Settlement services - Switzerland

21.11.2016

Settlement Services in SECOM

Pre-matching service

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

Service offeredMethod employedScope
All securities
Release of pre-matching instructions  (limited to outside the provisioning period) followed by a settlement instructionAutomated through SISOn receipt of instructions

Note: No pre-matching is performed on back-to-back instructions.

Procedures for domestic counterparties

Procedure for the domestic counterpartyDeadline
Receipt in CBL
Domestic counterparties delivering securities in favour of a CBL customer, free of or against payment, must provide information in their instruction to SIS as follows:Market deadline
-Deliver to: UBS AG, Zurich, Account CH100025
-In favour of: Clearstream Banking S.A., Account xxxxx a
Delivery from CBL
Domestic counterparties receiving securities free of payment or against payment from a CBL customer must provide information in their instruction to SIS as follows:Market deadline
-Receive from: UBS AG, Zurich, Account CH100025
-By order of: Clearstream Banking S.A., Account xxxxx a

a. This is an optional field in SIS and SIS ignores it for matching purposes. Counterparties are requested nevertheless to supply it.

Allowed countervalue difference

A maximum difference in countervalue of CHF 25, EUR 25, GBP 30 or USD 25 is allowed for the matching and settlement of transactions with domestic counterparties. In the case of a discrepancy within this limit, the delivering party’s cash amount shall prevail.

Bilateral cancellations

If a party sends a cancellation instruction for a matched instruction it is accepted, but only executed when the other party also sends a cancellation instruction.

If only one party sends a cancellation instruction then the matched instruction will settle on the intended settlement date.

Additional matching field

The following additional matching fields are initially not mandatory, however 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.

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

Type and purpose of the additional matching fieldXact 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

Back-to-back processing

Back-to-back processing is available for transactions in all dematerialised securities eligible in this market. If both the customer and the domestic counterparty meet their settlement obligations and fulfil the market's back-to-back requirements within the relevant deadlines, the linked receipt and the linked delivery will settle with same-day value. To benefit from this functionality, customers must ensure that their back-to-back transactions are formatted as per the following format, depending on the media 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

Although, in accordance with the procedures for meeting the new SIS standards, unsettled receipt instructions are automatically cancelled twenty calendar days after the requested settlement date, CBL reserves the right to cancel such instructions if they have not settled by the fifth domestic business day after the requested settlement date.

CBL also reserves the right to cancel delivery instructions that have not settled by the fourth business day after the requested settlement date (SD+4).

New issues settlement

Depending on when the securities are credited in SIS, the newly issued securities will be credited in CBL on the closing date or on closing date +1 at the start of real-time processing. For confirmation times, please refer to Settlement times.

CBL and Euroclear have agreed to apply back valuation to all trades that are settled in the newly issued security at the start of real-time processing of closing date +1 and that have indicated the closing date as the requested settlement date.

Settlement restrictions applying to U.S. customers for Regulation S Securities

Regulation S Securities are securities that have been issued by companies incorporated in the U.S.A., then offered and sold outside the U.S.A. without registration under the U.S. Securities Act of 1933.

If the transaction meets the requirements of 144A of Regulation S, a Qualified Institutional Buyer (QIB) is the only “U.S. person” (as defined in Rule 902(k) of Regulation S) that can purchase such securities. The purchase must be made during a one-year “distribution compliance period” that begins once the offering has been closed.

In accordance with the rules and regulations of the U.S. Securities and Exchange Commission (SEC), the following restrictions apply to the settlement of Regulation S Securities in CBL:

  1. U.S. customers must not receive/deliver Regulation S Securities by internal or Bridge settlement to/from their CBL account.
  2. Internal or Bridge settlement of Regulation S Securities by or on behalf of U.S. entities or individuals is a violation of the law and may result in sanctions. Such settlement also constitutes a violation of CBL procedures and each customer has a responsibility to ensure that no such violation occurs on their account.
  3. Upon request from the registrar, for any settlement instruction for Regulation S Securities to or from the domestic market, SIS is obliged to disclose the final beneficiary. Therefore, in order to avoid settlement delays, customers are requested to submit to CBL, before the intended settlement date, details of the final beneficiary for further transmission by UBS to SIS. If the final beneficiary is a U.S. customer, domestic settlement instructions will be rejected by UBS.

Note: A U.S. customer is any entity with a U.S. residence (based on the location of its executive office or principal place of business), including, without limitation:

  • Any U.S. bank (as defined by section 3(a)(6) of the Securities Exchange Act of 1934);
  • Any broker-dealer registered as such with the SEC, even if such broker-dealer does not have a U.S. residence; or
  • Any foreign branch of a U.S. bank or U.S. registered broker-dealer.

A non-U.S. customer is any CBL customer other than a U.S. customer as defined above.

Settlement Services in T2S

Pre-matching service

The table below summarises CBL’s pre-matching service for external settlement instructions, as well as the pre-matching method and scope.

Service offered

Method employed

Scope

All securities

Release of pre-matching instruction (limited to outside the provisioning period) followed by a settlement instruction

Automated through T2S

On receipt instructions

The hold and release feature available in T2S will be used by CBL 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.

Additional matching field

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.

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

Type and purpose of the additional matching field

Xact via SWIFT and Xact File Transfer

CreationOnline

Opt-out indicator

Customer wishes to opt out from market claims or transformations

:22F::STCO//NOMC

Opt-out indicator

Cum indicator

Customer wishes to indicate its transaction as cum coupon

:22F::TTCO//CCPN

CUM/EX indicator

Ex indicator

Customer wishes to indicate its transaction as ex coupon

:22F::TTCO//XCPN

CUM/EX indicator

Optional matching field

The following optional matching fields must match when provided by both counterparties:

  • Common reference;
  • Client of delivering/receiving CSD participant;
  • Securities account of the delivering/receiving CSD participant.

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::COMM

Common Trade Reference

Client of delivering CSD participant

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

:95a::SELL

Client 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::BUYR

Client of receiving CSD participant

Securities account of the delivering party

Customer wishes to specify the counterparty’s account

:97A::SAFE with :95P::DEAG

Securities account of the delivering party

Securities account of the receiving party

Customer wishes to specify the counterparty’s account

:97A::SAFE with :95P::REAG

Securities account of the receiving party

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 SIX SIS:

CSD                                        BIC11

SIX SIS                                   INSECHZZXXX

For cross-border transactions on Swiss securities with counterparties in Bank of Greece System, the Place of Settlement must contain the BIC of the counterparty’s CSD, i.e.

CSD                                        BIC11

Bank of Greece System       BNGRGRAASSS

If a customer uses a BIC8 to identify the Place of Settlement, Clearstream Banking 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.

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.

Procedures for domestic counterparties

Procedure for the domestic counterparty

Deadline

Receipt  in CBL / Delivery from CBL

-

Deliver to / Receive from: BIC UBSWCHZH80A (T2S SAC number INSE20001513a)

T2S  Deadline

-

In favour of: Clearstream BIC11 CEDELULLXXX and account number of the CBL customer.b

-------------

a. The securities account number (SAC) is an optional matching criteria in T2S.

b. T2S does not report the account field with second party level in the allegement messages and we therefore recommend customers to request their counterparties to include the CBL customer account number in field :70C::PACO instead of :97A::SAFE.

Partial settlement

UBS’s T2S account does not allow partial settlement therefore all instructions sent with the tag 22 “PAR” will be suppressed and the instruction will be sent with STCO/NPAR.

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; and
  • EUR 25 for transactions with an amount greater than EUR 100,000.

Cancellation

  • 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

Recycling rules

  • 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).