Settlement services – Hungary
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) |
All securities | ||
Release of pre-matching instruction (limited to outside the provisioning period) followed by a settlement instruction | Automated through KELER's system | On receipt of instructions |
Domestic allegement matching service
Complementary to the pre-matching services offered as described above and where no pre-matching instruction has been sent to the market, CBL accepts allegements via its depository from domestic market counterparties. It will then use these allegement messages to search for the best matching client instruction.
If no matching client instruction is found, the allegement is reported to the client provided that its Clearstream Banking account number is present.
For details of CBL's domestic allegement service, see Pre-matching services for external settlement instructions.
Procedures for domestic counterparties
Domestic counterparties should:
- Specify, in their instruction, the BIC of CBL (CEDELULLXXX) as Delivering Agent (DEAG) or Receiving Agent (REAG); and
- Always indicate CBL's account number at KELER (0450000000).
Domestic counterparties can contact Raiffeisen Bank International AG (RBI) in Vienna in order to arrange pre-matching of instructions on behalf of CBL at the following address:
Raiffeisen Bank International AG
Email: custsett@rsc.co.at
Attn.: Felicita Gyoergy
Phone: +43 1 33701-4614
Fax: +43 1 33701-4825
Receipt of securities in CBL
For all against payment receipts of securities, CBL – in accordance with market practice – executes DVP settlement in KELER Ltd’s system. Cash transfer via GIRO and a separate free receipt of securities is not supported.
Physical receipts
Physical securities currently held in KELER Ltd can, based on the instruction of the issuer, be held in fungible custody after moving in to KELER Ltd's vault. A feature of fungible custody is that such securities are eligible for the full range of transactions (for example, FOP, DVP) and are treated in the same way as dematerialised securities.
KELER Ltd provides custody services for physical securities that are held as individual deposits in a non-fungible manner. These securities are identifiable by sequence and serial numbers, which require specific validations and processing, and are held in book-entry form.
This service is restricted to safekeeping and physical delivery; settlement of such securities is not supported. However, if the specific transaction requires it, the official deadline for remitting physical securities to KELER Ltd for a given settlement date is 12:00 on SD-1. Clients should note that securities remitted within this deadline will be credited to the client’s CBL account only at the start of real-time processing for value SD.
Delivery of securities from CBL
For all deliveries, clients should advise their domestic counterparties to send their settlement instructions to KELER as soon as possible for pre-matching purposes.
N.B.: Failure to deliver securities to a KELER CCP clearing member (or its settlement agent) related to a CCP-cleared trade (BSE or MTS transaction) for the contracted settlement date (SD) might result in a buy-in being enforced against the defaulting broker if the fail is not resolved by SD+5. KELER CCP will initiate the buy-in procedure on SD+5 at 09:00.
For all against payment deliveries of securities, CBL – in accordance with market practice – executes DVP settlements in KELER Ltd’s system. Receipt of incoming funds via GIRO or VIBER with a separate free delivery of securities is not supported.
Settlement deadline for KELER CCP cleared transactions (including BSE or MTS trades) is 15:00 on SD.
Physical deliveries
After the dematerialisation on 1 January 2005 of all listed shares in KELER Ltd, some physical papers representing beneficial ownership in non-listed private limited companies still exist on the Hungarian market. These securities are eligible in KELER Ltd if they are delivered into and are kept in KELER Ltd’s vault.
If a specific transaction is required, the official deadline for remitting physical securities to RBI for a given settlement date is 12:00 on SD-1.
Specific settlement rules / settlement restrictions
Standard settlement period
- Debt securities (government and corporate)
KELER Ltd offers a T+2 settlement cycle for debt securities on the BSE and MTS.
Settlement deadline of CCP-cleared transactions is 15:00 on T+2 (=SD). - Equities
Settlement between BSE members takes place between 08:15 and 15:00 on T+2 (=SD).
