Settlement services - Italy

23.03.2018

Pre-matching service

The table below summarises Clearstream Banking's pre-matching service for external settlement instructions, as well as the pre-matching method and scope. For details of Clearstream Banking's pre-matching services, see Pre-matching services for external settlement instructions.

The hold and release feature available in T2S will be used by Clearstream for the pre-matching of settlement instructions in T2S.

 

Service offered

Method employed

Start (local time)

All securities (except physical securities via CBL/Intesa Sanpaolo)

CBF and LuxCSD

The T2S hold/release process allows for a released transaction to be set back to hold as long as it has not settled. Instructions that were sent on “Hold” can be released via a corresponding MT540 – MT543 “NEWM”. The status of a CBF/LuxCSD instruction can also be changed via a modification (MT530) until its final settlement. In parallel to the instruction hold flag set by the CBF/LuxCSD customers (“Party hold”) , T2S provides hold information from the counterparty (“counterparty hold”) itself. Hence, the following values can be reported to CBF/LuxCSD customers:

“CSDH” for CSD hold

“PREA” for Party hold

“RRCY” for Counterparty hold

Automated through T2S

On receipt of instructions

CBL

CBL releases pre-matching instructions (PREA) only outside the provisioning period to CBF for matching purposes only. As soon as the start of the provisioning period is reached and provided the provisioning of cash and securities is successful, the settlement instruction (NEWM) will be released to CBF for further processing and settlement in T2S. Once the instruction is released to CBF, it cannot be set back on hold again.

Automated through T2S

On receipt of instructions

Matching service

Matching is mandatory for all transactions settling in T2S. In addition to the mandatory matching criteria in T2S the following fields may, if present, be matching criteria.

Additional matching field

The following additional matching fields are initially not mandatory but, when one of the counterparties provides a value for them in its instruction, matching values must be provided by the other counterparty.

  • Opt-out indicator;
  • CUM/EX indicator

Optional matching field

The following optional matching fields must match when provided by both counterparties:

  • Common reference;
  • Client of delivering/receiving CSD participant;
  • Securities account of the delivering/receiving CSD participant.

Note: Clearstream recommends to agree on the usage of a common reference (:20C::COMM) and the T2S Security Account number (SAC) with the counterparty in Monte Titoli. Both fields are “optional” matching criteria in T2S and avoid cross-matching if it is populated in the Settlement instructions of both parties.

Allegements

T2S will send allegement messages depending on the information indicated in the counterparty’s

instruction. The allegements will contain the additional and optional matching criteria described above. These can be used to correctly format instructions to ensure matching if it has not yet been sent to Clearstream Banking or LuxCSD.

All securities (except physical securities via CBL/Intesa SanPaolo)

CBF

If the counterparty of the CBF customer instructs first, an allegement instruction will be generated by T2S. T2S will send the allegement message (sese.028) to CBF or to the DCP, without prior validation, whether the ISIN is eligible in the counterparty CSD, that in this case is CBF.

Receipt domestic instructions are automatically generated if the passive matching flag is set on the receiving main account or sub-account. In addition the generation follows the rules below:

  • For domestic transactions, if the delivering party is a ICP or DCP customer and the recipient is a passive matching participant (ICP/DCP), CBF generates the receipt instruction based on the delivery instruction sent to CBF (ICP) or based on the copy of the DCP instruction (sese.023) received from T2S.

For cross-border transactions where the deliverer is a foreign CSD customer and the recipient is a CBF customer (ICP/DCP), the receipt instruction is generated based on the allegement received from T2S.

Allegements are not generated for ‘Already matched’ instructions.

CBL

CBL may receive counterparty instructions alleged on its account at CBF and will report them to customers provided that the customer’s CBL account is present in the allegement and the allegement subscription is in place on the customer account.

LuxCSD

If a Settlement Instruction does not match after the first matching attempt,

the Counterparty is informed through an Allegement message after a predefined period of time (T2S standard service).

Identification of CSDs in T2S

In T2S all CSDs will be identified by their BIC11. CBL, CBF and LuxCSD customers are required to use the following BIC11 as Place of Settlement for domestic instructions:

CSD

BIC11

Monte Titoli

MOTIITMMXXX

Identification of the counterparty in T2S

In T2S, the CSD participants are identified exclusively by the combination of their home CSD (PSET DAKVDEFFXXX) and their BIC11.

