Harmonisation of Clearstream Banking’s asset services - update

20.05.2022

Note: This announcement, originally published on 21 March 2022, has been updated to provide customers with further asset servicing processing information. Changes have been highlighted.

Further to the Announcement C21059, Clearstream Banking1 would like to announce, that as part of its OneClearstream service offering enhancement, effective

24 October 2022

asset servicing processing for the German market will be enhanced and streamlined across Clearstream Banking entities.

As result of this, harmonisation changes will be also implemented to the current processing of corporate actions. The following processing aspects will be enhanced and will apply to all markets:

Asset servicing impact

As-is process

To-be process

Processing of warrants

Technical movements are reported via MT564:

  1. Debit of parent security;
  2. Credit of technical ISIN;
  3. Debit of technical ISIN;
  4. Credit of cash.

Example from MT564
(CORP AC13958721):

:16R:SECMOVE
:22H::CRDB//DEBT
:35B:ISIN GB00B8SVK441
/XS/160769220
WAR BARCLAYS BK PLC (CALL) 070422
:16S:SECMOVE

:22H::CRDB//CRED
:35B:/XS/028204124
WAR TECHNICAL CODE FOR UNKNOWN PROCEEDS XXXXX
:16S:SECMOVE

:22H::CRDB//DEBT
:35B:/XS/028204124
WAR TECHNICAL CODE FOR UNKNOWN PROCEEDS XXXXX
:16S:SECMOVE

:16R:CASHMOVE
:22H::CRDB//CRED
:16S:CASHMOVE

No technical movements on warrants are reported.

Example from MT564
(CORP AC13958721):

:16R:SECMOVE
:22H::CRDB//DEBT
:35B:ISIN GB00B8SVK441
/XS/160769220
WAR BARCLAYS BK PLC (CALL) 070422
:16S:SECMOVE

:16R:CASHMOVE
:22H::CRDB//CRED
:16S:CASHMOVE

MT565 usage of COAF

Customers are required to use the CORP ID to link to the corresponding MT564 Corporate Action Notification.

Customers cannot use the COAF.

Customers are required to fill the CORP ID.

Customers can optionally use the :20C::COAF in MT565 Corporate Actions instructions to link to the corresponding MT564 Corporate Action Notification. This field must contain the Official Corporate Action Event reference if it was indicated in the notification.

The COAF will be used by Clearstream Banking to identify the related event in case the CORP ID is filled with “NONREF”.

If there is conflicting information in COAF and CORP ID, then no straight-through-processing can be ensured.

MT564 - Claim and Reversal Advice (CRA)

A reversal may occur if a corporate action event data is incorrect or when the depository performs a reversal. Generally, reversals are performed at account level.

For income events, customers are informed via MT564 (CRA-reporting).

MT564 - Claim and Reversal Advice (CRA) reporting will be enhanced to include mandatory non-income events.

Following events will be added:

ACTV, ATTI, BONU, CHOS, BRUP, CHAN, CONV, CREV, DETI, DFLT, DRAW, DSCL, EXOF, EXTM, EXWA, INCR, INFO, LIQU, MRGR, OTHR, PARI, PLAC, PINK, PPMT, SMAL, SPLR, TEND, TREC, WRTH.

The CRA-report is subject to subscription via Xact Web Portal.

For details on the CRA-report, customers should refer to the Xact SWIFT User Guide and Customer Handbook.

Reversal repayment period

Reversal repayment can take place up to 180 days after the Payment Date without any impact on the standard reporting.

Reversal repayment period will be extended to 280 days after the Payment Date.

Cancel of reversal repayment

Reversals can be cancelled as long as they have not been executed.

In this case, a MT564 ADDB message will be created and sent to customers and agents.

Reversals can be cancelled as long as they have not been executed.

In this case, a MT564 ADDB message with specific reason code in field narrative :70E and reference to the originally communicated reversal via field :20C will be created and sent to customers and agents.

Transformation into cash

During transformations into cash, the reporting for the PFoD includes the settlement transaction indicator :22F::SETR//CORP and the settlement transaction condition indicator :22F::STCO//TRAN.

Instead of :22F::SETR//CORP, the PFoD uses the same settlement transaction indicator as the underlying instruction (for example, :22F::SETR//TRAD or :22F::SETR//CLAI).

Paying agent (PAYA)

No information on the paying agent is provided.

Information on the paying agent is provided via field :95Q::PAYA in MT564 and MT566 messages.

The following processing aspects will be enhanced and will apply to the German market only:

Asset servicing impact

As-is process

To-be process

Deduction

No deduction service is offered. Manual processing based on MT599 may apply.

Customers have three possibilities to deduct positions from a corporate action event:

  • The customer directly transfers securities to the sub-account;
  • The customer instructs Clearstream Banking via MT565 to deduct holdings from the entitled position;
  • The customer instructs Clearstream Banking via MT599 to manually deduct the securities.

Market and Reverse Claim detection

The compensation instruction is created when detection rules are fulfilled and the underlying instruction is matched at the end of the entitlement date.

For CCP transactions, compensation creation rules remain the same.

For all other transactions (for example, OTC or stock exchange), the compensation instruction will only be created when the underlying instruction is settled instead of matched.

Tax adjustment instruction market claim reporting

Tax adjustment instructions for the recrediting of tax payments are created for every event.

One bulk tax adjustment instruction for the re-crediting of tax payments will be created at the end of every day (starting on entitlement date and running on a daily basis until the end of the market claim period).

A corresponding report to explain the different daily market claim tax adjustment instructions will be provided.

PFoD model

PFoD’s are generally instructed “net”, that is, the tax processing is included. If no information on tax rate and/or status are available, “gross” processing applies.

PFoD’s generated as part of market claims will in the future be created “gross” with a separate tax adjustment. 

Fraction handling

For fraction positions, the cash equivalent will be directly credited to the customer’s DCA, if applicable.

For fraction positions, a separate interim line (temporary ISIN) is created and distributed to entitled customers, if applicable.

Customers can then exchange the interim line into securities or cash.

The Xact SWIFT User Guide and Customer Handbooks will be updated in due course.

Further information

For further information, customers may contact OneClearstream@clearstream.com, Clearstream Banking Client Services or their Relationship Officer.

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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, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.