KELER CCP has established a default fund, the Stock Exchange Settlement Fund (SESF). This is a collective guarantee fund underwritten by members of the BSE and is used in cases where the buying broker has insufficient funds on T+2 to honour payment to the selling broker.
The settlement cycle of OTC trades in all securities may vary from T+0 to T+20, according to market practice, but OTC transactions usually follow the same settlement cycles as BSE trades (T+2).
Counterparty accounts
Commercial banks often hold unpublished sub-accounts on behalf of their (foreign) clients in KELER Ltd. Clients must clearly identify the final beneficiary (the domestic counterparty’s client), by name or BIC and client code, in order to permit the securities to be credited to the correct KELER Ltd sub-account of the domestic counterparty (see the relevant instruction specifications).
Bridge settlement
Only corporate and government bonds are Bridge-eligible.
New issues settlement
Equities
In general, CBL clients must prepay the Lead Manager directly during the official subscription period for the countervalue of new equities to which they want to subscribe. The currency in which such payments are to be made is included in the official announcement of the subscription.
The Lead Manager holds the prepayment in escrow on behalf of investors. In the case of rejected bids, prepayments are refunded to the investors according to the payment instructions given to the Lead Manager. When a bid is successful, the Lead Manager delivers the newly subscribed shares to the broker who submitted the client's bid for onward delivery, free of payment, to CBL’s depository securities account 0450000000 with KELER Ltd. Clients must pre-advise CBL of the receipt of securities through transmission of a free of payment receipt instruction.
Depending on the details of the subscription, institutional buyers – such as CBL (and its clients) – may execute the transaction on a DVP basis in KELER Ltd’s system.
Government securities
Clients must submit an against payment receipt instruction, in accordance with the deadlines mentioned under Settlement times, identifying the broker/bank through which the bid for the subscription has been submitted (the bid must be submitted in accordance with the details in the relevant instruction specifications). CBL’s depository, RBI, arranges DVP settlement with the subscriber institution, the subscriber receiving the securities via DVP settlement from the State Debt Management Agency (SDMA).
Settlement Discipline Regime and related domestic market settlement functionalities
Recycling of pending transactions
Failed matched instructions will be recycled for 60 business days, failed un-matched instructions for 20 business days. bilateral cancellation is necessary for matched transaction
Bilateral cancellation
This means that matched instructions can only be cancelled if both domestic counterparties request a cancellation of their instructions.
Until the cancellation confirmation is received from the market, the instruction will remain eligible for settlement, that is, the instruction may be provisioned and proposed for settlement and may be subject to cash penalties.
Hold and release
The hold and release mechanism enables clients to temporarily hold back a securities transaction from domestic settlement, even if cash or securities provision is available and to release it to the domestic market only when settlement is desired. The matching process applies independently of the “hold and release” status of the instruction.
Partial settlement
Partial settlement is available for domestic transactions and the client’s decision to accept for the transaction to settle/not to settle partially will be systematically included in the instruction sent to the local market. Partial settlement will continue as it does today and Clearstream Banking will continue to report partial settlement feedback received from the markets.
Note: The partial settlement option is not available in the case of self contracting, for example, when the seller and buyer's securities account are the same.
Cash tolerances
With non-EUR currencies (such as HUF), for settlement amounts equivalent to less than or equal to EUR 100,000, the tolerance level will be equivalent to EUR 2, while for settlement amounts that are equivalent to more than EUR 100,000, the tolerance level will be equivalent to EUR 25. For settlement instructions in currencies other than EUR, CSDs should use the official exchange rates of the European Central Bank (ECB), valid on 1 January of the respective calendar year.
Matching information
The trade date is a mandatory matching criterion and domestic instructions will follow local market rules.
Cash penalties
Penalties are 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. However, cash penalties will not apply to shares listed in the Short Selling Regulation (SSR) exemption listed in the Short Selling Regulation (SSR) exemption list.