Settlement services - U.S.A.
Pre-matching service
The table below summarises CBL’s pre-matching service for external settlement instructions, as well as the pre-matching method and start time in the market. For details of CBL’s pre-matching services, see Pre-matching services for external settlement instructions.
| Service offered | Method employed | Start (local time) | |
| DTC ID service participants only | |||
Transmission of ID confirmation | MT595 | Upon receipt of the counterparty confirmation | |
Transmission of allegement | MT578 a | Upon release of the allegement by DTC b | |
| DTC settlement | |||
Transmission of allegement | MT578 a | Upon receipt of the counterparty delivery instruction in DTC | |
| FED settlement (FOP receipts only) | |||
Transmission of allegement | MT578 a | Upon receipt of the counterparty delivery instruction in FED | |
a. Eligible customers receive these messages in accordance with the frequency option to which they have subscribed.
b. In principle, these messages are generated by DTC approximately every 30 minutes from trade date through SD-1 during DTC’s operating time 08:00 - 15:00 EST (taking into consideration CBL’s operating hours).
Description of the DTC ID service
Under the DTC ID service, CBL will:
- Report ID confirmations received from customers’ U.S. brokers;
- Enable customers to affirm ID confirmations via CBL;
- Present affirmed ID confirmations for DTC settlement;
- Confirm settlement completion in conformity with the ID settlement cycle.
DTC’s ID service provides a mechanism for seamless confirmation, affirmation and settlement of against payment transactions in DTC’s books. U.S. brokers input confirmations of trades executed on behalf of their clients in the ID system. The confirmation is electronically forwarded to the client's custodian who will compare it against the receipt or delivery instruction received from the broker's and custodian's common client.
Provided that both sets of instructions match, the custodian will electronically affirm the broker's confirmation on the ID system. Affirmed ID confirmations will result in an automated settlement in DTC’s books, with no need for the delivering party (that is, the broker or the custodian as the case may be) to input additional separate delivery instructions.
U.S. brokers generally input trade confirmations into DTC’s ID system by 24:00 Eastern Standard Time (EST) on the Trade Date (later input is possible, however). Custodians are to affirm ID confirmations by 12:00 EST on SD-1. Provided the delivering party holds the required securities provision, DTC will settle affirmed ID confirmations in the early morning hours of SD and settlement results will be available to the broker and to the custodian at the start of the U.S. business day.
ID confirmations that are not affirmed by 12:00 EST on SD-1 cannot be affirmed afterwards. However, provided the delivering party inputs the appropriate DTC Delivery Order, the underlying trade can still settle on the Requested Settlement Date, but without the added convenience of prior trade affirmation.
CBL's participation in the ID service
In its capacity as CBL's depository, Citibank will forward ID trade confirmations to CBL. Following the customer's trade affirmation, CBL will transmit settlement instructions to Citibank. Citibank will affirm the transaction in the ID system and confirm settlement completion to CBL.
Customers who want to participate in CBL's ID service can choose between two options to affirm ID confirmations reported against their account(s):
- Positive affirmation: the customer inputs receipt (61) and delivery (8M) instructions by 17:25on SD-1 in order to affirm ID confirmations;
- Negative affirmation: CBL generates and affirms ID confirmations for the customer's account unless the customer has cancelled the instructions by 17:25 on requested SD-1.
Positive Affirmation Option
Customers choosing the positive affirmation option will receive an ID Confirmation Message advising them of the details of their broker's ID confirmation. This advice is received as a SWIFT MT595 message. To affirm the ID confirmation, customers must input a corresponding external receipt (61) or delivery (8M) instruction to CBL.
Negative Affirmation Option
Customers adopting the negative affirmation option will see an external receipt (61) or delivery (8M) instruction that CBL generates on their account upon receipt of their broker's ID confirmation. The Transaction Reference Number of such instructions will always correspond to DTCnnnn (where 'DTC' is a fixed value and 'nnnn' a number allocated by CBL). In addition, customers choosing this option will receive an ID Confirmation Message advising them of supplementary details. This advice is received as a SWIFT MT595 message.