 

Counterparty identification

CBF

4701000a (counterparty CSD account) or alternatively MOTIITMMXXX (BIC11 of the counterparty CSD)b

The counterparty CSD BIC is used by CBF to address the CSD where the counterparty is set up as T2S Party. This counterparty's CSD is reflected in CASCADE with a counterparty CSD account. The counterparty CSD BIC has to be used in cross-border instructions with T2S In-CSDs.

CBL

If a CBL customer uses a BIC8 to identify the Receiving/Delivering Agent, CBL shall be entitled to modify the BIC8 provided and the settlement instructions will be then processed by default with a BIC11 by adding the default XXX suffix to comply with T2S settlement rules. Accordingly, such customers remain liable for any settlement fails that the use of the BIC8 may cause and the customers furthermore agree to indemnify CBL against losses, liabilities, damages, penalties, expenses and all other costs on any kind suffered by CBL as a result of the customer not complying with the above requirement.

LuxCSD

Home CSD BIC11 and the T2S Party BIC11 of the CSD participant

a The counterparty CSD account can only be used for CBF Legacy connectivity

b. BIC11 of other T2S IN-CSDs possible if the technical configuration in T2S is available.

Note: Cross-border settlement between CSDs in T2S is only possible, if the corresponding technical configuration in T2S for cross-border links has been established by the CSDs linked to each other.

Settlement with remote trader clients 

BNP Paribas, Citibank, Deutsche Bank, Intesa Sanpaolo and Societe Generale remote trader clients each have specific matching codes at the Borsa Italiana’s electronic matching system but perform clearing and settlement through an agent. Therefore, settlement instructions for trades with such remote trader clients require the following special formatting details for CBL customer settlement instructions:

Connectivity medium

Field

Content

CreationOnline

Delivering/Receiving Agent

BIC

Party

BIC address of the clearing counterpartya

Seller/Buyer

BIC

Party

BIC address of the remote trader counterpartya

Xact via SWIFT and Xact File Transfer

:95P::DEAG/REAG

BIC address of the clearing counterpartya

:95P::BUYR/SELL

BIC address of the remote trader counterpartya

a. See Remote trader client BIC addresses.

CBF and LuxCSD customers must respect three different categories to address counterparties:

  1. Settlement Agent
    The participant holds an account at Monte Titoli and the corresponding BIC11 and the account number in Monte Titoli must be populated in the Settlement instruction.
  2. Trading Party
    The participant uses the account of a Settlement Agent. Consequently the BIC11 of the Settlement Agent, the corresponding account and the BIC11 of the Trading Party must be populated in the Settlement instruction.
  3. Intermediary Participant
    Monte Titoli maintains CSD Links to SIX SIS, Euroclear Bank and Clearstream Banking Luxembourg (CBL). If a BIC11 of an Intermediary Participant is used as MT participant the next level of settlement parties becomes mandatory. For the (I)CSD participant, the BIC11 and in addition the proprietary account number in the (I)CSD must be indicated.

Procedures for domestic counterparties for T2S eligible securities

CBL

 

CBL depository – CBF

CBL depository – Intesa SanPaolo

Place of settlement

DAKVDEFFXXX

MOTIITMMXXX

Delivering/Receiving Agent

CEDELULLXXX

CEDELULLXXX

SAFEa of the DEAG/REAG

Not to be instructed. If instructed, it must be the valid CBL SAC:
Monte Titoli: DAKV7201106

Not to be instructed. If instructed, it must be the valid CBL SAC:
Monte Titoli:
MOTICEDELULLXXX1293200

Buyer/Seller

BIC11 of the CBL customer

BIC11 of the CBL customer

a. Although the safekeeping account of Party 1 (REAG/DEAG) is an optional matching field in T2S, if it is present on one instruction only it will only match with instructions instructed by this account.
As CBL does not forward its own SAC to the settlement parties, if the customer counterparty instructs the SAFE of REAG/DEAG it must match CBL's SAC in T2S exactly.
We encourage customers to ask their counterparties not to include the SAFE of the DEAG/REAG in their instructions (also called securities account of the delivering/receiving party).

