Settlement services - Malaysia

18.11.2019

Pre-matching service

The table below summarises CBL’s pre-matching service for external settlement instructions, as well as the pre-matching method and start time in the market. For details of CBL’s pre-matching services, see Pre-matching services for external settlement instructions.

Service offered

Method employed

Start (local time)

Securities listed on Bursa Malaysia

Immediate Release Flag available

Manual via telephone, fax or email

Trade Date+1

SSDS-eligible securities

Immediate Release Flag available

Manual via telephone, fax or email

On receipt of instructions

Connectivity medium

Instruction format

CreationOnline and Xact Web Portal

Tick to enable the “Immediate Release” option.

Xact via SWIFT and Xact File Transfer

Field :22F::STCO/CEDE/IREL

Procedures for domestic counterparties

Procedure for the domestic counterparty

Deadline

Receipt in CBL / Delivery from CBL - securities listed on Bursa Malaysia

Customers delivering securities to or receiving from the Malaysian market must request their domestic counterparty to deliver/receive the securities to/from the Authorised Direct Member (ADM) account with HSBC Bank Malaysia Berhad as follows:

Delivering/Receiving Agent: HSBC NOMINEES (ASING) SDN BHD (BIC HBMBMYKL) to / i.f.o. Exempt AN for Clearstream Banking SA account number 318-025376-085. (CDS account number 206001046453007).

Seller/Buyer: Ordering party's/beneficiary's account number in CBL

Note: AN = Approved Nominee

Market deadline

Receipt in CBL / Delivery from CBL – SSDS-eligible securities

Customers delivering securities to or receiving from the Malaysian market must request their domestic counterparty to deliver/receive the securities to/from their RENTAS segregated securities account (0222N318xxxxxx085 or 0222R318xxxxxx085) with HSBC Bank Malaysia Berhad as follows:

Delivering/Receiving Agent: HSBC NOMINEES (ASING) SDN BHD (BIC HBMBMYKL) to / i.f.o. Clearstream Banking SA for account number 0222N318xxxxxx085; or

Delivering/Receiving Agent: HSBC NOMINEES (TEMPATAN) SDN BHD (BIC HBMBMYKL) to / i.f.o. Clearstream Banking SA for account number 0222R318xxxxxx085

Seller/Buyer: Ordering party/s beneficiary’s account number in CBL.

Market deadline

Reducing settlement risk for trades in securities listed in Bursa Malaysia

To reduce settlement risk, Clearstream Banking has issued standing instructions to HSBC so that HSBC will, by default, attempt to settle the customer's against payment transactions in these securities via the Institutional Settlement Service (ISS) mechanism.

However, HSBC only has a limited influence on a stockbroking company’s settlement choice and brokers may elect to settle via Bursa Depository Transfer, in which case HSBC will follow suit.

To reduce settlement risk, customers may want to instruct their counterparties to deliver such securities through ISS wherever possible, in which case, customers should either send standing instructions to their counterparties or issue case-by-case instructions that may be worded as follows:

  • “Please settle (all our Malaysian against payment transactions in Bursa Depository) via ISS (Institutional Settlement Service).”

Partial settlement in ISS

A trade can be successfully confirmed via ISS on T+2, even if there are insufficient shares on the delivering account. This may lead to a partial settlement.

Allowed countervalue difference

A maximum difference in countervalue of MYR 70 is allowed for the matching and settlement of transactions with domestic counterparties.

Specific settlement rules / settlement restrictions

Domestic (external) against payment transactions with domestic counterparties in all eligible securities can be effected in MYR only.

No change of beneficial owner declaration for securities listed on Bursa Malaysia

To fulfil Malaysian regulatory requirements, for trade settlement under an omnibus structured account at Clearstream's level, transactions in securities listed on Bursa Malaysia allowed in Clearstream Banking must always include the no change of beneficial owner declaration in line with local regulations. Please see "Settlement restrictions" below and refer to the relevant instruction specifications.

Settlement restrictions

Securities listed on Bursa Malaysia

Malaysian regulations prohibit free of payment transfers for securities listed on Bursa Malaysia when there is a change of beneficial ownership.

As a consequence:

  • Internal settlement instructions: against payment are allowed but free of payment are not allowed and will be rejected.
  • Domestic (external) settlement instructions: against payment are allowed but free of payment are only allowed provided that there is no change of beneficial ownership or it is one of the approved reason categories.

