Settlement process - Luxembourg
The standard settlement period for secondary market trades is Trade Date plus three business days (TD+3).
Trades are placed through the UTP platform and follow a “Bilateral”, “Pass-Through” or “Guaranteed” scheme depending on the securities involved in the trades.
LCH.Clearnet S.A. provides counterparty anonymity in the Pass-Through scheme and full central counterparty services, including novation and netting per security, in the Guaranteed scheme.
The following flow applies to Luxembourg Stock Exchange trades settled through CBL.
Under the Pass-Through scheme, LCH.Clearnet S.A. generates settlement instructions to CBL on behalf of its customers, under power of attorney and CBL matches the instructions.
|T+1:||Under the Bilateral scheme and for securities held with CBL, the buyer and seller send their receipt/delivery instructions to CBL that matches the instructions.|
|T+2:||Under the Guaranteed Scheme, LCH.Clearnet S.A. generates settlement instructions to CBL on behalf of its customers, under power of attorney and CBL matches the instructions.|
|T+3:||Confirmation of settlement.|
In the Guaranteed scheme, instructions that are unsettled at the end of the Mandatory Settlement Period are cancelled by LCH.Clearnet S.A. and reinstructed for next day value. This “cancel/reinstruct” process is maintained until buy-in takes place automatically after seven days of failed settlement. The buy-in process and the indemnisation instructions are generated by LCH.Clearnet S.A.
Note: For securities deposited outside CBL, settlement is performed through the exchange of securities free of or against payment.
Registered securities are registered either in the name of the beneficial owner or its nominee, or in the name of the custodian bank or its nominee.
Securities held in VP Lux only exist in book-entry and bearer form.
Stamp duty is not applicable in the Luxembourg market.
If the selling clearing member has failed to deliver the securities by the expected settlement date + 7, LCH.Clearnet S.A. automatically actions a buy-in. The automatic buy-in process is applied for failing trades executed on securities eligible for the Guaranteed scheme only. For full details on the buy-in procedure of LCH.Clearnet S.A., please refer to the relevant publication available at http://www.lchclearnet.com/.