Other services - International (CBL)

Reg S to 144A via Deposit/Withdrawal at Custodian (DWAC) Transfer

Some securities may be structured as dual tranche under both Rule 144A and Regulation S (Reg S).

 The two rules are defined as follows:

• Rule 144A is a regulatory exemption established by the SEC under the Securities Act that allows eligible securities to be privately offered and sold in the United States to Qualified Institutional Buyers (QIBs) without Securities Act registration. The exemption is available to any seller other than the issuer.
• Regulation S (Reg S) is a SEC rule that establishes the framework under which securities may be offered and sold outside the United States without registration under the Securities Act of 1933 (the 'Securities Act').

Where securities are issued under both Reg S and Rule 144A, clients have the possibility to exchange all or part of their position held under Reg S Global Note into Rule 144 Global Note, or vice versa. The security documentation clarifies if the exchange is possible and whether or not there are any restrictions to it.

The following exchange scenarios may arise:

• Exchange from the Rule 144A tranche held through DTC to the Regulation S tranche held through a Common Depository (US – XS).
• Exchange from the Regulation S tranche held through a Common Depository to the Rule 144A tranche held through DTC (XS – US).
• Exchange between the Rule 144A and Regulation S tranches (both directions), both held through a Common Depository (XS – XS).
• Exchange between the Rule 144A and Regulation S tranches (both directions), both held through DTC (US – US) is governed by the procedures described in the  Market Link Guide – USA, section Other Services – U.S.A.: Other services - U.S.A.

CBL facilitates exchanges of securities between Rule 144A and Regulation S (Reg S) formats, in both directions. Clients wishing to exchange their holdings must submit a Swift instruction to CBL for securities held in their account. Upon receipt of the instruction, CBL sends the required instructions to the relevant transfer agent and depository. Following the successful completion of the exchange by these parties, and upon receipt of the corresponding confirmation, CBL credits the exchanged securities to the client's account.

Whenever applicable and known to Clearstream, as there is a large number of bonds of this type and exchange is possible throughout the entire life of the bond (unless defined differently by Prospectus), the conditions of the exchanges Reg S to 144A or 144A to Reg S, will be announced to clients via Corporate Action event (MT564/seev.031) CONV VOLU

If the original ISIN can be exchanged into two different ISINs, a separate event will be created for each resulting ISIN.

Clients will be required to instruct via MT565/seev.033. In their instructions the clients will need to confirm the compliance with the required certification and to provide necessary details for the exchange in the narrative fields or MX equivalent:

• :70E::INST//Certification confirmation: Certification OK;
• :70E::PACO//Contact details

The status of the instruction will be reported to clients via MT567/seev.034. The standard recycling rules will be applicable in case of insufficient securities balance on the client account.

Once the exchange is executed and completed, clients will receive MT566/seev.036.

If no event is announced by Clearstream, clients can send an unsolicited instruction¹, that is, an MT565/seev.033 to request the exchange mentioning the following details:

:13A::CAON//001
:22F::CAOP//SECU
:70E::INST//1. Resulting ISIN code, 2. Certification confirmation: Certification OK
:70E::PACO//Contact details

The certification of QIB or non-US status is achieved by simply stating "certification OK".

By stating "Certification OK", the client certifies that they are eligible to receive the resulting bonds.

To receive 144A bonds, clients certify that they are QIB, and to receive Reg S bond, they certify that they are QIB and/or non-U.S. entity.

Clients also give the power to CBL to either confirm their status in their name to the Transfer Agent electronically, or in cases where electronic certification is not possible, they agree that CBL completes the necessary forms on their behalf.

CBL shall not be held liable for relying on the certification and for transmitting the certification provided CBL has not been grossly negligent, fraudulent or acted with willful default. The client shall be liable towards CBL to provide a complete, true and accurate certification.

