Flat bonds: Alignment with German market practice


Clearstream Banking1 would like to inform customers that the compensation treatment on interest payments of financial instruments known as flat bonds will be aligned with German market practice. Effective

21 November 2016

the compensation of German-issued securities identified as flat bonds will be Ex-Date driven so interest payment events for such securities will include the Ex-Date in sequence D of the MT564 and in sequence C of the MT566 SWIFT messages and in the details section of the CA Notifications and Confirmations in CreationOnline.

Background information

Flat bonds are debt instruments that are sold or traded without accrued interest. As per German market practice, interest payments (whether fixed or floating rate) on such bonds are subject to a specific compensation treatment.

Clearstream Banking offers automatic compensation for flat bonds for stock exchange trades and OTC trades. Unlike the other coupons, the compensation treatment for flat bonds is comparable to the compensation rule that applies to dividend payments.

It follows the Trade Date accounting model:

  • Flat bonds do not accrue interest calculated by the trading systems. A transaction is considered as traded "cum" in this context if the trade day of the transaction is before Ex-Date.
  • A transaction is considered as traded "ex" in this context if the trade day of the transaction is on or after the Ex-Date.

Further information

For further information, please contact Clearstream Banking Client Services or your Relationship Officer.


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 CBF customers using CreationOnline), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.