T2S: Introduction of a recycling period for matched trades
LuxCSD1 would like to inform customers that effective
5 October 2020
a 60-business day recycling period in the TARGET2-Securities (T2S) platform will be introduced.
Impact on customers
Instruction recycling in T2S
Matched settlement instructions stay in T2S until they are settled or cancelled bilaterally. T2S does not foresee a default termination of the lifecycle period for matched instructions. As a result, unlimited recycling takes place for matched instructions. Matched instructions are not cancelled automatically by T2S or LuxCSD. This also applies if one party has already sent a cancellation request. Therefore, both instructions remain pending in the system until both counterparties have sent their cancellation requests.
Important note: The recycling behaviour of unmatched instructions is as follows:
- Unmatched instructions recycled for 20 business days (countdown from the ISD or the date of instruction last status change);
- Unmatched cancellations recycled for 20 business days (countdown from the receipt date).
Future situation
With T2S CR691 “Recycling period of 60 business days for matched instructions”, T2S introduces a recycling period in order to reduce the number of matched but not settled instructions on the settlement platform. The new recycling period applies to all pending instructions in T2S.
Starting from 5 October 2020, T2S will cancel all matched instructions after a 60-day recycling period at the end of day.
The 60-business day period starts on the Intended Settlement Date (ISD) or the date of the last status change of the instruction, depending on which date is later:
If there is no status change, an instruction which was matched in T2S before its ISD should be cancelled by T2S if not settled by end-of-day (EOD) on ISD+60 business days.
If there is no status change, an instruction which was matched in T2S on its ISD should be cancelled by T2S if not settled by EOD on ISD+60 business days.
If there is no status change, an instruction which was matched in T2S on its ISD+50 business days should be cancelled by T2S if not settled by EOD 60 business days after matching (for instance, ISD+110 business days).
If there is a status change after matching, the 60-business day counter mentioned above is reset to zero (another 60 business days must pass, without status change, for the matched instruction to be automatically cancelled by T2S). Any partial settlement (for instance, first or subsequent partial settlement) also resets the counter to zero.
The rule that T2S cancels unmatched instructions open for more than 20 business days remains unchanged.
SWIFT reporting
A cancelled instruction will be displayed as follows:
:25D::IPRC//CAND
:16R:REAS
:24B::CAND//CANS
:70D::REAS//MMCS001 - The recycling period for
matched Settlement Instructions has
been exceeded
:16S:REAS
Further information
Particular questions related to the introduction of the recycling period will be routed to the experts of the T2S Settlement Functionality team.
For further information, customers may contact LuxCSD Client Support or their relationship manager.
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1. LuxCSD refers to LuxCSD, société anonyme registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, Luxembourg, registered with the Trade and Company Register of Luxembourg, under number B. 154 449.