Under the negative affirmation option customers will not need to input their receipt or delivery instructions themselves. They will need to ensure, however, that the trade confirmed by their U.S. broker represents a valid trade. If they do not recognise the receipt or delivery instruction as a valid trade, they must input a corresponding cancellation by 15:00 on requested SD-1.
N.B.: Customers that adopt the negative affirmation option must check and cancel unrecognised instructions by the above-mentioned deadline on each CBL business day - including those days that, while being a CBL business day or a U.S. domestic business day, is a holiday in their own location. CBL shall bear no responsibility if it settles any instruction that such customers have failed to cancel by the appropriate deadline.
Late ID confirmations
From time to time, Citibank and CBL may receive late ID confirmations that can no longer be affirmed before the ID affirmation cutoff time. In practice, CBL will not transmit ID Confirmation Messages (for accounts with a positive affirmation profile) or generate external receipt or delivery instructions (for accounts with a negative affirmation profile) on ID confirmations submitted later than approximately 06:00 EST on the U.S. domestic business day preceding the requested SD. In these cases, CBL will nevertheless send a Late ID Confirmation.
Late ID Confirmation Messages (sent as SWIFT MT595) are sent to all customers, regardless of their chosen affirmation profile.
Settlement confirmations
Please refer to Settlement times. Cancellations initiated by the U.S. broker
From time to time, brokers may cancel ID confirmations that have not been affirmed by the CBL customer and by Citibank yet. DTC will inform Citibank and Citibank will inform CBL of such cancellations. Depending on the impacted customer's affirmation profile, CBL will take the following actions:
- For accounts with a negative affirmation profile, the corresponding receipt or delivery instruction will be cancelled automatically. CBL will report the instruction’s status update (Cancelled) to the customer. Such cancellations will be reported in the MT537 Statement of Pending Transactions Report.
- For accounts with a positive affirmation profile, CBL will attempt to automatically cancel the corresponding receipt or delivery instruction. If cancellation is successful, CBL will report the instruction's status update (Cancelled) to the customer. The cancellation can only occur if the underlying customer had already input the receipt or delivery instruction with the appropriate DTC control number (DTCIDnnnnnnnnn) when CBL received the broker’s cancellation.
Cancellations initiated by the CBL customer
Customers can cancel receipt or delivery instructions with the DTCIDnnnnnnnnn reference in the narrative field of SWIFT MT54x messages as long as such instructions have not yet undergone CBL’s provision check or collateral check. Customers can no longer cancel such instructions once released to Citibank as a result of the successful completion of CBL’s provision or collateral check.
How to register for the DTC ID service
To participate in CBL's ID service, customers must complete the DTC ID Registration form in Forms to use in the U.S. market, indicating the following:
- Their chosen affirmation profile - positive or negative;
- Their U.S. broker account details, to enable CBL to map ID confirmations received from Citibank against their CBL account.
Customers using multiple U.S. brokers or servicing multiple underlying clients will be able to link their multiple broker accounts to one or to several CBL accounts; - Their chosen reporting medium for the ID Confirmation Messages and for the Late ID Confirmation messages.
Reporting on settlement
Any delivery to the U.S. market is subject to approval by the receiving party in DTC, using the DTC RAD function. The table below describes the scenarios that need to be considered and the corresponding reporting that is provided.
