamp duty details

Stamp duty details must be input in the relevant field of each instruction. Exemption of stamp duty is only possible if applicable and the relevant exemption code is included in the settlement instruction.

Customers should pay particular attention to the input of this field, as penalties may be incurred if the information subsequently proves to have been incorrect.

The following rules apply to Irish securities subject to stamp duty and must be completed as such in the appropriate fields of the CBL receipt and delivery instructions, as indicated.

Receipt of a security subject to Stamp Duty

 CreationOnline Xact via SWIFT
and Xact File Transfer a
 Meaning
1An exemption is claimed by the customer because there is no change of beneficial ownership.
  Stamp Duty Indicator:
IE Exempt
 MT540
:19A::DEAL// not used :22F::STAM/CRST/IEYX
 Transaction exempted from stamp duty
2An exemption is claimed by the customer because the deliverer is a broker and accountable or the receipt is the result of a new issue from an on-exchange member. b
  Stamp Duty Indicator:
not used
 MT540/541
:19A::DEAL// not used
:22F::STAM// not used
 Stamp duty to be paid by the delivering party
3An exemption is claimed by the customer because the receipt is a result of a new issue from a non-exchange party.
  Stamp Duty Indicator:
IE Exempt/New Issue
 MT540/541
:19A::DEAL// not used
:22F:: STAM/CRST/IE8X
 Transaction exempted from stamp duty as new issue
4An exemption is claimed by the customer because the deliverer is a custodian and has paid the stamp duty on a previous transaction.
  Stamp Duty Indicator:
IE Exempt
 MT540/541
:19A::DEAL// not used :22F::STAM/CRST/IEYX
 Transaction exempted from stamp duty as the stamp duty was paid on a previous transaction
5No exemption is claimed. The receiver is accountable.
  Stamp Duty Indicator:
not used
 MT540/541
:19A::DEAL// not used c
:22F::STAM// not used
 Stamp duty to be paid by the receiving customer
6Irish exempt for any other reason
Stamp Duty IndicatordMT540/541
:19A::DEAL// not used
:22F:: STAM/CRST/IEQX
Transaction exempted from stamp duty

a. To ensure correct processing of the instruction, please enter code words exactly as presented here, including the slash characters.
b. If the broker fails to account for the stamp duty, CREST will charge it to the receiver.
c. If this field is not populated CREST will calculate the stampable value using the share price in their system. This field must contain the ISO currency code (EUR) followed by the total amount of the deal (deal price * quantity of securities) in 1-13 numeric characters (no leading zeroes), the mandatory comma decimal separator and 0-2 decimal positions.
d. This stamp duty code is available via Xact via SWIFT and Xact File Transfer only.

Delivery of a security subject to Stamp Duty

CreationOnlineXact via SWIFT
and Xact File Transfer a
Meaning
1.The delivering customer is not subject to stamp duty (the receiving party is accountable).
Stamp Duty Indicator:
not used
MT542/543
:19A::DEAL// not used
:22F::STAM// not used
Stamp duty to be paid by the receiving party
2.Delivery where the delivering party is accountable, that is, the delivering customer wants to account for the stamp duty and the receiver is not accountable.
Repetitive Amount: “Trade Amount” EUR15d b
Stamp Duty Indicator:
IE applicable
MT542/543
:19A::DEAL//EUR15d b
:22F::STAM/CRST/IE1X
Stamp duty to be paid by the delivering customer

a. To ensure correct processing of the instruction, please enter code words exactly as presented here, including the slash characters.
b. This field must contain the ISO currency code (EUR) followed by the total amount of the deal (deal price * quantity of securities) in 1-13 numeric characters (no leading zeroes), the mandatory comma decimal separator and 0-2 decimal positions.

Input of the stampable consideration amount

Customers should pay particular attention to the input of the stampable consideration amount, as penalties may be incurred if the information subsequently proves to have been incorrect.

The following factors apply when including the stampable consideration amount in instructions:

  • The currency of the stampable consideration amount must always be euros (EUR).
  • The stampable consideration must be bigger than zero.
  • The amount of the stampable consideration can be up to 15 digits but must always include two decimal places preceded by a comma separator (not a period). For example:
    123456789012,12 and 57,12 are valid amounts;
    123456789012 or 123456789012.12 or 57.12 are not valid amounts.
  • No blank space must be left between the currency (EUR) and the amount.
  • The stampable consideration amount must always be preceded by the code word “DEAL//” for Xact via SWIFT and Xact File Transfer.

Payment of the stamp duty

When applicable, stamp duty (1% of the stampable consideration amount) will be debited either on the actual settlement date or at any time within 10 business days of the trade date once the trade is matched, whichever is the earlier.

For external receipt instructions, if the customer is to receive securities from an external counterparty that is considered a broker and the counterparty does not account for the stamp duty to be paid, or if the CBL customer includes an exemption flag in the instruction to CBL and in turn to its depository, Citibank will send a blank input field to CREST, meaning “No Stamp Status” and “No Stampable consideration”. As a consequence, CREST will deduct the due stamp duty from the receiver.

