CFCL Settlement – Spain

Settlement process in T2S

Please refer to the Settlement process in T2S for the complete information.

Settlement services

Pre-matching service

The table below summarizes CFCL's pre-matching service for external settlement instructions, as well as the pre-matching method and start time in the market. For details of CFCL's pre-matching services, see Pre-matching services for external settlement instructions.

The hold and release feature available in T2S will be used by CFCL for the pre-matching of settlement instructions in T2S.

Matching service

Matching is mandatory for all transactions settling in T2S. In addition to the mandatory matching criteria in T2S, the following fields may, if present, be matching criteria.

Additional matching fields

The following additional matching fields are initially not mandatory but, when one of the counterparties provides a value for them in its instruction, matching values must be provided by the other counterparty:

• Opt-out indicator;
• CUM/EX indicator.

Optional matching fields

The following optional matching fields must match when provided by both counterparties:

• Common reference;
• Client of delivering/receiving CSD participant;
• Securities account of the delivering/receiving CSD participant.

Note: Clearstream recommends to agree on the usage of a common reference (:20C::COMM) and the T2S Security Account number (SAC) with the counterparty in Iberclear. Both fields are “optional” matching criteria in T2S and avoid cross-matching if it is populated in the Settlement instructions of both parties.

Allegements

T2S will send allegement messages depending on the information indicated in the counterparty’s instruction. The allegements will contain the additional and optional matching criteria described above. These can be used to correctly format instructions to ensure matching if it has not yet been sent to Clearstream Fund Centre.

Identification of CSDs in T2S

In T2S all CSDs will be identified by their BIC11. CFCL clients are required to use the following BIC11 as Place of Settlement for domestic instructions:

Identification of the counterparty in T2S

In T2S, the CSD participants are identified exclusively by the combination of their home CSD (i.e., PSET DAKVDEFFXXX) and their BIC11.

 Procedures for domestic counterparties

This section describes the procedures for domestic counterparties of the Spanish market, which is both a domestic and a register market.

CFCL

a. Although the safekeeping account of Party 1 (REAG/DEAG) is an optional matching field in T2S, if it is present on one instruction only it will only match with instructions instructed by this account.

As CBL does not forward its own SAC to the settlement parties, if the client counterparty instructs the SAFE of REAG/DEAG it must match CBL's SAC in T2S exactly.

We encourage clients to ask their counterparties not to include the SAFE of the DEAG/REAG in their instructions (also called securities account of the delivering/receiving party).

CEU

Important note:

All Spanish ICPs are requested by Iberclear to use the Iberclear BIC11 (IBRCESMMXXX), in the Place of Settlement. For Spanish DCPs, the T2S standard applies and henceforth the BIC11 of the counterparty CSD should be indicated in the Place of Settlement. In addition, Iberclear is asking ICPs to indicate the SAFE of the Delivering/Receiving Agent in their instructions, so that Iberclear can identify the target CSD in T2S.

Cross-border settlement between CSDs in T2S is only possible if the corresponding technical configuration in T2S for cross-border links has been established by the CSDs linked to each other. For T2S cross-border settlement in Spanish securities between non-Iberclear counterparties and Clearstream Fund Centre, the T2S standard applies. This means that non-Spanish counterparties (that is, for example Monte Titoli participants) must instruct against DAKVDEFFXXX in the Place of Settlement.

Also, counterparties should verify with their domestic CSDs or agents for the proper formats to instruct against CFCL parties’ omnibus account. Some CSDs or agents may still have proprietary formats that differ from the format published in the above table. For DCP counterparties, the T2S Settlement standard generally applies.

Partial settlement

In T2S partial settlement for eligible instructions is allowed at the last night-time settlement cycle in sequence ‘X’; and within the real-time settlement period:

• At 08:00 CET,10:00 CET, 12:00 CET, 14:00 CET and 15:30 CET;
• 30 minutes prior to the DvP cut-off time (between 15:30 CET and 16:00 CET).

Within these windows all transactions that are pending due to lack of securities and hold a positive partial settlement indicator are included in the partial settlement processing.

Whether partial settlement will be applied or not depends on the partial settlement indicator set within the instruction or on the client account setup. A settlement Instruction will settle partially if both counterparties instruct with the Field :22F::PARQ.

Partial settlement applies only when full settlement is not possible due to lack of securities. T2S will perform partial settlement according to the available position after analyzing the partial settlement indicator in the instruction. The settlement instructions are submitted to a full settlement attempt before being submitted to a partial settlement attempt (if permitted by instruction indicators and/or client account setup).

Partial settlement is applicable to domestic and cross-border instructions and is not allowed for PFoD instructions. Also, Partial settlement is not applied if instructions are linked to any other settlement instruction with link type “Before”, “After”, “With” or via pool reference. Partial settlement is not applied if the transaction undergoes a process where a CoSD Hold is used. The unsettled remaining part of a partially settled settlement instruction can be cancelled.

Allowed countervalue difference

The following T2S cash tolerances will apply to instructions (against payment instructions in EUR only):

• EUR 2 for transactions with an amount equal to or less than EUR 100,000;
• EUR 25 for transactions with an amount greater than EUR 100,000.

In the event of a discrepancy within the limits, in principle the cash amount of the delivering party will prevail.

For non-EUR currencies, the T2S cash tolerances apply to against payment instructions in foreign currencies between CFCL and CEU participants.

Settlement with Euroclear (CBL only)

CBL as a sub-custodian of CFCL clients can settle Iberclear T2S- eligible securities via the Bridge.

Back-to-back processing (Transaction linking)

Back-to-back processing is available for transactions in Iberclear T2S eligible securities.

Cancellation

Unmatched instructions: can be cancelled unilaterally, at any time, by the party who placed the instruction at any time or until cancelled by T2S.

Matched instructions must be cancelled bilaterally by both counterparties.

Recycling rules

Unmatched instructions will be recycled for 20 business days (starting from the initial settlement date), after which they will be cancelled.

Unmatched cancellation requests will be recycled for 20 business days (starting from the date of receipt).

Matched, but not settled instructions will be cancelled by T2S after 60 business days (starting from the date of receipt or on the day the last modification was sent for this instruction).

Settlement Discipline Regime cash penalties

Penalties will be calculated and applied on matched settlement instructions that fail to settle, in full or in part, on and after their intended settlement date (ISD), if both the settlement instruction and the relevant financial instrument are subject to cash penalties.

Instruments subject to cash penalties

Any financial instrument listed in the Financial Instruments Reference Data System (FIRDS) database maintained by ESMA will be subject to cash penalties.

Re-registration procedure

Registry reporting details and registration procedures

Whenever the transaction of shares involves a change in the second-tier register, a re-registration is required in order to adjust the registry details accordingly.. The re-registration in the Spanish Market supported by CEU as Investor CSD in T2S takes place through one of the following methods:

Registration via OTC

The OTC trade in the Spanish Market can only be used to instruct the settlement of purchases or sales on securities listed in the Stock Exchange and being executed Over The Counter. The OTC allows the parties to concentrate the whole settlement chain (that is, transfer of shares and registration) in just one instruction. With this type of transaction, the change of registry stands on the final settlement of the OTC.

Registration via Change of ownership (OWNE)

This transaction needs the Stock Exchange supervision and supportive documentation is required in each case. The supportive documentation must be provided by clients to CEU upon request of market authorities to evidence the underlying sale/purchase agreement. As any bilateral trade, the settlement is agreed between the parties, and trades can therefore be matched and settled the same day. OWNE transactions can be used in the following cases: mergers, spin offs; transfer free of payment.