BVI-SECURITIES TRANSACTION STANDARDS · 6. The custodian is charging the settlement service to the...

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BVI-SECURITIES TRANSACTION STANDARDS

4. SECURITIES SETTLEMENT

German Investment Funds Association

External Business Communication of Investment Management Institutions

Securities Settlement

15. Mai 2007

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External Business Communication of Investment Management Institutions - Securities Settlement

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Content 1 Introduction ................................................................................................................. 2

1.1 Pre-Requisites ..................................................................................................... 2 2 Business Related Rules ............................................................................................. 3

2.1 Risk and Responsibility for Settlement ................................................................ 3 2.2 Settlement Fees................................................................................................... 3

3 Settlement Process..................................................................................................... 3 3.1 "Lean" Settlement Instructions............................................................................. 4 3.1.1 "Actual Settlement".......................................................................................... 4 3.1.2 "Lean" Settlement Confirmation ...................................................................... 5 3.2 Extended Settlement Instructions ........................................................................ 5 3.2.1 Extended Settlement Confirmation.................................................................. 6 3.3 How to charge fees .............................................................................................. 6 3.3.1 Summary ......................................................................................................... 7 3.3.2 Relation to the Cash Statements..................................................................... 7

4 Relation to Securities Statements ............................................................................. 8 5 Examples ..................................................................................................................... 8

5.1 Example 1: OTC Fixed Income trade................................................................... 8 5.1.1 Trade Confirmation MT 515 ............................................................................ 8 5.1.2 "Lean" Settlement Instruction MT 543........................................................... 10 5.1.3 "Lean" Settlement Confirmation .................................................................... 11 5.1.4 Extended Settlement Instruction ................................................................... 12 5.1.5 Extended Settlement Confirmation................................................................ 13 5.2 Example 2: Equities Trade in UK....................................................................... 14 5.2.1 Trade Confirmation MT 515 .......................................................................... 14 5.2.2 "Lean" Settlement Instruction MT 543........................................................... 16 5.2.3 "Lean" Settlement Confirmation MT 547 ....................................................... 16 5.2.4 Extended Settlement Instruction MT 543 ...................................................... 17 5.2.5 Extended Settlement Confirmation MT 547 .................................................. 18 5.3 Example 3: Equities Trade in Finland ................................................................ 19 5.3.1 Trade Confirmation MT 515 .......................................................................... 20 5.4 Example 4: Fixed Income Trade, settled via Euroclear ..................................... 21 5.4.1 Trade Confirmation MT 515 .......................................................................... 21 5.5 Example 5: Fixed Income Trade in US Securities ............................................. 23 5.5.1 Trade Confirmation MT 515 .......................................................................... 23

6 Appendix A: List of Countries with Documented SMPG-Standards for Settlement.................................................................................................................................... 24

7 Contacts..................................................................................................................... 27


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1 Introduction The purpose of this document is the specification of messages according to SWIFT/ ISO 15022 standards, for settlement of equities and fixed income trades, which are ex-changed between a KAG1 and a custodian.

This document expands on the BVI Transaction Standards dated May 2004. The BVI-Standards specify in detail the Trade Confirmations broker/dealers (B/D) send to KAGs. This document specifies the settlement instructions and settlement confirmations, that are exchanged based on those trade confirmations.

The terms used in here have been documented in the BVI Transaction Standards documents from May 2004. They can be looked up in the glossary section of the document "Trading & Settlement".

1.1 Pre-Requisites In the process of the introduction of ISO 15022 on the SWIFT network, settlement to sub-cus-todians2 had been standardised on a global basis. These standards are known as "Securities Market Practice for Settlements"3 (also known as "SMPG standards for S&R"4). We shall refer to "SMPG Standards" only, because only settlement is in scope.

SMPG Standards consist of two parts: "Common Elements" and "Country Specific Elements".

Common Elements are ten globally uniform data elements necessary for securities settlement.

They are complemented by Country Specific Elements. Country specific elements differ per country (to be more precise: per place of settlement = PSET, usually a Central Securities Depository). These data elements are either required by regulation, e.g. tax, or are necessary due to country specific functional or technical requirements. For example: the identification of parties is still not standardised globally. Specifications for these country specific data elements are available for more than 30 countries (see list appendix A).

