Process changes due to the OneClearstream migration in 2018 - update
Note: This announcement originally published on 28 September 2017 has been updated following the change of migration date for the ESES markets. Changes are highlighted.
Following Clearstream Banking’s1 website article of 15 June 2017, Clearstream Banking informs customers of the impact of its OneClearstream service introduction to existing processes and interfaces.
As part of its effort to provide settlement in the T2S environment with best in class asset servicing, Clearstream Banking introduces the concept of OneClearstream, where settlement and asset servicing processes will be harmonised between Clearstream Banking AG (CBF), LuxCSD SA and Clearstream Banking S.A. (CBL).
As a first step to an enhanced service offering, CBL will amend its settlement process flow and appoint CBF as its single gateway to the T2S settlement platform2. This will lead to the migration of T2S-eligible3 securities to CBF on a market-by-market basis according to the following migration schedule:
|Italy (Monte Titoli)||26 March 2018|
|France, Belgium, Netherlands (ESES)||9 April 2018|
Additional markets will be announced in due course.
The centralisation of T2S-eligible assets in CBF changes the settlement flow of instructions between counterparties in two different CSDs (crossborder settlement instructions).
The main benefit of this approach will be the harmonisation of formatting of counterparty instructions for all T2S markets, as illustrated in the diagram below. Every market migrated will add to this harmonisation.
In addition, Clearstream Banking will further enhance its asset servicing offering by introducing additional automation of the market claims and transformations life cycle. Please refer to the Release Notes for the upcoming November 2017 Release. Clearstream Banking will provide further information for subsequent releases.
This announcement provides an overview of the generic migration principles together with their preparation activities. Dedicated cutover announcements will be published around three months prior to the market migration date to provide further information concerning market migration timings and the securities to be migrated. They will also explain the rules applicable to distinguish securities that are being migrated from those that will remain with the current agent or depository.
Migration impacts on customers
The centralisation of T2S-eligible securities in CBF will be performed on a market-by-market basis on dedicated migration weekends. As the transfer of security positions needs to take place during regular T2S business hours, the migration activities will start on a Friday afternoon.
Customer preparation before a migration weekend:
- In order to ensure a smooth migration, customers are requested to cancel any remaining matched pending domestic settlement instructions in cooperation with their counterparties prior to the migration weekend (the specific deadline for each market will be provided in the detailed cutover announcement). This concerns instructions with a requested settlement date (RSD) instructed far in the past and instructions with a RSD after the effective date of the migration. Since matching is binding in T2S, Clearstream Banking cannot cancel matched instructions unilaterally and will therefore take no action on these instructions. Clearstream will initiate realignments to CBF for any positions that might result from cancellation of delivery instructions or settlement of receipt instructions. These realignments will be handled on a “best efforts” basis and delays in settlement of subsequent instructions with CBF cannot be entirely avoided. Clearstream strongly encourages customers to cancel as many matched instructions as possible prior to the migration to limit the occurrence of these incidents.
- For the impacted markets there is an Instruction Pre-Matching service offered, where Clearstream Banking releases domestic settlement instructions irrespective of the formal provisioning period and without provision check for pre-matching. In order to reduce the number of matched instructions at the time of migration in the domestic market to a minimum, Clearstream Banking will suspend this pre-matching service one week before the migration weekend. The re-activation of the Instruction Pre-Matching service is scheduled for Friday evening of the week following the migration weekend. Customers shall be aware that domestic settlement instructions sent for pre-matching purposes only (marked with value PREA in field :23G:) will not be forwarded to the current agent/depository while the Instruction Pre-Matching service is suspended. The Immediate Release Flag4 service, that triggers immediate provisioning and submission of the instruction to the domestic market, will be available for exceptional use while the Instruction Pre-Matching service is disabled.
- Customers are requested to advise their counterparties about a change in settlement instruction formats as from the migration date. The instruction format for settlement instructions will not change for CBL customers5, but it will change for their counterparties: the PSET will become DAKVDEFFXXX whilst DEAG/REAG remains unchanged to be CEDELULLXXX..
- Securities with an ongoing corporate action event (income and non-income) will be excluded from the original transfer date if the key date (that is, record date and/or deadline date) is around the migration date. These securities remain with the existing CBL depository/agent until they will be migrated in one consolidated second migration that will happen no more than 20 T2S business days later. Customers will be informed two weeks prior to the initial migration weekend about the impacted securities. The final list will be provided on the Thursday before the migration weekend.
- The place of safekeeping allocated to the transferred holdings will remain unchanged in the MT535 reporting.
- In addition to the market migration, CBF intends to extend the scope of securities admitted to Collective Safe Custody. The admission into CSC will have an impact on trade processing for the German Stock Exchange activity on 6-series accounts (CBFi). Clearstream will publish further details with regards to timing and impacted securities in due course.
Handling of domestic settlement instructions during the migration weekend:
- On the Friday afternoon Clearstream Banking will stop sending domestic settlement instructions to the existing agent/depository at a specific time defined for each market. The exact time will be communicated to customers in the dedicated market cutover announcements. This will not stop pending matched instructions to settle in the domestic market while CBL performs its cutover activities.
- Pending unmatched domestic settlement instructions that have already been submitted to the market will be cancelled by Clearstream Banking. These cancellations will be visible to customers in Xact Web Portal, CreationOnline and in the MT548 / MT537 reporting (if subscribed to).
- New domestic settlement instructions received after the cut-off deadline mentioned above will be put on hold until after the end of the migration. They will subsequently be transformed and processed after finalisation of the migration activities. Pending unmatched instructions that have been cancelled by Clearstream Banking can therefore be resubmitted by customers immediately after the receipt of the cancellation.
For further information, customers may contact Clearstream Banking Client Services or their Relationship Officer.
1. Clearstream Banking refers collectively to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248, and Clearstream Banking AG (for Clearstream Banking AG customers using Creation Accounts), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.
2. The process flows for asset servicing remain unaffected by this change.
3. It will not always be possible to migrate all T2S-eligible securities in a given market due to operational or legal constraints.
4. How to use the immediate release flag:
SWIFT: value CEDE/IREL is inserted in field :22F: in the mandatory sequence E with qualifier STCO
CreationOnline: the Immediate Release flag is ticked
Xact Web Portal: the settlement transaction cond. is set to IREL – Immediate release
5. Clearstream will advise customers of any exception in the dedicated cutover announcement for each market.