United States of America: Corporate Actions - Single Security Initiative by FHFA, Freddie Mac and Fannie Mae - Settlement instruction details - Reminder
Following Announcement A19036, Clearstream Banking1 informs customers from when they can send their settlement instructions for the exchange between Freddie Mac MBS and Fannie Mae MBS to create a new mortgage-backed security (UMBS) and how to format these instructions when participating in the Single Security Initiative through Clearstream Banking.
Impact on customers
The voluntary exchange will start on 3 June 2019 and will run until the maturity of the instruments. If you are interested in exchanging your Fanny Mae eligible securities, you may be able to request the exchange reserve date up to two (2) weeks prior to the exchange day and at the latest, two days prior to the requested exchange date.
The exchange will be performed by having the holders deliver via settlement instructions their eligible 45-day Fannie Mae securities for 55-day Freddie Mac securities.
If you are interested in participating to the exchange through your Clearstream Banking account, you will be able to instruct your settlement instructions for the exchange if you choose the Freddie Mac’s Dealer Direct option for the exchange. You will have to instruct a Fedwire settlement delivery and a receipt against payment instruction to complete the exchange. When you instruct please consider the cash considerations in your against payment instructions as follows:
- The deliver against payment instruction to deliver the Freddie Mac 45-day security will include the cash compensation and broker fee in the net settlement amount.
- The receive against payment instruction will be at par with the receive of the new UMBS.
Settlement instructions for this event may only be instructed through Xact via SWIFT and Xact File Transfer. Details on the instruction formats and content required in your settlement instructions to be provided via Clearstream Banking are described below.
For instructions via Xact via SWIFT and Xact File Transfer, in addition to using the format applicable to Federal Reserve Bank Book Entry system (FBE) instructions, please include the following field in both of your delivery and receive against payment settlement instructions:
Sequence E; Field :22F::STCO/FHMC/UMBS
Important note: You may include the Exchange Reference ID Number (official number from Freddie Mac) as your unique reference number. Clearstream Banking will playback the Exchange Reference ID Number on the SWIFT settlement confirmation and statements back to you but will not sent it to the market for matching or settlement purposes.
Clearstream Banking standard provisioning and settlement deadlines apply.
Customers wishing to participate in the exchange should make themselves familiar with the information available on the Freddie Mac and Fannie Mae official websites and the conditions applicable to their portfolio or 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.