Settlement process - Finland

09.08.2018

Settlement cycles

All securities admitted to trading on Nasdaq Helsinki Ltd (equities, bonds, derivates):T+2 for stock exchange trades
(OTC trades can settle with various cycles)
Money market instruments:T+2

Settlement flow

Note: All times are local (CET+1) unless otherwise mentioned.

Debt instruments, equities and corporate bonds in Infinity

EFI’s Infinity system provides clearing and settlement services for Infinity eligible instruments free and against payment in EUR. The against payment settlement takes place on accounts in Bank of Finland and settlement finality is immediate at settlement for all transactions.

Free of payment transactions can be settled at any time between 06:00 and 19:00 on SD on TARGET settlement days. Against payment transactions can be settled between 08:00 and 17:00 on SD on TARGET settlement days.

Partial Settlement

Partial settlement is not a market practice in Finland except for CCP net trades with a market threshold of EUR 50,000. 

For OTC trades, partial settlements can be executed by bilateral agreement between the counterparties that is, the original instruction is cancelled and thereafter replaced by two or more new instructions.

Partial deliveries to CCP has a new split window from 09:00 to 15:00 CET+1, and CCP split customers receive instructions between 16:00 and 16:30 CET+1.

Guarantee fund

EFI has established a guarantee fund (Finnish Central Securities Depository Fund) in accordance with the requirements of the Finnish Act on Book-Entry System and Clearing Operations (749/2012).

The guarantee fund includes assets placed as guarantee for liability of the participants in the book-entry system (account operators) arising out of operations in the system. The amount of the security in the registration fund is at least EUR 20 mn, in the form of collateral provided by account operators in proportion to their share of the total operation of the book-entry system.

The Act on Book-Entry System and Clearing Operations (749/2012) determines when compensation becomes applicable, the validity of compensation claims and how applicable compensation is paid. The decision as to whether the fund is liable to compensate claims rests with the FSA.

To pay compensation, the fund is entitled to liquidate guarantee payments in the manner considered best by the fund; the fund endeavours to pay compensation primarily from the assets that the account operator liable to pay compensation has paid into the fund.

Registration

Book-entry securities owned by foreign investors are nominee registered with the nominee registration custodian (the account operator who is an EFI participant). The registration takes place automatically upon settlement.

If shareholders wish to exercise their voting rights for any shares that are nominee-registered, they must have such shares re-registered in their own name. For this purpose, a temporary register that includes the reported holdings of nominee-registered shares on the record date is created.

Stamp duty

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

Penalties

The following buy-in rules apply on SE transactions:

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+8) at 08:00 CET at the earliest and the buyer has to send an updated notification to the seller informing that the buy-in has started.

EuroCCP 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. EuroCCP will send a buy-in notification on Intended Settlement Date (ISD)+4 and start the buy-in execution on ISD+5 if the delivery of equities is not made.

On buy-in date, EuroCCP will publish all non-delivered securities before 09:30 CET on its website and any counterparty can offer these securities to EuroCCP until 11:00 CET. The maximum offer price varies per market as detailed in paragraph. The failing delivering counterparty has until 11:00 CET on buy-in date to deliver the securities, either to the main settlement account or, if requested by EuroCCP, to the dedicated buy-in account.

Should the securities not been delivered and the CP not requested an extension, the transaction will be cancelled by EuroCCP and the CP must cancel the transaction within 15 minutes.

LCH Clearnet buy-in rules

If a settlement failure remains at the end of day on intended settlement day (ISD), the Clearing House will automatically commence the buy-in process under these procedures and notify Clearing Members accordingly. The buy-in execution date will be ISD+5.

If LCH is unable or for any reason fails to buy in the full amount of such securities on the buy-in date, LCH will use commercially reasonable efforts to buy in thereafter. If, by the close of business on the twentieth business day after ISD, LCH has not successfully bought in the full amount of such securities, LCH may “Cash Settle” the relevant EquityClear Contract(s) pursuant to the section on their Cash Settlement rules.