Colombia: Implementation of T+2 settlement cycle - Update III
Following Announcements A19028, A19051 and A19093, Clearstream Banking1 informs customers that the Colombian Central Counterparty - CCP (Cámara de Riesgo Central de Contraparte – CRCC) and the Colombian Stock Exchange, BVC, have published information explaining the benefits of the migration due on
6 April 2020
of the equity market to a central clearing model for the spot equity instruments and securities lending transactions as well as the reduction to the settlement cycle from T+3 to T+2.
Background
The information highlights the several benefits and impacts on the market, some of which are detailed below:
- Central clearing reducing counterparty risk and increasing operational efficiencies for general clearing members and market participants.
- Settlement cycle change from T+3 to T+2; investors will have to adapt their internal process to meet the shorter cycle.
- Fails management and new buy-in mechanisms are introduced:
- Partial settlement is introduced. The CRCC will start its fails management mechanism whenever a trade can’t be settled at the end of the expected settlement date (ESD).
- Buy-in mechanism is also introduced, starting on ESD+5 (securities or cash equivalent if securities unavailable).
Impact on customers
Customers are to consider the above market changes and adapt their systems accordingly to ensure compliance by the announced implementation date.
Further information
Further information will be communicated in due course.
For further specific information, customers may contact Clearstream Banking Client Services or their Relationship Officer.
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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 (for Clearstream Banking AG customers using Creation Accounts), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.