Securities delivery by CBL customers
Delivery status for instructions (including DTC ID instructions) | Message/Field/Value | Meaning |
Delivery awaiting approval | MT548 :24B::PEND//NCON | Confirmation not received from counterparty/awaiting counterparty approval. |
Delivery approved: settled | MT54x confirmation | Delivery has been executed and confirmed. |
Delivery approved: not settled in DTC on SD | No specific reporting | Delivery instruction will be automatically resubmitted by CBL’s depository for 30 days, unless cancelled by the customer or settled. |
Delivery refused by the receiving counterparty | MT548 :24B::NMAT//DTRA | Delivery will be cancelled by DTC. |
Delivery with no action taken by the counterparty by the end of SD and dropped by DTC | MT548 | Delivery has been cancelled by DTC. |
Securities receipt by CBL customers
No Clearstream Banking customer receipt instruction in place
Receipt status | Message/Field/Value | Meaning |
DTC counterparty’s delivery instruction received on the market | MT578 NEWM | A new allegement is reported where there is no receipt in place from Clearstream Banking’s customer or where the instruction of the DTC counterparty does not match the instruction of Clearstream Banking’s customer. From there, there are two possible options:
|
DTC counterparty’s allegement cancelled before matching at Clearstream Banking’s depository | MT578 REMO | Transmitted if the U.S. counterparty cancelled the allegement before the receipt of Clearstream Banking’s customer instruction. |
Clearstream Banking customer receipt instruction in place
Upon receipt of Clearstream Banking customer instruction | MT578 REMO | REMO will be reported upon receipt of a Clearstream Banking receipt instruction. |
Clearstream Banking customer’s instruction has been matched with counterparty’s delivery by Clearstream Banking’s depository | MT548 :24B::NMAT//DTRA | This status will be transmitted only if the counterparty cancelled its instruction. The counterparty could cancel the transaction:
|
Confirmation that our clients transaction matched the counterparty’s affirmation | MT548 | Only applicable to DTC ID transactions. |
Counterparty’s delivery approved but not settled in DTC | MT548 :24B::PEND//NCON | Clearstream Banking depository being the receiving counterparty approved the transaction in DTC but DTC did not provide the final approval for settlement. |
Counterparty’s delivery approved in RAD | MT545 confirmation | Receive instruction has been settled. |
Procedures for domestic counterparties - Book-entry transfers
Receipts in CBL (general, for free of and against payment)
Note: Please ensure that "CSC" is in capital letters to avoid settlement delays.
Securities allocated to Citibank must be delivered as follows:
Through DTC
RECV-PT: 0908
RCVR-ACCT: 089154 CSCxxxxx
or
RECV-PT: 0908
RCVR-ACCT: 089154
First comment line: CSCxxxxx
Through DTC's ID service
INST: 64005
ID AGT: 57569
A/C: 089154
Special instruction 5: CSCxxxxx
DEL AGT: 0908
Through FBE
CONTRA: CITIBANK NYC/CUST ABA 021000089
INF1 line: 089154 CSCxxxxx
where 64005=CBL’s Institution ID number; 57569=Citibank’s Agent ID number; 089154=CBL Agent’s internal account number; xxxxx=5-digit CBL account number.
If the securities are being transferred physically (see “Procedures for domestic counterparties - Physical transfers” below), please deliver to Citibank (address in “Depository” under General information). The delivering party must specify that the securities are in favour of 089154 CEDELBANK CSCxxxxx (where xxxxx=5-digit CBL account number).
Receipts in CBL (specific, for free of payment only)
Receipts free of payment in CBL from a U.S. counterparty require a receipt instruction from our customer.
Note: No DK (Don’t Know) will be initiated by CBL on its behalf, bearing in mind that the delivery could be DK'ed in turn by the U.S. counterparty in the absence of appropriate communication between said counterparty and our customer.
Our customers are also recommended to request timely instructions from their underlying clients for entries of securities free of payment in order to allow our customers to send in turn timely receipt free of payment instructions to CBL. This should further improve the booking process of security receipts free of payment and limit the risk of wrong allocation.
Deliveries from CBL (other than against payment deliveries via DTC’s ID service) and risk of DK
Local market practice allows the receiving party to reverse a receipt (under the “Don’t Know” - DK - procedure). If this happens, the securities are re-credited (and any sales proceeds are re-debited value settlement date) for same-day DKs on SD+1 and for later DKs as soon as the reversal has been processed. The reason of the DK is passed on from the counterparty to the customer in field :70D: of MT548 and MT537. The quality of the DK information depends on what the U.S. counterparty has input in its DK DTC ticket.
