CFCL Settlement - UK

Settlement process

Please refer to the Settlement process - UK page for the complete information about the settlement process.

Settlement services

 Pre-matching service

The table below summarises 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.

Procedures for domestic counterparties

Allowed countervalue difference

A maximum difference in countervalue of GBP 10.00 or its broad equivalent in EUR or USD (with maximum of EUR 15.00 or USD 15.00) is allowed for matching and settlement of against payment transactions with domestic counterparties. No difference in countervalue is allowed for account transfers between CFCL accounts (OAT instructions).

Specific settlement rules / settlement restrictions

Mandatory transaction data

As per CREST transaction data requirements, clients’ instructions must include the following fields in their settlement instructions:

• Trade date;
• Place of trade MIC (Market Identifier Code);
• Type of transaction.

Trade date

Trade date is mandatory in all instructions as well as a matching criteria. Instructions received without trade date are rejected. Furthermore, if the transaction is to settle, instructions of both counterparties must include identical trade date.

CSDR type of trade

Type of trade is mandatory field in CREST. If the fields are omitted where required or a value provided is not recognised by the CREST system, the instructions will be rejected by CREST.

The client must complete fields as follows:

Place of trade

The MIC to indicate the place of trade (segment MIC corresponding to the stock exchange or off-market where trade is concluded) is mandatory field in CREST. If the field are omitted where required or a value provided is not recognised by the CREST system, the instructions will be rejected by CREST.  If no MIC is provided by the client, CFCL sends the field as blank to its custodian who populates the value XOFF by default before sending the instruction to CREST.

To ensure accurate value is included in the instruction, the client must complete fields as follows:

CFCL does not check the mandatory matching fields or the value included related to CSDR type of trade and place of trade and does not assume responsibility for settlement failures due to non-compliance with the above norms. Clients are advised to confirm the use of these norms in accordance with the market practice and where relevant with their counterparties.

Partial settlement

Market practice is that a counterparty is entitled to deliver as much of its stock as it can according to stock availability and receive as much stock as it can according to cash availability in its CREST account. There are no set minimum amounts for partial settlements. A single trade can be partially settled on a number of different value dates depending on when the delivering party obtains the stock or the receiving party obtains the cash.

CFCL clients are not allowed to initiate splits, whereas CREST counterparties are allowed to initiate them. Nevertheless, customers’ instructions might be subject to a splitting process initiated by CREST counterparties, in which case the original client instruction (parent instruction) will automatically be reversed and replaced by the corresponding split instructions (sibling instructions): one settled instruction for the quantity and amount confirmed; and one outstanding instruction for the remaining quantity and amount, which may settle at a different time.

Receipt of securities via registrar dumps in CREST

Refer to the Settlement services - UK equities, corporate bonds and investment trusts page for detailed information.

Penalties in connection with CREST Settlement Discipline rules

The penalties explained hereafter apply to external transactions only and not to internal transactions between CFCL clients. For further details, please refer to the Market Profile - UK page. 

Re-submission charges (or fees)

A CREST re-submission charge of GBP 0.50 per day will be levied on all transactions that are eligible for settlement on their intended settlement date plus 20 business days (ISD +20) or later but fail to settle in the CREST system. On receipt of the relevant charges, CFCL will debit clients' accounts.

Matching fines

The matching discipline regime includes standard deliveries (DEL), residual deliveries (RES) and stock loans (SLOs) relating to the following security categories:

• FTSE 100;
• FTSE mid 250;
• Irish Equivalent 100;
• Irish Equivalent 250;
• Other UK and Irish settlable securities;
• Residual UK and Irish.

Matching is binding in EUI and, to avoid matching fines, should occur, at the latest, one local business day after the trade date (T+1).

• For each transaction that remains unmatched at close of business on T+1, a fine of GBP 2 will be charged.
• For each subsequent day a transaction remains unmatched in EUI, an additional fine of GBP 2 will be charged.

The fine is always charged to the party that was last to input and amend its instruction in the local market.

Unmatched transactions will be subject to fines for a maximum of five local business days, when the instruction will be cancelled in the Clearstream system.

Matching fines are calculated retroactively at the end of each two-month period. On receipt of the relevant charges, CFCL will debit clients’ accounts.

Settlement fines for failed deliveries

Each external delivery that remains unsettled in the local market after its intended (contractual) settlement date will incur a settlement fine. Such fines are charged by CREST per CFCL account with CREST.

The settlement fine will be calculated based on the average market value of the number of all unsettled transactions that do not reach specific settlement performance targets.

The settlement performance target is linked to the number of days a transaction remains unsettled after its contractual settlement date (S). The settlement fine will amount to either GBP 5 or an ad-valorem fine of 0.05% per unsettled transaction, whichever is higher.

The criteria for the calculation of the settlement fines are as follows:

In line with local market practice, settlement fines for failed deliveries will only be calculated up to 20 local business days after the contractual settlement date.

Penalties are charged on the basis of periods of two months. On receipt of the relevant charges, clients may be charged.

Interest charges for failed receipts and interest credits for failed deliveries

A matched against payment external receipt instruction that remains unsettled in the domestic market after its contractual settlement date, due to lack of cash or credit, will, according to CREST rules, be subject to interest charges.

A matched against payment external delivery instruction that remains unsettled in the domestic market after its contractual settlement date, due to the counterparty’s lack of cash or credit, will give rise to interest credits.

Effective 29 March 2021, the interest charge is based on the prevailing SONIA for GBP,  LIBOR for USD and EURIBOR for EUR (or zero if the relevant rate is negative) and until the transaction is settled or bilaterally cancelled.

CFCL will book interest charges or credits on the account of the respective client when charged or credited by the local market.

Back-to-back processing

Back-to-back processing is available for transactions in dematerialised securities eligible in the CREST system. Clients can increase same-day turnaround of instructions by “linking” one domestic receipt to one domestic delivery.

The settlement deadline for back-to-back instructions is 15:00 CET on SD-1. Clients must ensure, together with the respective counterparty, that the receipt and delivery instructions will match on SD-1.

Clients should be aware that, where one or other of the transactions to be linked fails to match, the linking process will not take place.

The CREST system prioritises individual transactions over linked transactions and the linking of two transactions may, therefore, not guarantee settlement.

CFCL will bear no responsibility with regards to failure of a linked transaction. By sending a back-to-back instruction in the UK market, client are deemed to indemnify CFCL for any costs, penalties or loss that CFCL may incur.

To benefit from this functionality, clients must ensure that their back-to-back transactions are formatted according to the following, as appropriate:

a. The reference (16x) must neither start nor end with a single slash (/) character nor must it contain two consecutive slash (//) characters.

Management of failed instructions

• CREST matched receipt and delivery instructions with domestic counterparties that have not settled on SD will remain pending until they settle or until they are cancelled by both parties in CREST.
• CREST matched instructions, for which a cancellation request has been sent to the market, remain blocked for settlement in the CREST system until the cancellation is matched by the counterparty.
  Where the cancellation request is not matched by the counterparty, CFCL will exceptionally accept an authenticated free format message from clients to reverse the cancellation request in CREST and reactivate the instruction in the system for further settlement.
• CREST instructions that remain unmatched by the requested settlement date are reported to CFCL as pending.
  CFCL reserves the right to cancel instructions with domestic counterparties that have not been matched by the fifth business day after the requested settlement date.
• Non-CREST instructions that remain unmatched by the requested settlement date are reported to CFCL as pending.
  CFCL reserves the right to cancel such instructions by the 15th business day after the requested settlement date.