Later, if the customer finds that it is was not liable to pay stamp duty, the customer may claim the stamp back directly from the broker or alternatively make a reclaim to the IRC.

If the external counterparty is considered a custodian bank and none of the settlement parties have accounted for stamp duty in CREST nor an exemption flag has been provided, the CBL customer instruction will be forwarded as such to CREST and no stamp duty will be deducted from the settlement parties.

Later, if the customer finds that it is liable to pay stamp duty, the customer will have to instruct CBL to make a manual payment to the IRC or alternatively make a direct payment. If the customer is audited and the IRC finds that SDRT is due, then CBL’s depository - and in turn, CBL - will pass any obligations on to the customer.

Note: Customers that are liable to pay stamp duty but do not comply with the delays set forth by the IRC may be charged additional non-refundable interest, penalties and surcharges. Customers are strongly recommended to always ensure that the appropriate stampable consideration is input in their instructions, along with the respective codes, to avoid the incorrect calculation of stamp resulting in under- or over-payments to the IRC.

For further details, please refer to the Market Taxation Guide - Ireland.

CBL will not bear any responsibility with regard to the stampable consideration amount mentioned in the customer's instruction. If the Revenue Commissioners question or make inquiries in relation to the stampable consideration amount input in the instruction or any other details of any of the customer's transactions, it is the responsibility of the customer to provide CBL with all required explanations and/or documentation.

By sending CBL an external receipt or delivery instruction for securities subject to Irish stamp duty, the customer is deemed to indemnify CBL for any taxes, penalties, interest thereon and other costs that CBL may incur as a result of CBL's reliance on the information included in the customer's instruction, including the stampable consideration amount indicated by the customer or the claim to be entitled to exemption from stamp duty.

When applicable, the stamp duty due on partial receipt(s) will be debited in the same processing as the consolidated credit of securities with value SD.

The transaction reference that will appear on the debit instruction will be in the format “SDR” followed by a sequential reference number and most of the details of the original instruction.

Retention and disclosure of documentary evidence

Documentary evidence of details of all transactions and, where applicable, proof of relief from stamp duty must be retained for six years from the settlement date of each transaction and must be forwarded upon request from CBL or the Revenue Commissioners. By holding Irish equities in an account with CBL, customers will be deemed to appoint CBL and CBL's depository for Irish equities as their attorneys-in-fact for the purpose of providing the information to the Revenue Commissioners, if requested by the latter.

SDRT Reclaim request charges

An out-of-pocket tax fee of EUR 65.00 is charged per reclaim item as soon as it has been charged by the IRC and forwarded by the depository.

For other fees, please refer to Clearstream Banking Fee Schedule.

Domestic bilateral securities lending and borrowing in CREST

An Irish domestic lending service is offered by Clearstream Banking for Irish CREST eligible securities and free of payment settlement instructions.

Customers are, and remain, fully responsible for managing their lending trades and considering any custody/income events that may affect their entitlements and/or lending transactions.

Irish loans are exempted as long as the return leg is processed within 12 months (or less than 365 days) of the settlement of the opening leg.

Instruction specifications

In order to identify the instructions as lending/borrowing in CREST, the following fields must be populated:

Identification as lender or borrower

Identification of every instruction as lending or borrowing throughout the life of the transaction:

  • SWIFT :22F:: SETR//SECL if lender; or
  • SWIFT :22F:: SETR//SECB if borrower.

This field must be populated in all related instructions and must be the same as the opening leg. Failure to follow this procedure will result in the instruction being treated as a standard OTC trade.

The original loan reference must always be unique. In the event of a duplicate reference, Clearstream Banking will reject the instruction and the customer will receive an instruction status message with the following narrative:

  • "Domestic loan with same reference already exists"

In CREST, the related Stock Loan Return (SLR) will be set up automatically and will remain in the system until the borrower returns the securities to the lender. The customer must input the SLR with the trade date under which the loan opening settled in CREST.

Linking the opening and closing leg

In addition to the above, in order to be able to link the opening and closing leg(s), the previous opening leg reference must always be included in the closing leg(s) as follows:

  • SWIFT :20C:: PREV//(original loan instruction reference); or

    In the event that the original loan reference is not included as per above, no opening leg will be identified. The instruction will then not be released to the market and the customer will receive an instruction status message with the following narrative:

  • "Waiting settlement of opening leg".

Once the loan has been confirmed in CREST, the following interim status update may be reported prior to the receipt of the MT542 settlement confirmation:
:25D::SETT//PEND
:16R:REAS
:24B::PEND//LALO

In the event that the counterparty sends partial deliveries, it may be that they are short and the customer may receive the following message:

  • "Counterparty Insufficient Securities"

If the customer is due to receive the securities from the counterparty: 

  • It is the counterparty’s responsibility to raise the priority in the market to allow the trade to settle;
  • If no closing leg is instructed on the day that the counterparty has returned the securities, Clearstream Banking will manually book them into the customer's account with a fee of 50 EUR per individual booking.

Partial settlement

The standard CREST rules and Clearstream Banking services apply.