The risk of DK is limited to transactions that are not subject to RAD approval in DTC.
Transactions that are subject to RAD approval are as follows:
- All against payment deliveries of DTC-eligible securities where the countervalue is greater than USD 0.01;
- Free of payment deliveries of DTC-eligible MMIs.
To avoid DK (Don’t Know) settlement failures, counterparties receiving securities from a CBL customer must instruct their U.S. or Canadian custodian by its agreed deadline to accept securities delivered by CBL’s depository Citibank via FBE, DTC, CDS or by physical delivery, as appropriate.
Transactions initiated via DTC’s Institutional Delivery System (ID System)
CBL participates in DTC’s ID service with respect to against payment transactions with counterparties in DTC for securities allocated to depository Citibank. U.S. brokers initiating confirmations against Citibank and CBL must submit their ID confirmations with the following data:
- (Mandatory) Citibank’s Agent ID number: 57569;
- (Mandatory) CBL’s Agent Internal Account Number: 089154;
- (Optional) CBL’s Institution ID Number: 64005.
Procedures for domestic counterparties - Physical transfers
Deposit procedure for physical securities
N.B.: No certificate should ever be sent to CBL or to Citibank if the security is not eligible in CBL.
Transfer of physical securities requires the intervention of a transfer agent that ensure either the registration in case of bearer securities or the re-registration of securities in the appropriate nominee name in case of registered securities.
Bearer securities
In most cases, physical securities that are delivered to CBL are in registered form. For bearer securities, the procedure depends on the requirements set by the concerned transfer agent. We therefore recommend you contact your CBL Client Services officer to determine the course of action.
Registered securities
The signed transfer documents - the Stock/Bond Power and the Corporate Resolution (see Forms to use in the U.S. market) - are to be sent by registered mail to the Settlement department in Frankfurt (address: Clearstream Banking AG, Settlement Global, OAA / EA.08.301, 60485 Frankfurt am Main, Germany).
- The customer signatures are authenticated by CBL.
- The transfer documents are posted back to the customer.
- The customer sends the certificates as well as the transfer documents authenticated by CBL to the Citibank mail address (see “Depository” under General information).
Citibank re-registers the certificates:
- In the nominee name of the Central Security Depository (CSD), if the securities are eligible for deposit in DTC or in the FBE; or
- In Citibank’s own nominee name (Gerlach & Co.).
CBL blocks the position in its customer account during the registration period and reports it as unavailable in its Statement of Holdings. When the nominee of Citibank (Gerlach & Co.), or the nominee of the DTC or the nominee of the FBE confirms to Citibank that the re-registration process has been completed, CBL unblocks the corresponding position in its customer’s account and makes the position available.
The re-registration process usually takes several weeks to complete.
In order for Citibank to execute the re-registration, the CBL customer must send the following documents:
- A covering letter including the name of the registered holder, the investor ID (found on the registered account holder’s statements), the quantity, the ISIN, the CBL account 089154 in Citibank, the 5-digit customer account in CBL and the contact name and address of the sender to enable Citibank to return securities that are not in good order;
- The physical certificates;
- The transfer forms in the form of a Stock/Bond Power (see Forms for use in the U.S. market) signed by the registered holder (or his authorised officer in the case of a corporation). This signature will be guaranteed by the CBL customer, whose own signature will then be guaranteed by CBL;
- For a corporation registered holder: a Corporate Resolution (see Forms for use in the U.S. market), which certifies that the two persons signing the transfer form (the assigning officers as indicated on the form) are authorised to do so on behalf of the corporation. This certification must be granted by two authorised persons of this corporation (the certifying officers (who must be different from the assigning officers) as indicated on the form);
- Additional documentation might be required by the Transfer Agent on a case by case basis (depending on the issue) in the course of the re-registration process.
The customer should only use separate forms, and not the reverse of the original certificates.
No original certificates should ever be sent to Clearstream Banking even as an attachment to the transfer documents.
