CBF Release May 2018 – Modification for the initial registration procedure for unregistered positions in corporate actions
Reference
Note: Additional information on the implementation of the resolution for the problem ticket was provided in Announcement D18086.
In Announcement D18034, Clearstream Banking AG, Frankfurt1, informed customers about outstanding Problem Tickets (PBI) on TARGET2-Securities (T2S). The related list shows a deviation ("202737 - Pooled settlement restrictions settled with zero position") which may lead to incorrect processing of instructions for the initial registration of registered shares. Until the 4CB2 has corrected the PBI, this type of registration will therefore only be possible with a manual process.
Effective from
7 May 2018
CBF will temporarily deactivate the entry and transfer of instructions for the initial registration of shareholders from corporate actions.
Background
CBF conducted extensive testing for the processing of registered shares in preparation for the upcoming Release. It was detected that settlement restrictions3 to present the registration on T2S are not always properly processed by T2S. This error was reported to T2S with the request for immediate resolution ("Hot Fix"). Due to the current development and implementation status for T2S Release 2.0, the 4CB cannot yet provide a resolution. A date out of the T2S releases has been agreed for the deployment of the resolution of the PBI. On 22 September 2018 the error in production shall be corrected.
Until 22 September 2018, a manual process is required to enable CBF to process instructions for the initial registration of registered shares for unregistered positions in corporate actions (FMB-KE).
This Announcement describes the necessary steps. The below graphic provides an overview of the following detailed description.
Operation at interim
Starting 7 May 2018, CBF customers cannot enter instructions for the initial registration of registered shares for unregistered positions in corporate actions (FMB-KE) via the CASCADE Online functionality (HOST / PC) or Straight-Through-Processing (STP) connectivity channels. CBF will block these functions, that is
- The Online functionality for registration – Instruction entry (TRAN: KVCE / FC: EE) cannot be retrieved. If used the message code “KV5449F – please contact the Customer Service Team“ will be displayed.
- Messages transmitted via “MT500 – Instruction to Register“ will be rejected. They are reported with “MT510 – Registration Status and Processing Advice” showing a newly set up error code4 “KV5449F – please contact the Customer Service Team“.
- Customers requiring an initial registration from FMB-KE are requested to follow the steps below:
1. Identification initial registration
The customer's operational procedures require an initial registration of a shareholder in the share register from a corporate action. Until the PBI 202737 is resolved, CBF asks customers to include the interims process described in this announcement in the operational procedures for the management of the initial registration and to inform the responsible functional and technical units about the temporary change.
2. Request for initial registration
In order to allow the initial registration, securities resulting from corporate actions (FMB-KE) must be transferred to a CBF settlement account. The settlement instruction (free of payment, FoP) will be set up to credit the main account “7299 000” (related T2S Party BIC “DAKVDEFFT20“). In addition to the mandatory match criteria defined by T2S, the instruction must show the indicator for the new issue and contain the information about the corporate action.
Instruction generation
Connectivity mode | Field | Value |
CASCADE Online Functionality HOST | Seite 1: EMISS-EINF (J/N) Seite 2: WKN D. RECHTS, EX-TAG / BEGINN, KE-DATUM | J = Ja
The information is available via CASCADE HOST |
CASCADE Online Functionality PC | Page 2: issue start, rights sec. code, ex-date / start, corp.act.date | This information is available via CASCADE HOST and can be requested by the CBF CASCADE-RS team (ORS), if required. |
ICP mode ISO 15022 MT542 | The details can be provided using the TAG 70E Transaction Detail Narrative | Data to be provided for shares resulting from a
|
DCP mode ISO 20022 | The instruction type “AA01 E“ is supported in ICP mode, only. | |
The CBF CASCADE-RS team (ORS) will enter the counter instruction, once the customer provides the form CASCADE-RS Request for initial registration (fillable PDF) via email to CBF. The form will act as a legally binding order for CBF to initially register the shareholder.
The information for the creation of the initial registration can be provided according to the customer's organisational requirements. However, some fields in the form are mandatory to ensure a validation in CBF processes. The table below lists the required information.
Form CASCADE-RS Request for initial registration: Mandatory fields
Mandatory fields | Description | Additional information |
Account | For the initial registration, a CBF settlement account is used. This interims process does no not allow a deviating account. | The CBF account is 7299 000 |
Security | Security code W = Wertpapierkennnummer I = ISIN | Format / Sample: W 840400 I DE0008404005 |
Type of person | It must be declared whether the shareholder is a natural person or a legal entity. | J = Juristisch (legal entity) N = Natürliche Person (natural person) |
Details about | Name of legal entity or natural person | Please provide full name of the institute (registered name of the company) or name of the person (first and last name). |
Industry key | Key list; two-digit numerical value according to CASCADE user manual part 2 | Valid values: 06 = Investment companies 12 = Non-profit organisations (church institutions, private foundations) 20 = Public budgets (local authorities, social insurance carriers) 21 = Insurance companies 22 = Banks 23 = Pension funds and other funds 24 = Central Securities Depository or Clearing Houses 25 = Other legal entities 99 = Not specified |
Registered office | ISO country code; two-digit alpha numerical value | Country code according to ISO Standard 3166-1 alpha 2 |
Legal address | Address with related country code | Country code according to ISO Standard 3166-1 alpha 2 |
Nominal | Number of shares | The nominal value must be a multiple of the settlement unit or denomination. |
Security of right6 | Security code W = Wertpapierkennnummer I = ISIN | Format / Sample: W 840401 I DE0008404010 |
Ex-date / start6 | Date format = DDMMYYYY | Sample: 03052018 |
Date of capital6 | Date format = DDMMYYYY | Only required, if the global certificate contains this detail. |
Third-party hold | If the shareholder to be registered acts on a fiduciary basis for another shareholder, the indicator “Y” must be set | Values: Y = Yes or N = No If “Y“, details in field “Category“ and “Country” must be given. |
Category | Category of third party hold, if third party hold = “Y“ | Valid values: 26 = Other natural persons / communities of persons |
Country | If third party hold = “Y“, nationality of person, for which the portfolio is held in trust. | Country code according to ISO Standard 3166-1 alpha 2 |
The above-mentioned completed form7 must be sent with two legally binding signatures to CBF. Customers need to send the form by email8 to enable prompt processing. Later on the original form must be submitted to CBF's postal address.