The BVI Transaction Standards and this document assume SMPG standards are applicable in their full scope and without change. This shall apply as well for the MT 515 trade confirmation (especially the "settlement details" data ("Settlement Chains") that shall be delivered accord-ing to SMPG) as well as the settlement instructions and settlement confirmations that are specified here.

1 KAGs are regulated German Investment Management Institutions (IMI) which do asset management, fund

accounting and administration and reporting to institutional investors. So called "Master KAGs" are working with asset management out-courced to third parties (see document "BVI Transaction Standards" part "Trading with Advisors/Outsourcing").

2 "Sub-Custodians" are financial institutions, who are direct members of a Central Securities Depository and hold securities accounts there.

3 Securities Market Practice are worked out by the Securities Market Practice Group (SMPG). It has sub-groups on a national level and a global group. SWIFT is working as secretariat for SMPG. For more info on SMPG, see www.smpg.info

4 S&R stands for Settlement & Reconciliation. Reconciliation using account statements is also standardised, but is out side the scope of this document. There are many more SMPG Standards, e.g. for Corporate Actions.


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The BVI Transaction Standards are hence not meant to supersede the SMPG standards, also not for Germany. Rather the BVI Transaction Standards specify the application of SMPG standards in the context of the German KAG business.

Ultimately brokers, KAGs, global custodians, sub custodians and central securities deposito-ries will use the same standards for securities settlement: SMPG based on ISO 15022 via SWIFT. This enables straight through processing (STP), also for complex cross border business.

2 Business Related Rules

2.1 Risk and Responsibility for Settlement General terms and conditions and the German legal framework are suggesting the following standard business scenario: • The standard scenario5 for securities settlement is "Actual Settlement", i.e. the value date

is depending on the local market where settlement ultimately happens. This is true for the expected value date (e.g. T+3 as per local market practice) as well as for the actual point in time when settlement happens, depending on matching trade details and if and when the counter party delivers6.

• The value date for the KAG is well defined. The settlement and delivery at a Central Securities Depository implies also change of ownership for the KAG at the same point in time, because settlement means change of ownership as per the definition of "collective safe custody" ("Verschaffung von Miteigentum an einem Sammelbestand").

2.2 Settlement Fees The following market practice is recommended: • Custodians charge the KAG for the settlement service and do so separately for own and

third party services. • Third party services shall be charged per trade. • Custodians charge their service preferably per trade ("Ticket Fee"), or in fixed intervals

(e.g. monthly).

3 Settlement Process Depending on how process steps are allocated between KAG and custodian there are two models:

5 Deviations from this procedure have to be agreed between KAG and custodians in writing. For example: the

custodian can assume full responsibility for settlement ("obligo"). The standard term for this is "Contractual Settlement". Then the custodian guarantees the KAG a certain value date independent from the local market and possibly even independent from the local market practice value date. For obvious reasons contractual settlement is the standard practice in the retails securities business.

6 This is known as "Settlement-Matching".


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3.1 "Lean" Settlement Instructions In this model fund accounting of the KAG is based primarily on the broker trade confirmation7 MT 515 and matching of the trade details with the broker/dealer.

Based on the broker trade confirmation the KAG generates a settlement instruction MT 541 (buy) or MT 543 (sell) to the custodian, containing only the information needed for settlement, hence the term "lean".

The content of the settlement instruction are hence only the "Common Data Elements" and the "Country Specific Data Elements" as defined by SMPG. The latter are depending on the "Place of Settlement" (PSET)8.

The settlement instruction shall be generated on the trade day.

This model fits best settlement in the currency of the security. This currency can be different from the fund currency.

3.1.1 "Actual Settlement" Broker/Broker/DealerDealer

CustodianCustodianCSDCSD

b) Settlement Instructionc) Settlement-Statuse) Settlement Confirmation

a) Settlement Instructiond) Settlement-Status

f) Settlement Confirmation

IMIIMI

All via SWIFT:SWIFTNet FIN:a) MT 541, MT 543b) MT 541, MT 543c) MT 548d) MT 548e) MT 545, MT 547f) MT 545, MT 547

In the case of "Actual Settlement" the value date is governed by the market practice of the lo-cal market (PSET, usually a central securities depository), where final settlement takes place. From a customer (the KAG) point of view settlement has only happened when it did happen in the local market ("actual"). Process: 1. The custodian receives the settlement instruction from the KAG. 2. The custodian checks if the "foreign" settlement chain fits the "own" settlement chain

(specifically if final settlement will happen at the same central securities depository, PSET).