Impact on corporate action and income collection
CBL is not responsible for corporate actions and income payments with respect to physical certificates that have not been re-registered and returned by the transfer agent to Citibank.
Entitlement will be passed to CBL’s Depository if the certificates are re-registered not later than the record date of a corporate action or income collection event. Corporate action proceeds and income will be processed on an “as received basis”.
Withdrawals and deliveries procedure for physical or DRS securities
Most U.S. equities are available in physical form, unless there are specific reasons (for example, an ongoing corporate event, Chapter 11 bankruptcy, DTC “chill” initiated by the issuer, securities eligible in the Direct Registration System (DRS) etc.). For “chill” time frames, “chill” removals or other specific details customers must contact the issuer or transfer agent in charge.
Physical deliveries
Physical deliveries are usually processed within four to six weeks depending on the transfer agent in charge. The completion is always dependent on the transfer agent. CBL has no impact on the actual completion time frame and therefore cannot be held liable in the event of delays.
Deliveries of DRS eligible securities
Any withdrawal request for securities participating in the DTC DRS will be processed into DRS statement form. On receipt of a withdrawal request, the position will be updated in the transfer agent books and the new registered holder will receive a DRS statement only.
If the registered holder wants to exchange the DRS statement into a physical certificate, the registered holder must send the request directly to the transfer agent; CBL is not legally entitled to send the request on behalf of the registered holder. Customers must be aware that the request may be rejected if the issuer does not permit the exchange. Impact on corporate action and income collection
CBL is not responsible for corporate actions and income payments with respect to DRS statement holdings as well as physical certificates withdrawn from Citibank.
Allowed countervalue difference
In transactions with domestic counterparties for standard DTC and FED transactions as well as DTCID transactions, a maximum difference in countervalue of USD 25 is allowed.
Where there is a difference in the settlement amount within this limit for standard DTC and FED transactions as well as DTCID transactions, the cash amount of the delivering party will prevail.
Summary of available services by security type and customer category
All security types can be held in custody for non-U.S. customers and for U.S. customers.
Settlement services vary according to security type and category of customer, as follows:
Note: In ther following table, I=Internal, E=External, B=Bridge.
| Security type | Settlement | |||||||
| Non-U.S. customers | U.S. customers | |||||||
| I | E | B | I | E | B | |||
| Central Securities Depository - FBE | ||||||||
- | U.S. Treasury bills, bonds and notes (Fedwire-eligible) | Y | Y | Y | Y | Y | Y | |
- | U.S. Agency securities (Fedwire-eligible) (for example, FNMA, GNMA, FHLMC) | Y | Y | Y | Y | Y | Y | |
| Central Securities Depository - DTC | ||||||||
- | Non-U.S. issuers’ foreign (Yankee) bonds or other debt transactions securities distributed in the U.S.A. (SEC registered or 144A placement) | Y | Y | Y | Y | Y | Y | |
- | U.S. issuers’ bonds or other debt securities distributed outside the U.S.A. (Regulation S, TEFRA D separate note) | Y | Y | Y | Y | Y | Y | |
- | Depository Receipts (ADRs, GDRs) distributed outside the U.S.A. (Regulation S, separate note) | Y | Y | Y | Y | Y | Y | |
- | U.S. issuers’ bonds or other debt securities distributed in the U.S.A. (SEC registered or 144A placement) | Y | Y | Y | Y | Y | Y | |
- | U.S. local authority bonds, for example, municipals | Y | Y | Y | Y | Y | Y | |
- | U.S. Depository Receipts (ADRs, GDRs) distributed in the U.S.A. (SEC registered or 144A placement) | Y | Y | Y | Y | Y | Y | |
- | U.S. equitiesa and equity products (for example, closed-end mutual funds) | Y | Y | Y | N | Y | N | |
a. Book-entry DTC settlement may not be possible due to a DTC “chill” initiated by the issuer of the security. For “chill” time frames, “chill” removals or other specific details, customers must contact the issuer or transfer agent in charge.
