Information on implementation approach for WM’s data model change (project “EDDy_neu”) – Update

19.12.2022

Note: This announcement, originally published on 11 October 2022, has been updated to provide customers with more detailed specification. Changes have been highlighted.

Clearstream Banking1 informs customers on the upcoming changes occurring from the Wertpapier-Mitteilungen (WM) introduction of the new EDDy_neu data model.

If not stated otherwise, the implementation of the CBF enhancements will be effective on

Tuesday, 11 April 2023

Background

WM announced the introduction of the new EDDy_neu data model, initiating major changes to the delivery of WM data and the decommissioning of the current WM interface.

CBF has established the project “EDDy Clearstream” ensuring operational readiness for the impacted CBF applications.

Functional design

CBF would like to absorb the impact on customers as much as possible. Most of the changes are related to corporate action processing and slight modifications in CASCADE Online functionality. The result of the analysis shows that only minor adjustments might be required in the processes for customers acting in Indirectly Connected Participant (ICP) mode.

General Corporate Action processing

In general, CBF will follow the new WM EDDy_neu logic when mapping business transactions with the content of messages for Corporate Action Notification (MT564) and Corporate Action Confirmation (MT566). The planned change of WM concerns warrants, certificates, bonds with certificate like structure and some convertible bonds. This modification may lead to changed timing of MT564 in the CBF corporate action management via KADI2. The change will be applicable for:

Terminart (TA)

CBF description

SWIFT field Corporate Action Event :22F::CAEV; Qualifier

122

Automatic exercise of warrants

EXWA

125

Other cash payments

All CAEVs of TA232 are possible

211

Bonus shares followed by EXOF for intermediate securities distribution

BONU

211

Stock dividend followed by EXOF for intermediate securities distribution

DVSE

211

Spin-off followed by EXOF for intermediate securities distribution

SOFF

211

Stock split followed by EXOF for intermediate securities distribution

SPLF

211

Pay in Kind followed by EXOF for intermediate securities distribution

PINK

222

Withdrawal (cancellation) of invalid warrants

EXWA

231

Redemption in securities

REDM

232

Bonus shares with cash alternatively – participation in securities

BONU

232

Reclassification

CHAN

232

Return of capital

CAPD

232

Exchange (conversion) of shares

CONV

232

Capital decrease followed by EXOF for intermediate securities distribution

DECR

232

Tender offer, exchange offer or dividend option with participation in securities

EXOF

232

Merger

MRGR

232

Equal ranking (pari passu treatment)

PARI

232

Change in nominal value/number of units

SPLF

232

Reverse stock split

SPLR

232

Conversion for any other reason

OTHR

280

Call on intermediate securities – following RHDI

EXRI

280

Exchange – Following BONU, SPLF, SOFF, DVSE, PINK or DECR

EXOF

280

Expiry of option period with voluntary or voluntary automatic exchange (conversion)

EXWA

281

Expiry of option period with mandatory or mandatory automatic exchange (conversion)

EXWA

281

Rights to tender shares or bonds

REDM

With the introduction of “EDDy Clearstream”, CBF aims to optimise the transmission of MT564. In future, the number of announcements can be reduced as event information will be consolidated prior to transmission.

WM introduces repetitive groups in the KAP (capital increases), VVK (redemption) and UMT (conversion) work areas with EDDy_neu, which may result in the distribution of multiple instruments under one BID. In line with the requirements addressed by WM, CBF will present such multiple proceeds in MT564 messages essentially under one Corporate action ID (:22F::CORP):

Event type

Terminart

SWIFT Sequence

Message type

Capital Increase

211
Without interim ISIN

280 EXRI
In 2-event scenario based on subscription right or interim ISIN

280 EXOF
In 2-event scenario based on subscription right or interim ISIN

Repeat of E1-Secmove-Credit in E-SECU-Option, E-EXER-Option

MT564

Redemption

231

Repeat of the E1-Secmove-Credit in the E-SECU option

MT564

Conversion
Mandatory

232

Repeat E1-Secmove-Credit in E-SECU option for exchange to multiple new instruments

MT564
The settlement of pieces (TA232) and cash (TA125) will still be done separately

Conversion
Voluntary

280

Repetitions of the E-SECU and/or E-CASE options

MT564

The unique referencing to an option in the MT565 for voluntary conversions is still done via the option number displayed in the MT564.

