Settlement services in T2S - Denmark

08.01.2019

Pre-matching service

The T2S functionality Hold and Release is not available for VP Securities eligible securities.

Matching service

Matching is mandatory for all transactions settling in T2S. In addition to the mandatory matching criteria in T2S, the following fields may, if present, be matching criteria.

Additional matching fields

The following additional matching fields are initially not mandatory but, when one of the counterparties provides a value for them in its instruction, matching values must be provided by the other counterparty:

  • Opt-out indicator;
  • CUM/EX indicator;
  • Client of delivering/receiving CSD participant;
  • Securities account of the delivering/receiving CSD participant.

In their instructions to CBL, customers may use the following fields:

Type and purpose of the
optional matching field
Xact via SWIFT and Xact File TransferCreationOnline
Opt out indicator
Customer wishes to opt out from market claims or transformations
:22F::STCO//NOMCOpt-out indicator

Cum indicator
Customer wishes to indicate its transaction as cum coupon

:22F::TTCO//CCPNCUM/EX indicator

Ex indicator
Customer wishes to indicate its transaction as ex coupon

:22F::TTCO//XCPNCUM/EX indicator

Client of delivering CSD participant

Customer wishes to specify the BIC11 or local code of the counterparty's underlying client

:95a::SELLClient of delivering CSD participant

Client of receiving CSD participant

Customer wishes to specify the BIC11 or local code of the counterparty's underlying client

:95a::BUYRClient of receiving CSD participant

Securities account of the delivering party

Customer wishes to specify the counterparty's account

:97A::SAFE with :95a::DEAGSecurities account of the delivering party

Securities account of the receiving party

Customer wishes to specify the counterparty's account

:97A::SAFE with :95a::REAGSecurities account of the receiving party

Optional matching fields

The Common reference field must match when provided by both counterparties:

Type and purpose of the optional matching field

Xact via SWIFT and Xact File Transfer

CreationOnline

Common reference

Customer wishes to indicate a reference agreed with the counterparty

:20C::COMMCommon Trade Reference

Allegements

CBL may receive counterparty instructions alleged on its account at VP Securities and will report them to customers provided that the customer’s CBL account is present in the allegement and the allegement subscription is in place on the customer account.

The allegements will contain the additional and optional matching criteria described above. These can be used to correctly format instructions to ensure matching if it has not yet been sent to CBL.

Identification of CSDs in T2S

In T2S, all CSDs will be identified by their BIC11. Customers are required to use the following BIC11 as Place of Settlement for domestic instructions in VP Securities:

CSDBIC11
VP Securities via T2SVPDKDKKKXXX

Identification of the counterparty in T2S

In T2S, the CSD participants are identified exclusively by the combination of their home CSD (SWIFT: PSET or CreationOnline: Place of settlement), i.e. the PSET shall be the BIC of the CSD the counterparty uses to access T2S, and their BIC11 (SWIFT: REAG/DEAG or CreationOnline: Receiving/Delivering Agent).

If a customer uses a BIC8 to identify the Receiving/Delivering Agent, CBL shall be entitled to modify the BIC8 provided and the settlement instructions will be then processed by default with a BIC11 by adding the default XXX suffix to comply with T2S settlement rules. Accordingly, such customers remain liable for any settlement fails that the use of the BIC8 may cause and the customers furthermore agree to indemnify CBL against losses, liabilities, damages, penalties, expenses and all other costs on any kind suffered by CBL as a result of the customer not complying with the above requirement.

Partial settlement

T2S will apply partial settlement when the delivering party does not have the full amount of securities or the receiving party does not have sufficient cash on the dedicated cash account (DCA) for settlement. Customer delivery and receipt instructions will continue to be provisioned for the full quantity or cash value before being released for settlement. Consequently, customer delivery and receipt instructions may only settle partially if their counterparty is short of securities or cash. Customers that do not wish their transactions to settle partially must provide field :22F::STCO//NPAR or Partial Settlement set to “Partial not allowed” in their instruction.

Allowed countervalue difference

The following T2S cash tolerances will apply to instructions (against payment instructions in EUR only):

  • EUR 2 for transactions with an amount equal to or less than EUR 100,000;
  • EUR 25 for transactions with an amount greater than EUR 100,000.

The following T2S cash tolerances will apply to instructions (against payment instructions in DKK only):

  • DKK 15 for transactions with an amount equal to or less than DKK 750,000;
  • DKK 187 for transactions with an amount greater than DKK 750,000.

In the event of a discrepancy within the limits, in principle the cash amount of the delivering party will prevail.

Back-to-back processing (Transaction linking)

T2S provides functionality to link settlement instructions together. Clearstream Banking continues to offer instruction linking on its link to VP via the existing back-to-back (B2B) service. The format for B2B instructions will remain unchanged.

Cancellation

The following cancellation rules are applicable to Clearstream Banking's link to VP:

  • Unmatched instructions: can be cancelled unilaterally by the party who placed the instruction at any time or until cancelled by T2S.
  • Matched instructions: must be cancelled bilaterally by both counterparties.

Note: When a counterparty only has a VP legacy account, its subcustodian creates a transaction account for settlement in T2S. A transfer from the VP legacy account to the transaction account is conducted as this is necessary for the actual transaction to settle in T2S. The transfer and the actual trade are linked together to settle simultaneously. If there is a mismatch between transfer logic and T2S logic, T2S will cancel the transfer and the actual transaction. This cancellation takes place even if the transaction in T2S is matched. The counterparty will consequently have to re-instruct. In these circumstances, customers are advised to contact their counterparty to ensure the counterparty re-instructs.

Recycling rules

The following recycling rules will apply in T2S and will also be applicable to Clearstream Banking’s link to VP:

  • 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).

Hold and release

The hold and release feature available in T2S will be used by Clearstream Banking for pre-matching only. Therefore, once the customer’s instruction is provisioned and released to the market, it will no longer be possible to place the instruction on hold. If the customer’s counterparty has placed its instruction on hold, we will report status/reason as follows: Xact via SWIFT and Xact File Transfer: SETT//PENx PENx//PRCY CreationOnline: Counterparty Instruction on Hold in CreationOnline.

New issues settlement

Customers interested in the service for new issues of VP Securities government bonds should contact Clearstream Banking Customer Service or their Relationship Officer.