Transfer of shares in open-end mutual funds
Transfers of shares in open-end mutual funds eligible on Vestima can be instructed via standard SWIFT MT540/542 message formats. These instructions should be alleged against a receiving/delivering agent REAG/DEAG 50613 and contain the counterparty’s standard settlement instructions (SSIs) in the BUYR/SELL field as described below:
- PSET// CEDELLUXXX
- DEAG/REAG// 50613
- BUYR/SELL// Counterparty BIC
- SAFE// Account of the counterparty at their custodian
In addition, the customer must send to the counterparty the number of CBL’s account in the register of the mutual fund. Customers who do not have this detail on file are advised to contact Clearstream Banking Investment Funds Client Services.
Change of distribution option on open-end mutual funds
The customer instructs a change of distribution option on open-end mutual funds eligible on Vestima by means of SWIFT MT540/542 message.
Customers who wish to amend their dividend option should instruct via a transfer out (MT542) of the common code/ISIN linked to their current holding and to the common code/ISIN of the new distribution option (MT540).
Holding restrictions on Canadian securities held in the U.S. market and applying to beneficial owners resident in Canada
Please refer to the Holding restrictions described in the Market Link Guide - Canada.
Back-to-back processing
Back-to-back processing is available for transactions in all DTC-eligible equities and bonds as well as in FBE-eligible U.S. treasuries and agency securities in this market. If both the customer and the domestic counterparty meet their settlement obligations and fulfil the market's back-to-back requirements within the relevant deadlines, the linked receipt and the linked delivery will settle with same-day value. The automated back-to-back functionality cannot be used in combination with the DTC ID service (with which customers can already achieve same-day turnaround).
To benefit from this functionality, customers must ensure that their back-to-back instructions are formatted as follows, according to the connectivity medium used:
| Connectivity medium | Pool ID format | Field(s) to be used |
Xact via SWIFT and Xact File Transfer | :POOL//16x a and :SETR//TURN | Field :20C: sequence A1 Field :22F: sequence E |
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
Receipt instructions remain in suspense until they settle or until they are cancelled. CBL reserves the right to cancel an instruction with a domestic counterparty that has not settled by the 30th domestic business day after the contractual settlement date or the instruction date, whichever is later.
Delivery instructions that have not settled by the requested settlement date are cancelled and the securities are re-credited to the customer’s account in the night-time processing for the following settlement date (SD+1 (n)).
To avoid settlement failure of DWAC instructions (withdrawals and deposits) due to delays caused by a failure to complete and return the necessary documents in time, these instructions will be re-submitted during each of the five business days following the requested settlement date if they are formatted as specified in the relevant instruction specifications.
New issues settlement
If the distribution of a new issue is confirmed by DTC before 18:00 CET, the distribution of that issue will be settled in CBL during the overnight processing following the closing date in the U.S.A. Cash will be debited in the same processing with back value to closing date.
MMI new issues are subject to an earlier cutoff time in DTC and are exclusively settled via the DTC - Receiver Authorised Delivery (RAD) function.
The MMI valued new issuance (DTC reason code 82 - issuance DO) submission DTC cutoff is changed to 14:00 EST from 15:20 EST for settlement on the current date.
All Reg S issues held in DTC are subject to a “chill period” of 40 days after issuance. During that period, these issues cannot be moved in DTC nor transferred to the corresponding 144A tranche through a regular delivery. Nevertheless, it will still occasionally be possible to transfer securities via DWAC. It is the agent’s responsibility to request DTC to lift the chill after the 40 days have elapsed.
All TEFRA D issues are subject to a restricted period of 40 days after issuance, during which period certification of beneficial ownership will be requested from customers.
- Customers will be responsible for informing CBL of U.S. non-qualified holder positions, which will be blocked to allow for the exchange of the temporary global note for definitive notes or for a permanent global note.
- Non-U.S. and qualified U.S. holder positions will not be blocked and will be eligible for exchange of the temporary global note for definitive notes or for a permanent global note.