Harmonisation of Clearstream Banking’s asset services - Update
Note: This announcement, originally published on 21 March 2022 and updated on 20 May 2022, 12 October 2022 and 19 October 2022, has been further updated to add information on the "Cancel of reversal payment" functionality, "PFoD model" and provide a new date for the service offering enhancement. Changes have been highlighted.
Further to the Announcement L21053, LuxCSD1 would like to inform customers that, as part of Clearstream Banking’s2 service offering enhancement, effective
3 July 2023
asset servicing processing for the German market will be enhanced and streamlined across Clearstream Banking entities.
As result of this, harmonisation changes will be also implemented to the current processing of corporate actions. The following processing aspects will be enhanced and will apply to all markets:
Asset servicing impact | As-is process | To-be process |
Processing of warrants | Technical movements are reported via MT564:
Example from MT564 :16R:SECMOVE :22H::CRDB//CRED :22H::CRDB//DEBT :16R:CASHMOVE | Technical movements on warrants will not be reported. Example from MT564 :16R:SECMOVE :16R:CASHMOVE |
MT565 usage of COAF | Customers are required to use the CORP ID to link to the corresponding MT564 Corporate Action Notification. Customers cannot use the COAF. | Customers are required to fill the CORP ID. Customers can optionally use the :20C::COAF in MT565 Corporate Actions instructions to link to the corresponding MT564 Corporate Action Notification. This field must contain the Official Corporate Action Event reference if it was indicated in the notification. The COAF will be used by Clearstream Banking to identify the related event in case the CORP ID is filled with “NONREF”. If there is conflicting information in COAF and CORP ID, then no straight-through-processing can be ensured. |
MT564 - Claim and Reversal Advice (CRA) | A reversal may occur if a corporate action event data is incorrect or when the depository performs a reversal. Generally, reversals are performed at account level. For income events, customers are informed via MT564 (CRA-reporting). | MT564 - Claim and Reversal Advice (CRA) reporting will be enhanced to include mandatory non-income events. Following events will be added: ACTV, ATTI, BONU, CHOS, BRUP, CHAN, CONV, CREV, DETI, DFLT, DRAW, DSCL, EXOF, EXTM, EXWA, INCR, INFO, LIQU, MRGR, OTHR, PARI, PLAC, PINK, PPMT, SMAL, SPLR, TEND, TREC, WRTH. The CRA-report is subject to subscription via Xact Web Portal. For details on the CRA-report, customers should refer to the Xact SWIFT User Guide and Customer Handbook. |
Reversal repayment period | Reversal repayment can take place up to 180 days after the Payment Date without any impact on the standard reporting. | Reversal repayment period will be extended to 280 days after the Payment Date. |
Cancel of reversal repayment | Reversals can be cancelled as long as they have not been executed. In this case, a MT564 ADDB message will be created and sent to customers and agents. | Reversals can be cancelled as long as they have not been executed. In this case, a MT564 ADDB message with specific reason code in field narrative :70E and reference to the originally communicated reversal via field :20C will be created and sent to customers and agents. Note: This functionality will not be implemented as part of the overall release on 3 July 2023. Instead, it is planned to be implemented and activated already in 20 March 2023. |
Transformation into cash | During transformations into cash, the reporting for the PFoD includes the settlement transaction indicator :22F::SETR//CORP and the settlement transaction condition indicator :22F::STCO//TRAN. | Instead of :22F::SETR//CORP, the PFoD uses the same settlement transaction indicator as the underlying instruction (for example, :22F::SETR//TRAD or :22F::SETR//CLAI). |
Paying agent (PAYA) | No information on the paying agent is provided. | Information on the paying agent is provided via field :95Q::PAYA in MT564 and MT566 messages. |
The following processing aspects will be enhanced and will apply to the German market only:
Asset servicing impact | As-is process | To-be process |
Deduction | No deduction service is offered. Manual processing based on MT599 may apply. | Customers have three possibilities to deduct positions from a corporate action event:
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Market and Reverse Claim detection | The compensation instruction is created when detection rules are fulfilled and the underlying instruction is matched at the end of the entitlement date. | For CCP transactions, compensation creation rules remain the same. For all other transactions (for example, OTC or stock exchange), the compensation instruction will only be created when the underlying instruction is settled instead of matched. |
Tax reporting | The tax rates KESt (25%) and SolZ (5,5% of the KESt amount) are reported in one combined field under the Tax qualifier :92A: :TAXR//26,375. | The tax rates KESt (25%) and SolZ (5,5% of the KESt amount) are reported in two separate fields to simplify the distinction between them:
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Tax adjustment instruction market claim reporting | Tax adjustment instructions for the recrediting of tax payments are created for every event. | One bulk tax adjustment instruction for the re-crediting of tax payments will be created at the end of every day (starting on entitlement date and running on a daily basis until the end of the market claim period). A corresponding report to explain the different daily market claim tax adjustment instructions will be provided. The tax adjustment debit is processed market claim per market claim and is generated at the same time as the compensation instruction. |
PFoD model | PFoD’s are generally instructed “net”, that is, the tax processing is included. If no information on tax rate and/or status are available, “gross” processing applies. | For PFoD’s generated as part of market claims, instead of one “net” PFoD instruction, there are two PFoD instructions:
When the first PFoD is a debit, then the later tax adjustment is a credit processed via a Clearstream transfer account. Accordingly, customers receive reporting for two PFoD with their respective amounts. |
Fraction handling | For fraction positions, the cash equivalent will be directly credited to the customer’s DCA, if applicable. | For fraction positions, a separate interim line (temporary ISIN) is created and distributed to entitled customers, if applicable. Customers can then exchange the interim line into securities or cash. |
The Xact SWIFT User Guide and Customer Handbooks will be updated in due course.
Further information
For further information, customers may contact OneClearstream@clearstream.com, Client Services or their Relationship Officer.
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1. LuxCSD refers to LuxCSD S.A., registered office at 42, Avenue J.F. Kennedy, L-1855 Luxembourg, registered with the Luxembourg Trade and Companies Register under number B-154.449.
2. 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, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.