CSDR mandates the adoption of T+2 for all transactions in “transferable securities” (including exchange traded funds and warrants) that are executed on trading venues (exchanges, Multilateral Trading Facilities (MTFs) or Organised Trading Facilities (OTFs)1) and that are settled in the international or domestic CSDs.
Exceptions, in principle, include the following securities or transaction types2:
- Non-listed investment fund shares (UCITS);
- New issues/primary market transactions.
In addition, on 15 May 2014, debt managers of all 28 EU Member States agreed to the implementation of T+2 as the standard settlement period for OTC secondary market transactions in EU Member State government securities, to become effective as of 6 October 2014.3
With regard to primary market transactions in French government debt instruments, Agence France Trésor (AFT) has studied the potential for harmonising auction settlement dates with those of the secondary market and announced the application, as of 6 October 2014, of the T+2 settlement cycle for BTF, BTAN and OAT auctions (primary market).
Preparing for migration
In order to monitor unmatched transactions and ensure timely settlement, customers are encouraged to send their instructions to Clearstream as early as possible in advance of the double-settlement day, 8 October 2014.
As some counterparties may not be able to comply with the new rules immediately, a larger number of settlement fails may occur on and after 8 October. This may lead to increases in the need for securities lending, collateral or credit lines, in settlement/matching fails and in customer query management.
Also, on 8 October, a significantly higher volume of settlement instructions will occur as transactions falling under the old T+3 cycle (Trade date 3 October) and those falling under the new regime (Trade date 6 October) will accumulate on that day.
Note: Increased volumes will be smoothly handled by Clearstream's settlement systems as business as usual.
Clearstream will closely monitor the situation around the migration date. Our settlement, securities lending and financing, as well as the Client Services areas, are aware and will support customers in handling potential impacts.
The new T+2 settlement cycle has no technical implications for Clearstream's systems and reporting and customers will not need to consider adaptations. Any relevant Clearstream customer documentation (for example, Market coverage, Entitlement Compensation Rules) will be updated accordingly.
International (Eurobonds) market transactions
Though principally out of the CSDR scope (being traded mostly on an OTC basis), Eurobonds may be subject to the T+2 standard where the transaction is executed on a trading venue.
Following market consultation, the International Capital Market Association (ICMA) announced, on 20 May 2014, their intention to change their rules and recommendations related to the standard settlement cycle to “T+2 unless otherwise agreed” to allow for the orderly trading of all fixed income securities traded under ICMA rules.
For further details, please refer to the official ICMA announcement.
Furthermore, as reviewed by ICMA’s European Repo Committee, security financing transactions such as repurchase agreements will also migrate from the standard of T+2 to a standard of “T+1 unless specified otherwise”.
Eurex Bonds transactions
As of trade date 6 October 2014, Eurex Bonds order-book transaction settlement will change from T+3 to T+2.
In addition, the last trade date for all relevant securities will be adjusted from three days to two days before maturity.
Note: In accordance with CSDR, the settlement cycle for off-order book trades will remain unchanged.
For further details, please refer to the Eurex Bonds circular number 27/2014.
Luxembourg market transactions
As of trade date 6 October 2014, all securities traded on the Bourse de Luxembourg and Euro MTF markets will settle on a T+2 basis.
For further details, please refer to the official announcement of Bourse de Luxembourg.
German market transactions
Settlement on the German market already takes place on a T+2 basis today. The only exception is stock exchange traded Non-Collective Safe Custody (NCSC) debt instruments that settle T+3.
In order to ensure alignment between all market segments, as of trade date 6th October 2014, the settlement cycle for these instruments will be changed to T+2.
For further details, please refer to our CBF Release November 2014 notification.
Other markets transactions
The following table gives an overview of the migration status of the other domestic markets (as of 2 June 2014)4.
Note: Unless otherwise indicated, the T+2 intended migration date is trade date 6 October 2014.
