Saudi Arabia: Enhancements to Clearstream Banking’s Saudi Arabia link

Clearstream Banking¹ would like to inform customers that effective

4 April 2022

the following enhancements will be made to Clearstream Banking’s Saudi Arabia link as a result of the implementation of the Saudi Exchange’s Post Trade Transformation Program (PTTP).

Improved customer settlement deadlines

Customer settlement deadlines will be improved thanks to the introduction of additional settlement batches in the Saudi market.

Settlement times in Central European Time (CET)

Improved customer cash funding deadlines for trade settlement

Due to the improvement to the customer settlement deadlines, customers will now be able to fund and provision their Clearstream Banking Saudi Riyal (SAR) account by latest SD 10:55 or 09:55 CET (depending on the period) instead of SD-1 previously.

Removal of the broker linkage process

Customers will no longer need to request for their broker trading account to be linked to Clearstream Banking’s Securities Account (previously named “Investor Access Trading Portfolio (IATP)”). This is because PTTP effectively removes the role of the historic account structures, which in turn, eliminates the need for the broker linkage requirement, making the onboarding process simpler for customers.

As a reminder, customers should still provide the below information to their brokers as part of the trading account opening process if the customer would like to trade or settle Saudi securities in the domestic market.

Note: Customers who only wish to execute internal transactions do not need to appoint their own broker in Saudi Arabia.

Introduction of Central counterparty

Muqassa will be the central counterparty (CCP) for all listed securities in Saudi Arabia. Muqassa, however, will not clear negotiated deals or unlisted securities and therefore does not guarantee market settlement of such trades.

Negotiated deals – Introduction of a negotiable settlement cycle

Customers should be aware that trade settlement takes place from Sunday to Thursday in Saudi Arabia and follows a T+2 settlement cycle, noting that Clearstream Banking does not operate on Sundays.

With the implementation of PTTP, settlement cycles ranging from T+0 to T+5 will be introduced for negotiated deals, which will allow customers to avoid Sundays as a settlement day. Customers who execute negotiated deals with their brokers on Wednesdays are strongly advised to ensure that the agreed settlement date (SD) between both parties does not occur on Sundays by agreeing to a T+0, T+1 or T+3/4/5 cycle. The customer’s broker will be able to modify the settlement cycle as agreed between both parties and thereby avoiding Sundays as the settlement date (SD). Settlement of trades in Saudi Arabia is mandatory and trades failing to settle on SD will go through a fail trade (buy-in) process from SD+1 and may result in penalties being passed to the customer from the customer’s broker.

Fail trade management

Sales trades failing to settle on SD will now undergo a buy-in starting from SD+1 to SD+2 instead of SD+3 previously as the late settlement window will be removed in the PTTP environment. Buyers will receive their securities if the buy-in is successful otherwise the buyer will receive cash in lieu of the securities on SD+3. Penalties relating to the buy-in process might be passed on directly by the customer’s broker so customers should ensure that they send proper and timely instructions to Clearstream Banking to avoid any settlement delays. The buy-in process, however, will not be applicable for negotiated deals.

Further information

The Market Link Guide - Saudi Arabia will be updated on the website to reflect the above-mentioned information.

For further 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.