CBF

Place of settlement

DAKVDEFFXXX

Delivering/Receiving Agent

T2S Party BIC11 CBF participant

LuxCSD

Place of settlement

DAKVDEFFXXX

Delivering/Receiving Agent

T2S Party BIC11 LuxCSD participant

Partial settlement

In T2S partial settlement for eligible instructions is allowed at the last night-time settlement cycle in sequence ‘X’; and within the real-time settlement period:

  • At 08:00 CET, 10:00 CET, 12:00 CET, 14:00 CET and 14:15 CET.
  • 15 minutes prior to the DvP cut-off time (between 15:45 CET and 16:00 CET).

Within these windows all transactions that are pending due to lack of securities and hold a positive partial settlement indicator are included in the partial settlement processing.

Whether partial settlement will be applied or not depends on the partial settlement indicator set within the instruction or on the customer account setup. A settlement Instruction will settle partially if both counterparties instruct with the Field :22F::PARQ.

Partial settlement applies only when full settlement is not possible due to lack of securities. T2S will perform partial settlement according to the available position after analysing the partial settlement indicator in the instruction.  The settlement instructions are submitted to a full settlement attempt before being submitted to a partial settlement attempt.

Partial settlement is applicable to domestic and cross-border instructions and is not allowed for PFoD instructions. Also, partial settlement is not applied if instructions are linked to any other settlement instruction with link type “Before”, “After”, “With” or via pool reference. Partial settlement is not applied if the transaction undergoes a process where a CoSD Hold is used. The unsettled remaining part of a partially settled settlement instruction can be cancelled.

CBF

CBF customers can define within the instruction whether partial settlement is to be applied or not by setting a partial settlement indicator. In addition, they can set a flag on account level (CBF 7-digit account number) that defines the default value to be set to those instructions where the partial settlement indicator is not filled. The flag is maintained within CBF’s static account database and defines which partial settlement indicator is to be assigned to an instruction as default value (NPAR, PART).The flag applies to delivery and receipt instructions.

CBL

Customer delivery and receipt instructions will continue to be provisioned for the full quantity and/or cash value before being released for settlement. Consequently, customer’s delivery and receipt instructions may only settle partially if their counterparty is short of securities or cash and the instructions are received by T2S within the times set above.
When CBL customers access T2S via CBF, the default set up will be Partial Settlement. Customers that do not wish their transactions to settle partially must provide the No Partial Settlement flag (NPAR) in their instruction.

LuxCSD

LuxCSD customers can define within the instruction whether partial settlement is to be applied or not by setting a partial settlement indicator.

Allowed countervalue difference

The following T2S cash tolerances will apply to instructions (against payment instructions in EUR only):

·         EUR 2 for transactions with an amount equal to or less than EUR 100,000; and

·         EUR 25 for transactions with an amount greater than EUR 100,000.

In the event of a discrepancy within the limits, in principle the cash amount of the delivering party will prevail.

For non-EUR currencies, the T2S cash tolerances apply to against payment instructions in foreign currencies between CBL and CBF participants (not applicable to LuxCSD).

Bridge settlement (CBL only)

CBL customers can settle Monte Titoli T2S- eligible securities via the Bridge. This service is not available for CBF and LuxCSD customers.

Back-to-back processing (Transaction Linking)

Back-to-back processing is available for transactions in Italian T2S eligible securities.

Cancellation

Unmatched instructions can be cancelled unilaterally, at any time, by the party who placed the instruction or until cancelled by T2S.

Matched instructions must be cancelled bilaterally by both counterparties.

Recycling rules

Unmatched instructions will be recycled for 20 business days (starting from the initial settlement date), after which they will be cancelled.

Unmatched cancellation requests will be recycled for 20 business days (starting from the date of receipt).

Matched instructions will have no cancellation limit and will be recycled until a business rule is violated (for example, security reaches maturity).

New issues settlement

New issues of Italian government securities can be received either free of payment or against payment. Securities may be received on issue date (ID) or on the following business day (ID+1), depending on the local settlement system through which the receipt is effected.

If the receipt is settled via T2S, the settlement date (SD) indicated in the customers' instruction must correspond to ID.

Customers must send a receipt instruction to CBF, CBL or LuxCSD by 15:30 on SD-1.

Receipts against payment: the SD indicated in the customer instructions must correspond to ID.

Receipts free of payment: the SD indicated in customer instructions must correspond to ID.