7 The German term for trade confirmation - as agreed by BVI - is "Broker-Abrechnung". 8 KAG and Broker have to agree on a PSET beforehand. In the best case the KAG is advising PSET to the broker

after the KAG has queried the PSET for this trade (and this fund) from the custodian (electronically!).


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3. The custodian instructs the CSD or its intermediary (sub-custodian) where it has a custody account.

4. The custodian checks the matching of its own instructions with the instruction of the counter party until the settlement finally happens. Intermediate reports to the KAG are possible (per MT 548, on request by MT 549).

5. The custodian confirms settlement to the KAG by MT 545/547. 6. The custodian is charging the settlement service to the KAG9. 7. The custodian is accounting securities an cash.

3.1.2 "Lean" Settlement Confirmation In the case of lean settlement instructions and "Actual Settlement" the custodian confirms set-tlement to the KAG at the same day when settlement happened using MT 545 (buy) or MT 547 (sell). The custodian shall specify the charges its settlement service using the same settlement confirmations10.

This settlement confirmation is "lean" because the custodian is reporting back the same con-tent of the settlement instruction, adding just the fees for the settlement service11, 12.

3.2 Extended Settlement Instructions In the second model the custodian is performing additional accounting and checking services. Extended settlement instructions should allow, for example, for the following: • The custodian is checking trade prices. • The custodian is checking accrued interest. • The custodian is checking and accounting for brokerage fees.

For this purpose the KAG shall supply the custodian additional data elements to the ones mandated by SMPG.

The custodian can return these data elements in the settlement confirmation.

Note: As the extended settlement instruction is an extention of the lean settlement instruction, the KAG shall be allowed to elect to send an extended settlement instruction all the time, even in the case where the custodian does not save and process the additional data elements.

9 Fees for the settlement service are reported separately (as separate data elements) and will be charged in

addition to the settlement amount. 10 For this the German term "Depotbank-Abrechnung" had been agreed by the KAGs in den BVI-Transaction

Standards from Mai 2004. 11 Brokerage services of the Custodian (if the custodian has a brokerage arm) (aka Konto-Depot business) shall

not be confirmed using MT545/547. Rather for this kind of business MT515 shall be used. Pure settlement services (without Brokerage) shall not be confirmed using MT515. Rather MT545/547 shall be used.

12 Special cases e.g. Partial Settlements are not documented here for the sake of clarity.


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The KAG shall be willing to accept that the custodian does not return these data elements in the case of a lean settlement service. This arrangement needs to be documented in the SLA between KAG and custodian as this deviates from the standard case in which the custodian returns all data elements it had received in the settlement instruction.

3.2.1 Extended Settlement Confirmation In that case the custodian returns additional data elements in the settlement confirmation it had received in the extended settlement instruction. These data elements are not to be changed. The purpose of this "data round trip" is to facilitate feeding KAG systems which are geared to be fed by information supplied by the custodian13.

The fees the custodian charges for this settlement service shall be reported in additional data elements just as in the case of lean settlement confirmations.

3.3 How to charge fees The model of lean settlement instructions assumes broker fees are accounted for by the KAG.

If the KAG has elected to out-source accounting, e.g. to the custodian, then it shall report broker fees in the additional data elements of the extended settlement instruction. The data elements in the MT 541/543 fit one-to-one the data elements in the MT 515 trade confirmation. The custodian will report back these data elements unchanged in the MT 545/547 settlement confirmation adding another data element to charge its settlement fee.

In both cases – lean or extended settlement instruction – the Settlement Amount as been provided by the broker and as agreed between broker and KAG must remain unchanged along the whole process chain. This is a pre-requisite for STP and the only way to achive a matching tolerance of zero Euro at the central securities depository (PSET).