Please note that while the typical processing time for exchanges is two to five business days, execution times may vary. To maintain compliance with legal and regulatory standards, transfer agents conduct mandatory screenings—including AML, KYC, and sanctions checks—prior to completing transactions.

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1. In the absence of an announced event, XACT users are required to submit their exchange intention through their designated Client Service channel. Upon receipt of such request, a Corporate Action CONV VOLU event will be created to enable clients to submit their instructions accordingly.

Securities lending and borrowing

All debt securities eligible in CBL qualify for CBL’s securities lending and borrowing programme.

Equities are not eligible for CBL’s securities lending and borrowing programme.

Registration of securities

Although rare, some international debt securities are subject to registration. These securities are normally registered either under the name of Clearstream Banking or under the name of the Nominee company of Clearstream Banking’s depository.

In the event of an entry of registered securities, the custodian of the delivering party must complete a stock transfer form. Upon receipt of the securities and the stock transfer form, CBL’s depository completes the form and sends it to the corresponding registrar for registration.

Compliance

The U.S.A. asserts jurisdiction over transactions involving securities issued or held for custody in the U.S.A., even where the link between the transaction and the U.S.A. is quite attenuated. Some U.S. economic sanctions laws have extraterritorial effect and others impose or threaten third parties' actions with secondary boycotts, which may affect the third parties' access to U.S. financial or other markets. U.S. financial institutions and, in some cases, their foreign-incorporated subsidiaries and affiliates, are subject to U.S. regulations, even when operating outside the U.S.A. CBL intermediates transactions involving securities in which the U.S.A. is the jurisdiction of issuance or custody. CBL also engages U.S. financial institutions to provide custody, depository and other services in selected non-U.S. jurisdictions, based on the quality of the services offered and CBL’s other requirements. Such U.S.-owned or controlled institutions may be required to refuse or even block/freeze transactions directly or indirectly involving parties subject to U.S. economic sanctions regulations, regardless of the law of the jurisdiction in which the U.S. institution operates. CBL conducts its business to comply with all laws applicable to CBL. Accordingly, CBL may not be able to complete or may refuse or block/freeze transactions in or through a CBL account that, in CBL's judgment, may expose CBL to U.S. laws and regulations even where neither CBL nor the client is directly subject to such laws, but where CBL’s chosen custodian or depository is subject to such laws.

Where a U.S.-linked institution serves as CBL’s custodian or depository, the client acknowledges and accepts the obligation to comply and ensure compliance by any of the client’s underlying clients, up to the ultimate [legal and] beneficial owner, with any U.S. law, regulation, sanction, order, judgment, injunction, asset freeze, blocking regulation or order or any other act or action of, or by, any national or foreign government, authority, court, (self-) regulatory organisation, government agency or instrumentality of government, including, but not limited to, investment and holding restrictions (“U.S. Regulations”) applicable to any of the client, its underlying clients or CBL. The client shall not hold or seek to hold CBL liable for actions by CBL’s chosen custodian or depository to comply with U.S. Regulations applicable to such custodian or depository. The client shall not, by action or inaction, cause CBL to violate a U.S. Regulation and shall be liable for and hold CBL harmless against any direct or indirect loss, claim, damage, liability or expense, imposed on or incurred by or asserted against CBL in connection with any actual or alleged non-compliance with the aforesaid by the client or any underlying client of such client up to the ultimate [legal and] beneficial owner.

Please also refer to the Resource Center of the U.S. Department of the Treasury.

Disclosure requirements

In principle, international securities are not subject to disclosure requirements. Exceptions may apply to securities subject to local tax or legal requirements, such as the Shareholder Rights Directive II national acts.

Holding restrictions

In principle, international securities are not subject to any holding restrictions. Exceptions are described in the Investment regulation section of the Market profile - International.

Tax services

Income from international securities may be subject to tax depending on the terms and conditions of the securities. Where withholding tax is applicable, a relief may be available through CBL either at source or through refund.

Please contact Clearstream Banking Tax Help Desk for details of the services offered.