- The email address is registeredshares@clearstream.com. If the customer provides the following text in the subject, the order can be recognised immediately for processing for an initial registration. The definition is
Priority – Initial registration account 7299 via ORS for customer account XXXX
“XXXX“ must be replaced by the account master of the instructing customer. - The original form must be sent to the address shown on the form:
Clearstream Banking AG
Settlement, Banking & GSF
Settlement Services / Registered Shares (ORS)
60485 Frankfurt am Main
Germany
3. Instruction entry by CBF
Correctly issued orders for initial registration that are sent to the above mentioned email address by latest 16:00, can be processed on the same day. By this time, the related securities transfer must be successfully completed, that is, the position is available in the account “7299 000”. A status reporting for the instruction can be retrieved according to the usual processes or is transmitted as subscribed by the customer.
CBF reporting securities instruction
Connectivity mode | Pending instructions | Booked movements |
CASCADE Online functionality HOST | Transaktion “KVAI“ | Transaktion “KVDU“ |
CASCADE Online functionality PC | pending instructions | booked movements |
ICP mode ISO 15022 | MT548 – Settlement Status and Processing Advice | MT546 – Deliver Free Confirmation |
DCP mode ISO 20022 | sese.024 – Securities Settlement Transaction Status Advice | sese.025 - Securities Settlement Transaction Confirmation |
4. Instruction management by CBF
CBF will carry out all relevant steps for the initial registration. Shareholder data will be forwarded to the share register on basis of the procedures published by CBF. The feedback from the share register to CBF remains unaffected by the interims solution described in this Announcement.
Customers who generally submit instructions for the initial registration via an automated connectivity channel must note that no “Confirmation of Registration (MT501)” can be provided.
5. Settlement confirmation via CBF
The registration process ends with an external account transfer to the customer account used in the original instruction. The credit will be made with the nominal specified in the order. This process does not support a transfer to third parties. CBF creates the instructions as "already matched" to T2S so that customers do not need to enter counter instructions. A status reporting of an instruction can be retrieved according to the usual processes or is transmitted as subscribed by the customer. See also the definitions in table 3.
If the customer has entered a reference in the form CASCADE-RS Request for initial registration, the CBF CASCADE-RS team (ORS) will try to enter this reference in the settlement instruction. Deviations are possible because the reference for T2S must be unique and cannot be assigned more than once. However, the customer's reference is entered in the free text field to allow a traceability.
The customer reference for the initial registration of the shareholder will automatically be assigned by CBF. This reference can be changed in a further step by the customer with an internal account transfer.
Next steps
CBF asks customers for their understanding for the setup of an interims procedure for the initial registration of registered shares for unregistered positions in corporate actions.
The status of T2S Problem Tickets (PBIs) is regularly reported by CBF. The "PBI 202737 - Pooled settlement restrictions settled with zero position" will be actively tracked.
It has been agreed with the 4CB, that the resolution of the PBI will be deployed on 22 September 2018, however the implementation approach of T2S is not yet known. The test and implementation measures required for the resolution shall be carried out exclusively by CBF. CBF would like to apply its approach also for this PBI, in that efforts generated by T2S for customers are compensated by a target-oriented solution approach.
Contact
For further information customers may contact the CBF CASCADE-RS team (ORS) via email to registeredshares@clearstream.com or their Relationship Officer.
------------------------------------------
1. This Announcement is published by Clearstream Banking AG (CBF), registered office at Mergenthalerallee 61, 65760 Eschborn, Germany, registered with the Commercial Register of the District Court in Frankfurt am Main, Germany, under number HRB 7500.
2. 4CB = 4 Central Banks, Deutsche Bundesbank, Banco de España, Banque de France and Banca d’Italia, collectively, in their capacity as national central banks (NCBs) responsible for building, maintaining and running the T2S platform based on the relevant contractual arrangements and on decisions of the Governing Council of the ECB.
3. Only CBF can transfer Settlement Restrictions to T2S.
4. The new error code will be added in the document “Messages and Error Codes”.
5. Sample for formatting:
:70E: :DECL///ISST J/RSEC DE000ABCDEF9/EXDA 20180504/COAD 20180503
6. The information is available the via CASCADE Online functionality HOST (TRAN: KVBA // FC: KE).
7. The company's signature policy stipulates whether one or two authorised signatures are required.
8. An email is always required. Orders cannot be placed by post, only.