Internal transfers that do not involve a change of beneficial owner (for example, portfolio transfers) are permitted. Although instructions will be rejected in the first place, Clearstream Banking will regenerate instructions after successful validation of the format requirements. Customers must specify details in their instructions as follows:


Field

Content

CreationOnline






Delivery Without Matching

Checkbox checked

Place of Settlement: Party Format

BIC

Place of Settlement: Party

Clearstream

Receiving Agent: Party Format

Clearstream

Receiving Agent: Party

Receiving CBL account

Beneficial Ownership Indicator

No change of beneficial owner

Xact via SWIFT and Xact File Transfer


:22F::STCO

//DLWM

:22F::BENE

//NCBO

:95P::PSET

//CEDELULL

:95R::REAG

/CEDE/account of beneficiary

Please refer to the relevant instruction specifications.

For domestic (external) free of payment transfers of securities listed in Bursa Malaysia, they must fall within one of the following approved reason categories (this rule does not apply to trades in de-listed securities):

Reason category

Reason

Reason category

Reason

A

NCBO - No change of beneficial ownership

B3

Transfers involving government authorities

B1

Take Over

B4

Pledge or charge

B2

Family Member

B5

Reasons with prior approval of Bursa Depositorya

a. Prior written approval is required from Bursa Depository for category B5; for the other categories, no prior approval is required.

Before instructing any of these free of payment receipt or delivery of securities in Bursa Depository, customers are strongly recommended to contact Clearstream Banking (at the address below), with appropriate lead time, to confirm the relevant reason for the requested transfer or to ascertain that the required approval will be issued prior to the requested transfer date. Any supporting documentation required should also be sent to the address below:

Clearstream Banking S.A. Singapore Branch
Attn: Settlement Operations
9, Raffles Place
#55-01 Republic Plaza
Singapore 048619

For transactions where there is no change of beneficial owner, there is a need to ensure that the transfer is for the same end beneficiary, that is, NCBO basis. Therefore, when instructing a domestic (external) free of payment transaction, where there is no change in beneficial ownership, customers must specify in the Narrative field of their instructions:

  • <beneficiary’s name> and <purpose of transfer>.

This information will then be verified with the counterparty.

In the event of a mismatch between the beneficiary names and/or purposes of transfer, the counterparty and Clearstream Banking’s depository will put on hold the free of payment transfer until the discrepancy can be resolved. As such, customers are advised that in the event of doubt, either Clearstream Banking or its depository may request additional details of the beneficiary and/or purpose of transfer. Customers should bear in mind that such transactions form part of the audits conducted on local custodians by Bursa Depository and the provision of such information is mandatory.

Clearstream Banking will not assume any liability if customers do not comply, or have not communicated in due time, with the request for additional details of the beneficiary and/or purpose of transfer.

SSDS-eligible securities

  • Internal instructions: against payment and free of payment are allowed.
  • Domestic (external) instructions: against payment and free of payment are allowed.

To trade and settle SSDS-eligible securities, customers are requested to take note of the following:

1. Obtention of a Legal Entity Identifier

All investor types in Table A (excluding individual investors), attached below, are required to obtain a Legal Entity Identifier (LEI) for the segregated securities account opening and reporting purposes.

Customers are requested to obtain and provide Clearstream Banking with the LEI of the ultimate beneficial owner (UBO). The LEI details are to be included in the MT599, described in point 3 below.

2. Account opening requirements

Customers of Clearstream Banking who wish to hold SSDS-eligible securities for underlying ultimate beneficial owners (UBOs) must open the following accounts, in addition to their main Clearstream Banking account:

a. An additional Clearstream Banking account per ultimate beneficial owner (UBO), to distinguish third party assets from proprietary assets on the Malaysian RENTAS link. Please refer to the Customer Handbook (section “Opening additional CBL accounts”) for further details on how to open the additional accounts.

b. A segregated securities account per UBO within the books of Clearstream Banking’s depository, HSBC Bank Malaysia Berhad.

c. A segregated securities account per UBO within the books of RENTAS.

Note: Account opening requests for UBOs that are individuals will not be accepted. Customers who only hold proprietary securities in their main Clearstream Banking account only need to open segregated securities accounts at Clearstream Banking’s depository (point 2b. above) and RENTAS (point 2c. above).

