Settlement process - Sweden
Settlement cycles
Equities: | T+2 |
Debt instruments: | T+2 |
Settlement flows
The settlement process in the VPC system commences as soon as the instructions are registered in the system. Once receipt and delivery instructions have been matched, on the morning of the settlement date, a pre-settlement check is carried out on the securities holding and payment capacity. If these conditions are fulfilled, instructions are marked 'ready to settle'. Thereafter, settlement takes place at certain times during the settlement date. The change of ownership for securities and payments occurs once instructions have been settled in the market.
| T to T+1: | The investor provides its custodian with the settlement instructions for the trade. On-exchange transactions will be automatically downloaded by the custodian (if requested by the investor). |
| T to T+2: | The custodian provides the Swedish local custodian with the settlement instruction. The local custodian registers the instruction in the VPC settlement system. Off-exchange cash equity transactions are pre-matched in the separate VPC pre-matching system. Transactions in the pre-matching system are not binding and can be unilaterally revoked as long as they have not been released to the VPC settlement system. Matched fixed-income transactions can only ever be revoked bilaterally. |
Settlement date (SD)
Settlement is completed in the VPC system in several batches during SD: 08:00 (for fixed-income securities only), 10:00, 12:00, 14:00 and (for free of payment transactions only) 17:00.
Instructions that do not settle during the first cycle automatically pass on to the next cycle until they settle.
Instructions fail, as follows:
- If they do not settle on contractual SD; or
- Due to their late arrival, insufficient holdings of securities/cash or mismatch.
Failed unmatched transactions are cancelled in the VPC system after 20 days and the custodian must re-enter the transaction.
The cash is cleared at the Riksbank simultaneously with the securities. The custodian sends a settlement confirmation to the investor when the trade has been settled.
Over-the-counter (OTC) trades
The OTC market is a separate market within the stock exchange and any OTC transaction in a listed company must always be followed by a special registration in the trading system.
Equity market
Trading in all major equities is centralised to the Stock Exchange and trades are centrally cleared and settled through the Swedish CSD. On-exchange trades in OMXS30, Large Cap, Mid Cap and most ETFs are cleared by CCP. The CSD also clears and settles all equities traded OTC outside the Stock Exchange. All listed equities, as well as the vast majority of the equities traded on the OTC market, are in book-entry form.
Partial settlement
Partial settlement is available for domestic transactions and the customer’s decision to accept the transaction to settle or not to settle partially will be systematically included in the instruction sent to the local market. Partial settlement will continue as it does today and Clearstream Banking will continue to report partial settlement feedback received from the markets.
Euroclear Sweden supports partial settlement, in the form of split settlement:
- AM sub-market -automated solution
- PM sub-market -partial settlement will be performed on a manual bilateral basis.
Registration
Nominee registration is allowed. If the beneficial owner wants to vote by proxy or attend general meetings, temporary registration in the name of the beneficial owner is mandatory.
Stamp duty
Stamp duty is not applicable in the Swedish market.
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 listed in the Short Selling Regulation (SSR) exemption list.
NASDAQ Buy-in Rules
The following 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+2 (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+7) at 8:00 CET at the earliest and the buyer has to send an updated notification to the seller informing that the buy-in has started.
EUROCCP N.V. (CCP) Buy-in Rules
Buy-ins are only triggered for non-deliveries of equities by the clearing participant. Non-settled receipts due to lack of funds from the clearing participant will be subject to fail management fees.
On Intended Settlement Date (ISD) +5 (buy-in execution) EUROCCP will begin the buy-in process if the delivery of equities is not made by the clearing participant by the deadline of ISD+4 (notification date).
After the deadline on the ISD+4, EUROCCP will determine which buyer has the right of a buy-in and which clearing participant has the oldest obligation to deliver the relevant number of equities. This clearing participant will be appointed for the buy-in, and will be informed directly about the upcoming buy-in. At the end of this day, the closing price for the failed equities delivery is determined and will be used to determine the maximum buy-in offer price.