Handling of Bondholder Meeting events
Clearstream Banking1 informs clients that, in light of the implementation of ISO 20022 messaging for General Meetings, notification of bondholder meetings (BMET) for certain Eurobonds as well as domestic bonds, where a meeting with fees (or cash incentive) has been announced or where the ISO 20022 messages have some limitations, will be communicated via the Corporate Actions process, using the voluntary event type Consent (CONS).
Clearstream Banking anticipates that the majority of parties announcing such events will adopt this approach, eliminating the need for extra operational procedures and minimising the risk of technical disruptions.
In the event, where this process would be extended to regular bondholder meetings by the announcing parties, Clearstream Banking will follow the market announcement as received.
While discussions are ongoing with the relevant parties, Clearstream Banking cannot guarantee a unified process across all stakeholders at this time.
In any event, relevant information will be provided to noteholders who hold their assets in the custody chain with Clearstream Banking.
- The fee payment (cash incentive) under a Corporate Actions CONS event will be processed with the same CORP reference as the event announcement, under which the instruction was accepted.
- In the expected rare case that the event has been announced through the General Meeting process with event type BMET, the votes will be expected under this event reference. The payment of fees (cash incentive) will then be processed using a Corporate Actions payment MT566 under a separate CORP reference.
Corporate Actions Consent Event and SCoRE limitation on option types
It must be noted that the Corporate Actions consent event is subject to certain restrictions on the option types. These restrictions derive from the Single Collateral Management Rulebook for Europe (SCoRE) standards. The allowed codes include Consent Granted (CONY), Consent Denied (CONN) and Abstain (ABST). The option types Split Instruction (SPLI), Proxy Card (PROX) and others are not allowed.
SCoRE Standard 12: Bondholder Meeting with fees
SCoRE Standard 12 in its original version of December 2021 states that fees related to meeting events will be announced and confirmed within a single event using dedicated meeting messages with the caveat that SMPG will define the exact message to be used.
The May 2022 SMPG market practice states that the meeting event with fees is announced via a meeting notification while the payment of fees is announced and confirmed via a mandatory Corporate Action CONS event.
The December 2023 version of the SCoRE rulebook has taken this technical limitation into account and Standard 12 has been re-written so that the payment of fees (solicitation fees, consent fees) as part of a meeting event must be announced and confirmed using a consent corporate event.
Taking into account market behaviour and the announcements we have seen so far from the issuer community, Clearstream Banking will only partially comply with the SMPG recommendation and SCoRE Corporate Action Standard 12 in a scenario involving the announcement of a meeting notification and the event with fees. The MT564/seev.031 for the payment of fees (cash incentive), when the event itself is announced with a meeting notification, is planned for a later stage if the markets show a move in this direction.
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Further information
For further information, clients may contact Clearstream Banking Client Services or their Relationship Manager.
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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, registered office at Mergenthalerallee 61, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.