There will be no requirement to open segregated cash accounts per UBO. Customers may continue to use Clearstream Banking’s existing omnibus cash account in Malaysia.

3. Account opening instruction requirements

Customers are requested to send Clearstream Banking instructions via SWIFT MT599 free-format message in order for their segregated securities accounts to be opened at Clearstream Banking’s depository and RENTAS.

Instructions should be issued from the new additional Clearstream Banking account (see 2a. above), and should ensure the following details are mentioned:

QUOTE
Attn: Settlement Singapore
Please take this MT599 as our request to open a new segregated securities account at HSBC Bank Malaysia Berhad and RENTAS.
CBL Account Number: <insert the number of the Clearstream Banking account opened per UBO>

UBO Name:
Account name: Clearstream Banking S.A. - <insert name of UBO as per registered LEI>
If account opening is at fund level, you can format the account name as either:

Clearstream Banking S.A. - <insert name of fund as per registered LEI of the fund>, or
Clearstream Banking S.A. - <insert name of fund as per registered LEI of the fund> (name of fund manager)
Registered address: <insert address as per registered LEI or if account opening is at fund level then insert address as per registered LEI of the fund>
Country of incorporation: <insert country as per registered LEI or if account opening is at fund level then insert country per registered LEI of the fund>
Business registration number: <insert business registration number obtained from regulatory body/authority (such as the trade and companies register) in country of incorporation or if account opening is at fund level, where there is no such number, then insert “N/A”>
Date of incorporation: <insert date as per incorporation with regulatory body/authority (such as the trade and companies register) in country of incorporation or if account opening is at fund level then insert date fund is established>
Institutional sector: <insert the relevant investor type code from the investor types in Table A>
Legal Entity Identifier: <insert LEI or if account opening is at fund level then insert LEI of the fund>
Please link the securities account to our existing MYR cash account for all settlement and corporate action transactions and set up the required SWIFT reporting advice as per existing arrangements.
UNQUOTE


Note: The account opening process will generally take up to five business days after the customer has provided the relevant information.

When acting as an intermediary (refer to footnote d in Table A for definition) to hold individuals collectively, the “Institutional sector” should be indicated as “IN”. When acting as an intermediary to hold corporate entities collectively (refer to footnote c in Table A on criteria to hold such entities collectively), the “Institutional sector” should be indicated as “NF”.

An intermediary holding individuals and corporate entities collectively cannot have both individuals and corporate entities co-mingle in the same account. The intermediary will have to hold the collective of individuals in one securities account and the collective of corporate entities in another securities account.

Account name at RENTAS will be formatted as “<name of UBO as per registered LEI> (Clearstream Banking S.A.)”

Customers are liable for the usage of any safekeeping accounts obtained through Clearstream Banking and HSBC. Clearstream Banking shall bear no responsibility for any illegitimate or erroneous use - for any trading or other purpose - of such safekeeping accounts. Clearstream Banking does not validate whether the safekeeping accounts that customers use in their settlement instructions sent to Clearstream Banking represent the legitimate investor who ordered the underlying transaction. Clearstream Banking shall therefore not be responsible if the customer uses a safekeeping account belonging to an investor other than the investor on whose behalf the relating transaction has been or was deemed to be executed or settled.

4. Clearstream Banking customer domestic (external) settlement instructions

a. When settling outside of Clearstream Banking, the segregated securities account number opened at the depository (see point 2b. above) must always be mentioned in the customer’s domestic settlement instructions so that it can be transmitted to Clearstream Banking’s depository. The segregated securities account number at Clearstream Banking’s depository of the ordering party (on deliveries) or the beneficiary (on receipts) must be indicated in the first row of the narrative of domestic (external) settlement instructions (Settlement Processing Narrative in CreationOnline; :70E::SPRO// in Xact via SWIFT and Xact File Transfer; Settlement instruction processing additional details in Xact Web Portal) as follows:

/SAFE/318-NNNNNN-085” (Where NNNNNN is 6 digits).

