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Know the details of the Reform of the Clearing, Settlement & Registry System

Know the details of the Reform of the Clearing, Settlement & Registry System

With the finalisation of the Reform of the Clearing, Settlement & Registry System in September 2017, the Spanish cash stock market will be structured around the SIBE, the ECC and IBERCLEAR.

6 may 2016

Bolsas y Mercados Españoles (BME), the operator of all stock Markets and financial systems in Spain, started the Reform of the Clearing, Settlement & Registry System in Spain with the introduction of three changes: the move towards a registry system based on balances, the introduction of a new Central Counterparty Clearing (CCP) called BME Clearing and the integration into a unique platform of the current CADE(Central Register of the Public Debt Market) and SCLV (Securities Clearing and Settlement Service), both of them settlement platforms.

BME Clearing is the CCP of the BME Group resulting from the regulation Nº 648/2012, issued by the European Parliament and the European Council in 2012 requiring the separation of the trading activities from the clearing activities. With the introduction of this CCP, the Spanish equity markets will be structured around three infrastructures:

  • The Spanish Stock Market Interconnection System (SIBE) negotiation platform;
  • The Central Counterparty Clearing (new segment in the BME Clearing Chamber);
  • The Central Securities Depository (IBERCLEAR).

Modifications

The Reform of the Clearing, Settlement & Registry System in Spain will involve a number of operating modifications:

  • The current Collective Deposit will be replaced by the CCP guarantee system.
  • The new PTI ancillary system will manage the communications between Participants and infrastructure members, which will simplify their requirements and work.
  • Entities (financial institutions) will be able to be members of one, two or even three of the new infrastructures.
  • Each Stock Exchange member will need to sign a contract with a General Clearing Member of the CCP (with the exception of the same entity being member of both infrastructures).
  • Each CCP Member will need to sign a contract with, at least, an IBERCLEAR Settlement Participant.
  • The CCP will make the netting of transactions (trades) possible before generating settlement instructions.
  • IBERCLEAR will implement and manage an optimization procedure that will enable the maximization of settled transactions in the exceptional occasions in which a delay of delivery of securities occurs.
  • It will be possible to settle in the CCP accounts in gross or net value. Likewise, the reform also introduces changes in the trading and post-trading procedures, and regarding the new controls over the activity between Trading and Clearing members.

With the new reform, the current Collective Deposit will be replaced by the CCP guarantee system

The new system implementation will take place in two phases:

  • First phase: 27 April 2016, CCP implementation and migration of the Equity settlement system to the new platform.
  • Second phase: 18 September 2017 incorporation of the Fixed Income settlement system to the new platform and migration to T2S.

In the following image you can know more about the second phase of the Reform of the Clearing, Settlement & Registry System in Spain.

Image source: iberclear.es

More information: http://www.iberclear.es/esp/Entidades/Reforma.aspx

Tags BME , stock market
Published by: Pablo Martí Prats
 
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