U.S.A.: Processing change for rollover events on U.S. Treasury Bills

16.01.2020

Clearstream Banking1 informs customers of the changes to the handling of rollover events for U.S. Treasury Bills that becomes effective on

18 May 2020

This change will be implemented in order for Clearstream Banking to comply with the requirements of the Commission Delegated Regulation (EU) 2017/390 of 11 November 2016.

Impact on customers

The following changes will be introduced to the current process of debiting and crediting the customers as result of the customer’s election of re-investment:

  • On the payment date of the redemption event, Clearstream Banking will generate a domestic receipt against payment instruction on the customer account. 
  • This settlement instruction will be generated under high priority with the settlement date equal to the payment date of the redemption event and will include a narrative referring to the rollover corporate action.
  • The settlement of this instruction will be subject to a standard provisioning check that is, cash or credit line availability. The straight-through processing of the re-investment election of the customer depends on the successful provisioning of the customer's against payment settlement instruction. If the settlement instruction is not provisioned on time, an exceptional operational procedure will be deployed by Clearstream Banking to meet the commitment with the market. 
    Customers are, and remain, liable for such payment or payment default in these circumstances. The unsuccessful cash provisioning of the account on the payment date will lead to penalties and delay in receiving the rollover proceeds and penalties in the near future.

To facilitate proper handling of the rollover events by customers, the following enhancements will be implemented to the current reporting: 

  • The rollover related MT564 Corporate Action Notification (with qualifier OTHR) will include a narrative reminding customers that the execution of this corporate action will be handled with an against payment settlement instruction on their account. 
  • The MT566 Corporate Action Confirmation will be released to customers along with a standard settlement confirmation. 

Further information

Detailed information will be provided as it becomes available.

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.