Example:
:70E::SPRO///SAFE/318-NNNNNN-085

Additionally, the buying/selling counterparty’s RENTAS segregated securities account number must also always be mentioned in the customer domestic settlement instructions (Party in CreationOnline; :97A::SAFE// (Sequence E1) in Xact via SWIFT and Xact File Transfer; Party 1 Safekeeping account in Xact Web Portal) as follows:

“0xxxNxxxxxxxxxxxxxxxxxxxxxxxx” or “0xxxRxxxxxxxxxxxxxxxxxxxxxxxx” (Where 0xxx represents the participant code of the counterparty’s custodian, N-non-resident, R-resident and xxxxxxxxxxxxxxxxxxxxxxxx is the safekeeping account number – length and permutation of the account number may vary by counterparty)

Example:
:97A::SAFE//0xxxNxxxxxxxxxxxxxxxxxxxxxxxx

Please refer to the instruction specifications for Xact via SWIFT and Xact File Transfer, CreationOnline and Xact Web Portal in relation to domestic (external) settlement of SSDS-eligible securities.

Note: Failure to adhere with the above requirements will lead to a fail trade or delay in settlement.

b. Customers must communicate their RENTAS segregated securities account (see point 2c. above) details to their domestic counterparties prior to trading.

The RENTAS segregated securities account is a matching criterion in the Malaysian market.

As such, customers receiving/delivering securities from/to the Malaysian market must request their domestic counterparty to deliver/receive the securities to/from their RENTAS segregated securities account (0222N318xxxxxx085 or 0222R318xxxxxx085) as follows:

  • Delivering/Receiving Agent: HSBC NOMINEES (ASING) SDN BHD (BIC HBMBMYKL) to/in favour of: Clearstream Banking SA for account number 0222N318xxxxxx085; or
  • Delivering/Receiving Agent: HSBC NOMINEES (TEMPATAN) SDN BHD (BIC HBMBMYKL) to/in favour of: Clearstream Banking SA for account number 0222R318xxxxxx085
  • Seller/Buyer: Ordering party's/beneficiary's account number in CBL.

c. In principal, transactions of SSDS-eligible securities must be settled against payment when there is a change of beneficial owner. However, transactions of SSDS-eligible securities where there is a change of beneficial ownership, may settle through the use of a free of payment (FOP) instruction provided that there is a separate payment in cash. In relation to domestic (external) FOP settlement, the cash payment may take place either in Malaysian Ringgit (MYR) or in a foreign currency.

This information has been provided by the Malaysian central bank, Bank Negara Malaysia (BNM), and confirmation of effective payments as well as satisfactory proof of payment are required in practice by local custodians.

Therefore, when instructing a domestic (external) FOP transaction where there is a change of beneficial ownership, customers must specify in the second row of the Narrative field of their instructions (Settlement Processing Narrative in CreationOnline; :70E::SPRO// in Xact via SWIFT and Xact File Transfer; Settlement instruction processing additional details in Xact Web Portal):

  • “Underlying cash settlement via onshore payment” or “Underlying cash settlement via offshore payment”

to confirm that payment has been made.

Example:
:70E::SPRO///SAFE/318-NNNNNN-085
//Underlying cash settlement via onshore payment

This information is required in order to provide sufficient elements to Clearstream Banking's depository in Malaysia to confirm that payment has been or will be effected between both the delivering and receiving parties to the transaction. If this information is missing, the domestic (external) FOP transfer will remain open until the requested elements are provided.

Customers are also advised that, in the event of doubt, either Clearstream Banking or its depository may request additional proof of the transfer of cash funds. 

Clearstream Banking will not assume any liability if customers do not comply with effective payment, or have not communicated, in due time, proper documents establishing effective payment.

For transactions of SSDS-eligible securities where there is no change of beneficial owner, there is a need to ensure that the transfer is for the same end beneficiary, that is, NCBO basis, and that it is non-SBL (securities borrowing and lending) programme related. Therefore, when instructing a domestic (external) FOP transaction where there is no change in beneficial ownership, customers must specify in the second row of the Narrative field of their instructions (Settlement Processing Narrative in CreationOnline; :70E::SPRO// in Xact via SWIFT and Xact File Transfer; Settlement instruction processing additional details in Xact Web Portal):

  • "NCBO ASSET TRANSFER for <beneficiary’s name> and non-SBL programme related"

Example:
:70E::SPRO///SAFE/318-NNNNNN-085
//NCBO ASSET TRANSFER for <beneficiary’s name> and non-SBL programme related

This information will then be verified with the counterparty and is in line with the requirement from BNM, where supporting confirmation from customers is to be evidenced for such FOP transactions.

