Settlement process - Iceland

07.02.2022

Settlement cycles

All trades executed on the Icelandic Stock Exchange (ICEX) are cleared and settled by the domestic CSD, Nasdaq CSD SE.

The full lifecycle process of a settlement instruction can be managed via GUI and ISO messaging, and the process is the same in each case.

Settlement flow

All times below are GMT.

Trading process

Trading takes place between 9:30 and 15:35 on banking days.

Settlement process

The CSD provides settlement in batches throughout the working day, and as per below table.

Free of Payment 

DVP

Start of day

08:00

Settlement batches

Every 10 minutes

09:15
11:45
15:00

End of day

17:00

The settlement against Icelandic krona takes place at designated cash account owned by participants at the Central Bank of Iceland. The CSD uses netting and optimizes the settlement.

Matching

For two settlement instructions to match, the mandatory matching fields must be present in both instructions, and their value should be identical (with the exception of the trade price being within the cash tolerance, including the CRDT/DBIT code, that must be opposite).

Non-mandatory matching fields are classified as either optional or additional matching fields.

Additional matching fields will only match if the same value is present in the additional fields of both instructions.

Optional matching fields will match if the same value is present in the additional fields of both instructions, or if one of the fields has been left blank, and the other instruction has a value in this field.

Partial Settlement

Partial settlement is not market practice in Iceland.

Registration

Book-entry securities owned by foreign investors are generally registered in the name of the trustee (nominee-registered). This can be either in the name of the custodian or local sub-custodian; however, segregated accounts on beneficial owner basis are also possible in the market.

Registration takes place automatically upon settlement.

Details on how to register for an AGM/EGM are available in “Organisation of AGM/EGMs”.

Stamp duty

Stamp duty is not applicable in the Icelandic market.

Penalties

Cash penalties

Penalties will be calculated and applied on matched settlement instructions that fail to settle, in full or in part, on and after their intended settlement date (ISD), if both the settlement instruction and the relevant financial instrument are subject to cash penalties.

Instruments subject to cash penalties

Any financial instrument listed in the Financial Instruments Reference Data System (FIRDS) database maintained by ESMA will be subject to cash penalties. However, cash penalties will not apply to shares listed in the Short Selling Regulation (SSR) exemption list.

Buy-ins

No official agreed procedures exist in the market but, if a trade fails, Nasdaq CSD SE can call the buy-in to the defaulting party.

The following Nasdaq Iceland hf. buy-in rules apply to SE transactions that are not cleared and settled through the CCP environment:

  • If the seller has not delivered the securities by SD+3 (N as Notification date), the buyer may send the first notification of a possible buy-in to the seller.
  • The first possible execution date for the actual buy-in is N+5 (SD+8) at 08:45 GMT at the earliest and the buyer must send an updated notification to the seller informing that the buy-in has started.

Duty on transactions

Stamp duty is not applicable in Iceland. However, if one of the parties is resident in Iceland, there is a transfer tax for off-exchange trades.