South Korea: New information on specific settlement rules
Clearstream Banking1 informs customers that effective
7 December 2020
customers must select or indicate the “Immediate Release” option in their receipt against payment instructions as outlined in the Settlement services - South Korea page of the Market Link Guide – South Korea.
Additionally, whilst adhering to the settlement deadlines outlined in the Settlement times - South Korea page of the Market Link Guide – South Korea, customers shall also ensure that they provision their cash accounts accordingly with the USD amount, and take note of the new process that will apply as indicated below:
Purchase of securities - receipt versus payment (funding)
Customer instruction entered in the CBL system with “Immediate Release” flag.
Customers shall ensure that they provision their cash accounts accordingly, with the USD amount – the KRW amount equivalent in USD as well as a 5% buffer. For example, if the settlement amount is KRW 10,000,000 and exchange rate is 1 KRW = 0.00086 USD, the customer shall ensure that their USD account is provisioned for USD 8,600 + 5% (USD 430) = USD 9,030.
Note: CBL reserves the right to amend and update the buffer from time to time, to reflect market conditions. It is also the responsibility of customers to ensure the timely availability and coverage of their cash account with USD, as appropriate.
CBL shall post a debit to the customer’s cash account in USD for value SD-1. The debit shall be the provisioned amount described above.
SD-1 or SD:
The depository provides CBL with the foreign exchange (FX) details related to the customer instruction.
CBL shall, upon receipt of the settlement confirmation (MT545) from the depository:
Sale of securities - delivery versus payment (repatriation)
Customer instruction entered in the CBL system.
The depository will include the FX details in the settlement confirmation sent to CBL.
The depository will convert the KRW proceeds into USD.
a. If SD is not a bank holiday in New York, sales proceeds will be converted and remitted on SD; otherwise, the funds will be remitted on the next available New York business day.
Finally, customers should note that access to this market is subject to conditions and criteria, which will be assessed on a case-by-case basis. Please contact your Relationship Manager to confirm or make the necessary arrangement, in case of doubt. Clearstream Banking reserves the right to revoke a customer’s access to the market in the event that such conditions and criteria are not fulfilled.
Note: All times in this announcement are in Central European Time (CET).
The Market Link Guide – South Korea will be updated accordingly.
For further information, customers may contact Clearstream Banking Client Services or their Relationship Officer.
1. Clearstream Banking refers collectively to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248, and Clearstream Banking AG (for Clearstream Banking AG customers using Creation Accounts), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.