In the event of a mismatch between the beneficiary names, the counterparty and Clearstream’s depository will put on hold the FOP transfer until the discrepancy can be resolved. As such, customers are advised that in the event of doubt, either Clearstream Banking or its depository may request additional details of the beneficiary. Clearstream Banking will not assume any liability if customers do not comply, or have not communicated in due time, with the request for additional details of the beneficiary.

Customers should bear in mind that the above-mentioned transactions form part of the audits conducted on local custodians by BNM and the provision of such information is mandatory.

Please refer to the instruction specifications for Xact via SWIFT and Xact File Transfer , CreationOnline  and Xact Web Portal  in relation to domestic (external) settlement of SSDS-eligible securities.

5. Clearstream Banking customer internal settlement instructions

a. To conduct internal settlement of SSDS-eligible securities in Clearstream Banking, the buyer and seller must both be customers of Clearstream Banking, obtain a LEI (see point 1. above) and have the required accounts opened at Clearstream’s depository and at RENTAS (see point 2. above).

b. The customer’s segregated securities account number opened at the depository (see point 2b. above) as well as the counterparty’s RENTAS segregated securities account number must always be mentioned in the customer’s internal settlement instructions so that this data can be transmitted to Clearstream Banking’s depository for the purpose of realigning the internally settled securities positions in the domestic market.

Where there is a change in beneficial owner, a declaration that the underlying cash settlement is via offshore or onshore payment must also be included (see point 5e. below for more details). Where there is no change in beneficial owner (NCBO), a declaration that it is a NCBO transfer for the particular beneficiary and that it is not related to a securities borrowing lending programme must also be included (see point 5e. below for more details).

In the narrative of internal settlement instructions (Settlement Processing Narrative in CreationOnline; :70E::SPRO// in Xact via SWIFT and Xact File Transfer; Settlement instruction processing additional details in Xact Web Portal), the segregated securities account number at Clearstream Banking’s depository of the ordering party (on deliveries) or the beneficiary (on receipts) must be indicated in the first row as follows:

“/SAFE/318-NNNNNN-085” (where NNNNNN is 6 digits),

Example:

:70E::SPRO///SAFE/318-NNNNNN-085

whilst the buying/selling counterparty’s RENTAS segregated securities account number must be indicated in the second row of the narrative of the internal settlement instructions (Settlement Processing Narrative in Creation Online; :70E::SPRO// in Xact via SWIFT and Xact File Trasnfer; Settlement instruction processing additional details in Xact Web Portal) as follows:

“0222N318xxxxxx085” or “0222R318xxxxxx085”

Example:

:70E::SPRO///SAFE/318-NNNNNN-085
//0222N318xxxxxx085

In the case of internal settlement instructions where there is a change in beneficial owner, the declaration that the underlying cash settlement is via offshore or onshore payment must be indicated in the third row of the narrative of internal settlement instructions (Settlement Processing Narrative in CreationOnline; :70E::SPRO// in Xact via SWIFT and Xact File Transfer; Settlement instruction processing additional details in Xact Web Portal) as follows:

“Underlying cash settlement via offshore payment” or “Underlying cash settlement via onshore payment”

Example:

:70E::SPRO///SAFE/318-NNNNNN-085
//0222N318xxxxxx085
//Underlying cash settlement via offshore payment

In the case of internal settlement instructions where there is no change in beneficial owner, the declaration that it is a NCBO transfer for the particular beneficiary and that it is not related to a securities borrowing lending programme must be indicated in the third row of the narrative of internal settlement instructions (Settlement Processing Narrative in CreationOnline; :70E::SPRO// in Xact via SWIFT and Xact File Transfer; Settlement instruction processing additional details in Xact Web Portal) as follows:

“NCBO ASSET TRANSFER for <beneficiary’s name> and non-SBL programme related”

Example:

:70E::SPRO///SAFE/318-NNNNNN-085
//0222N318xxxxxx085
//NCBO ASSET TRANSFER for <beneficiary’s name> and non-SBL programme related

Note: Failure to adhere to the above requirements will lead to a failure or delay in the realignment of the internally settled securities positions in the domestic market.

c. Customers must communicate their RENTAS segregated securities account (see point 2c. above) details to their internal counterparties prior to trading.