The broker will include its and third party fees (and taxes and accrued interest, if applicable) in the settlement amount. It will include a cost block to cover for its part of the settlement as the broker trade confirmation is the only means for the broker to charge the cost to its client (the KAG):

In MT 515, 541/3, 545/7: DEAL = Price * Nominal (or Price * Units)

In MT 515, 541/3: SETT = DEAL + ACRU + EXEC + LOCO + STAM + STEX + REGF

The BVI Transaction Standards specify in detail the broker fees14. Broker fees and fees charged by the custodian are to be kept separate. Hence the settlement fees shall be put in separate data elements and appear only in the settlement confirmations MT545/547:

In MT 545/7: ESTT = SETT + CHAR + Matching Tolerance15

13 If the KAG is requesting the Settlement Confirmation for the trade day of the following day, then only the model

"Contractual Settlement" is applicable as all markets have at least T+2. This is because the Settlement Confirmation shall be sent only once.

14 Specified Broker fees are: ACRU, EXEC, LOCO, STAM, STEX, REGF. CHAR shall not be used by the Broker, rather the other specified fields. Thus CHAR is available for the custodian's settlement fee.

15 Strangely there is no separate field for the Matching Tolerance. Hence it has to be implied by the difference between SETT+CHAR and ESTT. All parties shall strictly stick to the standards so that the matching tolerance gets zero. All parties shall assume the same settlement amount (SETT).


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The following graphics shows how the different amounts relate to each other in the different Message Types:

...... ......

......

MT 515 MT 541/543 MT 545/547

BrokerFees

BrokerFees*

CustodianFees (CHAR)

SettlementAmount (SETT)

Units*Price /Nominal*Price

......BrokerFees*

* Reporting broker fees in MT541/543 and MT545/547 is optional

Settled Amount (ESTT)

PossiblyMatchingTolerance

The "settled amount" (ESTT) reported back in MT 545/547 results from the "Settlement Amount” (SETT) plus the fees the custodian charges the KAG. There could be a matching tolerance, if the trade has been matched at the central securities depository (CSD) within a tolerance. These tolerances are different from CSD to CSD. Examples: Euroclear France: Zero Euro, Clearstream Frankfurt: 25 Euro, Japan: Zero Euro.

The settled amount is the amount to be booked on the KAG cash account.

In the case of "Actual Settlement" own and third party fees can be exactly accounted for per trade because the MT 545/547 are only sent after the final settlement happened in the local market and the custodian has been charged by its service provider (possibly via a chain of service providers and MT 545/547).

In the case of "Contractual Settlement" the custodian has to charge a flat fee because the fees of the custodian's service providers can not be known at this point in time.

3.3.1 Summary If the KAG has agreed a "Ticket Fee" with the custodian it shall be part of ESTT and reported using the CHAR field.

For the same trade the amount in the fields DEAL SETT and ESTT are exactly the same for lean and extended settlement instructions and settlement confirmations. The only difference is whether DEAL and the individual broker fees do or do not appear.

3.3.2 Relation to the Cash Statements The present standard for cash statements via SWIFT is MT 940. The process and messages described above will result in one statement line for one securities trade. This includes the cash leg of the securities trade and all fees if – as described and mandated above – the set-tlement fees are included in the settlement amount in MT 545/547.


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4 Relation to Securities Statements Holding balances are reported by the custodian to the KAG using MT 535.

The status of an individual trade can be requested using MT 549 from the custodian who is responding using MT 548.

For a batch like processing the custodian can report all matched and settled trades using MT 537 and all pending unsettled and unmatched trades using MT 537.

SMPG documents are also available for these messages.

5 Examples16 The examples show in turn MT515 - conforming to the BVI Securities Transactions Standards - to be sent from broker/dealers to asset managers and the related MT541/543 to be generated by the Asset Manager from the MT515. The asset manager will send the MT541/543 to the custodian (and if applicable also a copy to a Master-KAG).

The examples also show some important decisions by the German KAGs on content and codes: • The ISIN shall be used as the sole and binding securities identifier • The ISO MIC code shall be used to indentify the place of trade (exchange or trading

platform), if not OTC • The Settlement Parties/Accounts (Settlement Chain), for the Place of Settlement at hand

shall be included exactly as specified by SMPG

The examples cover standard equities and fixed income business in various markets17.

