Clearstream Banking offers the option of removing securities from a customer’s portfolio upon formal instruction by the customer, to permanently markdown specific securities1. This service is offered only to securities of domestic markets and defaulted securities. This option is subject to confirmation by Clearstream Banking’s depository or agent appointed for the market of the security to be removed from the customer’s portfolio.
- The instruction to request the removal of a security (markdown), must be sent to Clearstream Banking. Once sent, the markdown instruction will be irreversible. Therefore, customers by sending the instruction, acknowledge and consent to the permanent loss of all their rights and entitlements on any future changes in the status or pay-outs of the marked down securities.
- This service is not offered to markdown holdings in Alternative Investment Funds (AIF) or Undertakings for Collective Investment in Transferable Securities (UCITS).
- Customers instructions to remove a holding is accepted by Clearstream Banking only upon receipt of the depository/agent acceptance and confirmation that the holding is removable from its books. As the process of obtaining the depository/agent validation may involve investigations with the Issuer, or other entities, Clearstream Banking cannot commit in advance to a time frame by when the securities will be removed. As investigations, especially on defaulted securities, might take some time, and, as mentioned before, Clearstream Banking cannot commit in advance to a time frame. The securities holdings, for which the markdown request was sent, will be blocked for the period of investigation.
How to instruct
Customers must instruct Clearstream Banking via MT599, MT568, MT565, Xact Web Portal or CreationOnline free-format message, using the template provided below. Customers must only include one instruction per message. One instruction consists of:
- one financial instrument identification number ISIN;
- Common Code or safekeeping place and name;
- one account number and name;
- the quantity of securities to be debited; and
- the Waiver and Release disclaimer.
ATTN: CORPORATE ACTIONS SINGAPORE (SCA) for APAC markets, or
CORPORATE ACTIONS FRANKFURT (OCA) for the German market, or
CORPORATE ACTIONS PRAGUE (PCA) for all the other domestic markets, or
CORPORATE ACTIONS LUXEMBOURG (OCE) for defaulted securities
THIS INSTRUCTION HEREBY AUTHORISES AND DIRECTS CLEARSTREAM BANKING S.A.TO REMOVE THE BELOW DESIGNATED POSITION FROM OUR CUSTODY ACCOUNT.
ISIN CODE AND NAME: XXXX
COMMON CODE OR SAFEKEEPING PLACE: XXXX
A/C NUMBER AND NAME: XXXX
WE AND OR OUR CLIENT HEREBY IRREVOCABLY RELINQUISH ALL RIGHTS OF OWNERSHIP AND OTHER INTEREST IN SUCH SECURITIES INCLUDING FUTURE DISTRIBUTIONS, IF ANY. WE AGREE TO HOLD CLEARSTREAM BANKING S.A. HARMLESS AND INDEMNIFY IT AGAINST ANY LOSS; CLAIM, DAMAGE LIABILITY OR EXPENSE, INCLUDING ATTORNEY’S FEES, IMPOSED ON OR INCURRED BY OR ASSERTED AGAINST CLEARSTREAM BANKING S.A. AS A RESULT OF THIS INSTRUCTION.
WE HEREBY REPRESENT THAT WE HAVE AUTHORITY TO ISSUE THIS INSTRUCTION ON BEHALF OF THE BENEFICIAL OWNER OF THE SECURITY.“
On a case by case basis, Customers will be requested to provide a Letter of Indemnity to Clearstream or the agent. Clearstream will advise the customer accordingly.
The reporting of markdown is done via MT566 containing in the narrative “mark-down as per your request”. Additionally, Clearstream Banking sends out a settlement confirmation MT546/MT548.
This service requires manual processing of customer instructions and is therefore subject to fees as published in the Clearstream Banking Fee Schedule. The fees applied differ according to the status of the securities: defaulted or non-defaulted securities.
1. Markdown is a process on securities with low or none price removing them from the customer account.