The RENTAS segregated securities account is a matching criterion for the realignment in the Malaysian market.

d. With regards to internal against payment settlement:

Non-resident customer and internal non-resident counterparties

Non-resident customer and internal resident counterparties

Resident customer and internal resident counterparties

Against payment in foreign currency and MYR allowed.

Against payment in foreign currency only. MYR not allowed.

Against payment in foreign currency only. MYR not allowed.

Note: Customers should also take note of the holdings restrictions of MYR as indicated in Cash services.

e. In principal, transactions of SSDS-eligible securities must be settled against payment when there is a change of beneficial owner. However, transactions of SSDS-eligible securities where there is a change of beneficial ownership, may settle through the use of a free of payment (FOP) instruction provided that there is a separate payment in cash. In relation to internal FOP settlement in Clearstream Banking, the cash payments that may take place:

Non-resident customer and internal non-resident counterparties

Non-resident customer and internal resident counterparties

Resident customer and internal resident counterparties

FOP with change of beneficial ownership, cash payment in foreign currency and MYR allowed.

FOP with change of beneficial ownership, cash payment in foreign currency only. MYR not allowed.

FOP with change of beneficial ownership, cash payment in foreign currency only. MYR not allowed.

This information has been provided by BNM and confirmation of effective payments as well as satisfactory proof of payment are required in practice by local custodians.

Therefore, when instructing an internal FOP transaction where there is a change of beneficial ownership, customers must specify in the Narrative field of their instructions (see point 5b. above for more details):

  • “Underlying cash settlement via offshore payment” or “Underlying cash settlement via onshore payment”

to confirm that payment has been made.

This information is required in order to provide sufficient elements to Clearstream Banking's depository in Malaysia to confirm that payment has been or will be effected between both the delivering and receiving parties of the transaction. If this information is missing, the realignment in the domestic market of the internally settled securities positions will remain open until the requested elements are provided.

Customers are also advised that, in the event of doubt, either Clearstream Banking or its depository may request additional proof of the transfer of cash funds. Clearstream Banking will not assume any liability if customers do not comply with effective payment, or have not communicated, in due time, proper documents establishing effective payment.

For transactions of SSDS-eligible securities where there is no change of beneficial owner, there is a need to ensure that the transfer is for the same end beneficiary, that is, NCBO basis, and that it is non-SBL (securities borrowing and lending) programme related. Therefore, when instructing an internal FOP transaction where there is no change in beneficial ownership, customers must specify in the Narrative field of their instructions (see point 5b. above for more details):

  • “NCBO ASSET TRANSFER for <beneficiary’s name> and non-SBL programme related”

This information will then be verified with the internal counterparty and is in line with the requirement from BNM, where supporting confirmation from customers is to be evidenced for the realignment in the domestic market of such internally settled securities positions.

In the event of a mismatch between the beneficiary names, the realignment in the domestic market of the internally settled securities positions will be put on hold until the discrepancy can be resolved. As such, customers are advised that in the event of doubt, either Clearstream Banking or its depository may request additional details of the beneficiary. Clearstream Banking will not assume any liability if customers do not comply, or have not communicated in due time, with the request for additional details of the beneficiary.

Customers should bear in mind that the above-mentioned transactions form part of the audits conducted on local custodians by BNM and the provision of such information is mandatory.

f. Customers should take note that internally settled positions will not be reflected on their RENTAS segregated securities accounts on a real-time basis, due to the realignment reporting requirements imposed on Clearstream Banking by Bank Negara Malaysia. For any positions that settle internally outside of RENTAS operating hours, the realignments will only be reflected within RENTAS on the next available business day in Malaysia. As such, delays should be anticipated if internally settled positions need to be re-delivered to a domestic counterparty.

Bridge settlement

According to Malaysian regulations, Bridge settlement is not allowed.

Management of failed instructions

Clearstream Banking will advise the defaulting customer of all failed receipts that become subject to a sell-out and of all failed deliveries that become subject to a buy-in. HSBC will continue to attempt to settle failed transactions that do not become subject to a sell-out or buy-in as long as such instructions have not been cancelled by the customer. Clearstream Banking reserves the right to cancel these instructions as of the third business day following the first attempted settlement date.