The booking of each cash amount or instrument is confirmed via single MT566.

Specific Corporate Action processing on warrants

Due to the future WM representation of a warrant lifecycle over two BIDs, the preliminary TA280 EXWA / TA281 EXWA and the later TA122 EXWA / TA222 EXWA messages will have different Corp IDs (today identical BID as part of the Corp ID).

TA280 EXWA / TA281 EXWA will include the BID from the initial UMT segment of WM. CBF will create TA122 EXWA / TA222 EXWA from its own data supply by issuers and paying agents via ARP (please refer to Announcement D19017). The Corp ID of this MT564 will therefore have no reference to a WM message.

The MT564 to TA122 EXWA / TA222 EXWA will reference the Corp ID of the MT564 to TA280 EXWA / TA281 EXWA in the linkage section.             

Specific Corporate Action processing on warrants, certificates and tender bonds

The current MT564 for TA280 EXWA / TA281 EXWA as well as TA281 REDM as information on a final maturity specified in the terms and conditions of the issuance will in future generally be sent out with the issue of the respective instrument. This means that these MT564 will also be sent for instruments that do not have a specified final maturity (continuous securities).

For instruments with settlement type "delivery of securities" or "delivery of different securities", the deliveries of several securities will be shown in repetitions of the E1-Secmove-Credit within the E-EXER or E-SECU option. The base prices are always represented in the E1-Secmove-Credit, even if only one security is delivered.

SWIFTNet message size limitations on MT564

Due to the possible representation of complex events under one BID / Corp ID, the maximum message size (10KB) might be reached. Therefore, multiple linked MT564 messages might be sent within one Corp ID. The current procedure remains unchanged.

CASCADE Online Functionality (HOST / PC):

A few screens for the Vaults processing will be slightly adapted in preparation for the EDDy_neu data model:

  • Transaction KVEW using function EL (HOST) – CBF-Tresor in case of ”laufende Einlieferung von Einzel- und techn. Sammelurkunden”;
  • KVEC (HOST / PC) – “Auftragsabwicklung Kontrolle Wertebereich” respectively in CASCADE-PC “OTC: unverified instructions”; and
  • KPHI (HOST / PC) “CARAD Auftragshistorie”
    respectively in CASCADE-PC “vaults: display: instruction history”.

The field “WKN Stammrecht” was removed.

In preparation of the implementation in April 2023, CBF already changed the layout of the screens with the CBF Release November 2022. The update is visible to customers since 21 November 2022.

Customer simulation

Based on the latest specification, a reassessment for customer simulation activities has been conducted. The envisaged functional changes will not require a dedicated customer simulation.

Cutover

Due to the migration of ongoing Corporate Action events into the EDDy_neu format by WM, an increased volume of MT564 REPL, CANC and NEWM messages can be expected on 11 April 2023, especially in the area of warrants and certificates. The MT564 lifecycle for warrants, which has been adapted to EDDy_neu, will only become effective for instruments issued after the cutover.

Contact

For further information, customers may contact T2S-Support@clearstream.com, Clearstream Banking Client Services or their Relationship Officer. The relevant contact details are available on our website under Contacts & Client Services.

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1. This Announcement is published by Clearstream Banking AG (CBF), registered office at Mergenthalerallee 61, 65760 Eschborn, Germany, registered with the Commercial Register of the District Court in Frankfurt am Main, Germany, under number HRB 7500.

2. KADI stands for Kapitaldienste, that CBF Corporate Action Management.