| Country/CSD | Current settlement cycle | Remarks | ||
| Austria Österreichische Kontrollbank AG (OeKB) | T+3 | |||
| Belgium Banque Nationale de Belgique - NBB (fixed income); Euroclear Belgium (equities) | T+3 | NBB-eligible Treasury Certificates already T+2 | ||
| Bulgaria Tzentralen Depozitar AD (CD AD); Bulgarian National Bank | T+2 | CD AD already T+2; OTC T+0 or T+2 | ||
| Croatia Sredisnje Klirinsko Depozitarno Drustvo d.d. | T+3 | |||
| Cyprus a Cyprus CSD | T+3 | Change also applies for OTC trades executed on the CSE Central Registry/Depository | ||
| Czech Republic Centralni depozitar cennych papiru, a.s. (CDCP) | T+3 (mandatory for trades executed on Prague Stock Exchange) | For OTC tades, T+0 to T+99 (negotiable); OTC equities trades usually T+3 | ||
| Denmark VP Securities A/S (VP) | T+3 | Danish T-Bills already T+2 | ||
| Estonia Estonian Central Securities Depository | T+3 | |||
| Finland Euroclear Finland Oy | T+3 | Zero-coupon instruments in RM system already T+2 | ||
| France Euroclear France | T+3 | Also applicable for BTF, BTAN and OAT auctions (primary market) | ||
| Greece a Bank of Greece System - BOGS (government debt); HCSD (corporate bonds, equities, warrants) | BOGS: T+3 (HDAT, EuroMTS); T+1 (Private fixed income traded in ATHEX and settled at HELEX); T+0 to T+365 (BTEC, MTS); HCSD: T+3 | Trades settling in BOGS (when traded via HDAT), HELEX; OTC trades (via HCSD) will change to “T+0 to T+2” | ||
| Hungary Központi Elszámolóház és Értéktár Rt (KELER) | T+3 | Fixed income already T+2 | ||
| Iceland Icelandic Securities Depository Ltd (VS) | T+3 (equities); T+1 (bonds) | |||
| Ireland Euroclear UK & International Ltd; Euroclear Bank (government bonds) | T+3 | T+2 also applies for Irish government bonds | ||
| Italy Monte Titoli SpA | T+3 (all instruments except BOTs) | BOTs already T+2; The standard settlement cycle for shares traded on MTA International segment and for foreign shares traded on TAH will, as now, reflect the standard settlement of the main regulated market of the share | ||
| Latvia Latvian Central Depository (LCD) | T+3 | |||
| Lithuania Central Securities Depository of Lithuania (CSDL) | T+3 | |||
| Malta MaltaClear | T+3; T+0 (T-bills) | T+2 will apply to settlement of trades executed on the regulated market in all currencies settled in MaltaClear; T-Bills will change from T+0 to T+2 | ||
| Netherlands Euroclear Nederland | T+3 | |||
| Norway Verdipapirsentralen ASA (VPS) | T+3; T+1 (Norwegian short-term instruments) | |||
| Poland Krajowy Depozyt Papierow Wartosciowych (KDPW) | T+3 (equities); T+1 / T+2 (bonds) | |||
| Portugal Interbolsa | T+3 | |||
| Romania Depozitarul Centrum S.A. (equities); National Bank of Romania (NBR) (bonds) | T+0 or as agreed by counterparties (government bonds on SaFIR1); T+2 (government bonds, T-bills ); T+3 (equities, corporate and municipal bonds) | Migration date not yet confirmed; only the settlement cycle of BVB traded instruments will be affected. No impact on Clearstream since link is not with the CSD but with NBR (bonds only). | ||
| Slovakia Centralny Depozitar Cennych Papierov SR | T+3 | Repo deals, direct trades and off-exchange trades not impacted as already T+0 to T+15 (negotiable) | ||
| Slovenia Centralna Klirinsko Depotna Druzba d.d. (KDD) | T+2 | Already T+2 | ||
| Spain Iberclear | T+3 | Government bonds (on CADE), corporate bonds (AIAF) and Deuda Barna (SCLV Barna); bonds from the Basque Country and Valencia are excluded; Migration date 22.11.2015 for equities, warrants, corporate bonds (via SCLV) | ||
| Sweden Euroclear Sweden AB | T+3; T+2 or T+3 (debt) | |||
| Switzerland SIX SIS AG | T+3 | |||
| United Kingdom Euroclear UK & International Ltd | T+3 (equities); T+1 (gilts); T+0 (money market instruments) | UK gilts remain at T+1 |
a. Further information is available for Cyprus (Marketflash M14022) and Greece (Marketflash M14021).
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1. For complete migration details, please consult the MTFs/OTFs directly.
2. Clarification is still required on transactions in money market instruments.
3. See the announcement. It will remain possible, on a bilateral basis, to agree a settlement date other than the standard T+2 for OTC transactions. Primary market transactions are not yet in scope but the EU Member States also aim at harmonising the standard settlement period for securities auctions; they will provide details in a separate announcement.
4. The information provided is based on an understanding of the status of current discussions in the respective markets and, unless communicated otherwise, should not be understood to represent the official position of the respective markets.
