CSDR: Resolving reconciliation breaks
In order to comply with the Central Securities Depositories Regulations (CSDR), Clearstream Banking1 continues to apply necessary measures to prevent reconciliation breaks from occurring and takes action to resolve them when they happen.
Background
A reconciliation break may result from extended settlement delay related to redemption orders placed by Vestima distributor banks. Redemption orders that are confirmed by a contract note (from the order receiver), require the Vestima distributor banks to instruct a settlement (delivery of shares). Unfortunately, it is sometimes the case that the Vestima distributor banks put this settlement instruction on "hold release“, effectively postponing the settlement for a prolonged period of time and delaying settlement accordingly.
In such cases, Clearstream Banking faces a reconciliation break (the difference between holdings on register, as per trade confirmation, and pending settlement instructions), that must be resolved.
Impact on customers
Clearstream Banking’s governing documentation already makes provisions for such resolutions (Special Conditions of Investment Fund Services section 4.3, available to logged-in customers only), by means of a process of purchase and debit initiated by Clearstream Banking.
In addition, failure to resolve the break may result in Clearstream having to take immediate and strict action in accordance with CSDR requirements.
Further information
For full details on the CSDR please refer to the Customer Readiness information on the Clearstream website.
Further information is available from your dedicated Relationship Manager or Clearstream Banking’s Client Services teams.
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1. This Announcement is published by Clearstream Banking AG (CBF), registered office at Mergenthalerallee 61, 65760 Eschborn, Germany, registered with the Commercial Register of the District Court in Frankfurt am Main, Germany, under number HRB 7500.