Settlement services - Hungary

05.12.2016

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)
All securities
Release of pre-matching instruction (limited to outside the provisioning period) followed by a settlement instructionAutomated through KELER's systemOn receipt of instructions

Domestic allegement matching service

Complementary to the pre-matching services offered as described above and where no pre-matching instruction has been sent to the market, CBL accepts allegements via its depository from domestic market counterparties. It will then use these allegement messages to search for the best matching customer instruction.

If no matching customer instruction is found, the allegement is reported to the customer provided that its Clearstream Banking account number is present.

For details of CBL's domestic allegement service, see Pre-matching services for external settlement instructions.

Procedures for domestic counterparties

Customers should request their domestic counterparties to contact Raiffeisen Bank International AG (RBI) in Vienna in order to arrange pre-matching of instructions on behalf of CBL at the following address:

Raiffeisen Bank International AG
Email: rsc-ic@rsc.co.at
Attn.: Felicita Gyoergy
Tel: +43 1 33701-4614
Fax: +43 1 33701-4825

CBL account with KELER is 0450-000000.

Receipt of securities in CBL

For all receipts of securities, customers should advise their domestic counterparty to:

  • Pre-match the transactions with RBI AG as soon as possible.
  • Indicate their (the customer’s) CBL account when pre-matching.

For all against payment receipts of securities, CBL - in accordance with market practice - executes DVP settlement in KELER Ltd’s system. Cash transfer via GIRO and a separate free receipt of securities is not supported.

Physical receipts

Physical securities currently held in KELER Ltd can, based on the instruction of the issuer, be held in fungible custody after moving in to KELER Ltd’s vault. A feature of fungible custody is that such securities are eligible for the full range of transactions (for example, FOP, DVP) and are treated in the same way as dematerialised securities.

KELER Ltd provides custody services for physical securities that are held as individual deposits in a non-fungible manner. These securities are identifiable by sequence and serial numbers, which require specific validations and processing, and are held in book-entry form.

This service is restricted to safekeeping and physical delivery; settlement of such securities is not supported. However, if the specific transaction requires it, the official deadline for remitting physical securities to KELER Ltd for a given settlement date is 12:00 on SD-1. Customers should note that securities remitted within this deadline will be credited to the customer’s CBL account only at the start of real-time processing for value SD.

Delivery of securities from CBL

For all deliveries, customers should advise their domestic counterparties to pre-match the transactions with RBI as soon as possible.

N.B.: Failure to deliver securities to a BSE member for the contracted settlement date will result in a buy-in being enforced against the defaulting broker.

For all against payment deliveries of securities, CBL - in accordance with market practice - executes DVP settlements in KELER Ltd’s system. Receipt of incoming funds via GIRO or VIBER with a separate free delivery of securities is not supported.

Settlement for BSE members occurs between 08:15 and 14:00 on SD.

Physical deliveries

After the dematerialisation on 1 January 2005 of all listed shares in KELER Ltd, some physical papers representing beneficial ownership in non-listed private limited companies still exist on the Hungarian market. These securities are eligible in KELER Ltd if they are delivered into and are kept in KELER Ltd’s vault.

If a specific transaction is required, the official deadline for remitting physical securities to RBI for a given settlement date is 12:00 on SD-1.

Allowed countervalue difference

A difference in countervalue of HUF 5,000 or equivalent is allowed by the CSD’s system and with RBI. The amount of the buyer will be taken as a reference. On the other hand, KELER Ltd's system allows settlement of countervalue amounts with decimals. Customers should therefore avoid using decimals in the countervalue of their settlement instructions. If decimals are used, rounding is applied automatically by KELER Ltd's system. Amounts with decimals in the range .50 to .99 are rounded up and amounts with decimals in the range .00 to .49 are rounded down. For example, value 1234.50 is rounded up to 1235 and value 1234.49 is rounded down to 1234.

Specific settlement rules / settlement restrictions
Standard settlement period

  • Debt securities (government and corporate)
    KELER Ltd offers a T+2 settlement cycle for debt securities on the BSE. The cycle is based on multilateral netting; however, gross settlement between BSE members is also possible when effecting block trades.
    Settlement between BSE members takes place between 08:15 and 14:00 on T+2 (=SD).
  • Equities
    The settlement of transactions concluded on the BSE between member companies is effected on the principle of multilateral netting on the basis of a T+2 rolling settlement. Gross settlement is also possible when effecting block trades.
    Settlement between BSE members takes place between 08:15 and 14:00 on T+2 (=SD).
    KELER CCP has established a default fund, the Stock Exchange Settlement Fund (SESF). This is a collective guarantee fund underwritten by members of the BSE and is used in cases where the buying broker has insufficient funds on T+2 to honour payment to the selling broker.

The settlement cycle of OTC trades in all securities may vary from T+0 to T+15, according to market practice, but OTC transactions usually follow the same settlement cycles as BSE trades (T+2).

Counterparty accounts

Commercial banks often hold unpublished sub-accounts on behalf of their (foreign) clients in KELER Ltd. Customers must clearly identify the final beneficiary (the domestic counterparty’s client), by name or BIC and client code, in order to permit the securities to be credited to the correct KELER Ltd sub-account of the domestic counterparty (see the relevant instruction specifications).

Bridge settlement

Only corporate and government bonds are Bridge-eligible.

Management of failed instructions

In line with KELER Ltd's practice, RBI shall automatically cancel Clearstream customers' settlement instructions that are still unmatched at the end of the 20th settlement day after the first attempted settlement date.

New issues settlement

Equities

In general, CBL customers must prepay the Lead Manager directly during the official subscription period for the countervalue of new equities to which they want to subscribe. The currency in which such payments are to be made is included in the official announcement of the subscription.

The Lead Manager holds the prepayment in escrow on behalf of investors. In the case of rejected bids, prepayments are refunded to the investors according to the payment instructions given to the Lead Manager. When a bid is successful, the Lead Manager delivers the newly subscribed shares to the broker who submitted the customer's bid for onward delivery, free of payment, to CBL’s depository securities account 0450 with KELER Ltd. Customers must pre-advise CBL of the receipt of securities through transmission of a free of payment receipt instruction.

Depending on the details of the subscription, institutional buyers - such as CBL (and its customers) - may execute the transaction on a DVP basis in KELER Ltd’s system.

Government securities

Customers must submit an against payment receipt instruction, in accordance with the deadlines mentioned under Settlement times, identifying the broker/bank through which the bid for the subscription has been submitted (the bid must be submitted in accordance with the details in the relevant instruction specifications). CBL’s depository, RBI, arranges DVP settlement with the subscriber institution, the subscriber receiving the securities via DVP settlement from the State Debt Management Agency (SDMA).