5.1 Example 1: OTC Fixed Income trade The KAG "AKAGDEFF" effected an OTC fixed income trade with bank BANKDEFF. • Customer: AKAGDEFF sold • Fixed Income • Place of Trade: Over the counter • Place of Settlement: Clearstream Banking Frankfurt • Counter Party (Broker): BANKDEFF • BANKDEFF is Clearstream Banking Frankfurt participant.

5.1.1 Trade Confirmation MT 515 The left column shows the physical representation of the SWIFT/ISO 15022 message ("Text-Block" only, no FIN "Header"). The right column are comments. Empty lines are only included

16 The amounts shown are estimates and only serve illustration of the data format standards. They are not meant to

reflect market conditions. 17 Exchange trades options and futures shall be included in a future version of this paper


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to increase readability. :16R:GENL :20C::SEME//7654321001081349 Broker's message reference :23G:NEWM :22F::TRTR//TRAD :16R:LINK :20C::RELA//NONREF No reference to an allocation :16S:LINK :16R:LINK :20C::TRRF//12345 Broker's trade reference :16S:LINK :16S:GENL :16R:CONFDET :98C::TRAD//20031120173900 Trade date and time :98A::SETT//20031125 Settlement day :90A::DEAL//PRCT/101,79 Price :99A::DAAC//073 Interest days :94B::TRAD//OTCO/GMTS Trading system (GMTS) the KAG

and B/D have used :22H::BUSE//SELL Sell (KAG view) :22H::PAYM//APMT Settlement against payment :16R:CONFPRTY :95P::SELL//AKAGDEFF KAG is seller :97A::SAFE//FUND 62502592 Account of fund with broker :16S:CONFPRTY :16R:CONFPRTY :95P::INVE//AKAGDEFF Ultimate seller (Fund remains

anonymous) :97A::SAFE//999999 Account of fund with custodian :16S:CONFPRTY :16R:CONFPRTY :95P::BUYR//BANKDEFF Buyer (Broker) :22F::TRCA//PRIN Broker trades against own book :16S:CONFPRTY :36B::CONF//FAMT/4000000, Nominal :35B:ISIN DE0002029378 Security 3,75 PRCT ALLGEM.HYP.BK.RHEINB.AG PF.S.3 Narrative 37 13.9. 05 ditto /F:2500 ditto :16S:CONFDET :16R:SETDET :22F::SETR//TRAD :16R:SETPRTY :95P::PSET//DAKVDEFF Central securities depository:

Clearstream B.F. :16S:SETPRTY :16R:SETPRTY :95P::REAG//BANKDEFF Broker himself is CBF member


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:97A::SAFE//7777000 Broker's account with CBF (= KV-Nummer)

:16S:SETPRTY :16R:AMT :19A::ACRU//EUR29918,03 Accrued interest :16S:AMT :16R:AMT :19A::DEAL//EUR4071600, Nominal*Price :16S:AMT :16R:AMT :19A::SETT//EUR4101518,03 Settlement amount :16S:AMT :16S:SETDET

5.1.2 "Lean" Settlement Instruction MT 543 From the MT 515 the KAG generates the following settlement instruction to the custodian: :16R:GENL :20C::SEME//1234567 KAG's message reference :23G:NEWM :16S:GENL :16R:TRADDET :98C::TRAD//20031120 Trade day :98A::SETT//20031125 Settlement day :35B:ISIN DE0002029378 Security 3,75 PRCT ALLGEM.HYP.BK.RHEINB.AG PF.S.3 Narrative 37 13.9. 05 ditto /F:2500 ditto :16S:TRADDET :16R:FIAC :36B::SETT//FAMT/4000000, Nominal :97A::SAFE//999999 Fund's account with custodian :16S:FIAC :16R:SETDET :22F::SETR//TRAD :16R:SETPRTY :95P::PSET//DAKVDEFF CSD (= CBF) :16S:SETPRTY :16R:SETPRTY :95P::REAG//BANKDEFF Broker himself is CBF member :97A::SAFE//7777000 Broker's account with CBF

(= KV-Nummer) :16S:SETPRTY :16R:AMT :19A::SETT//EUR4101518,03 Settlement amount :16S:AMT


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:16S:SETDET

SMPG standards mandate the trade day only, not day and time.

Broker fees (usually irrelevant for fixed income trades) and accrued interest are not mentioned explicitly in the lean settlement instruction. They are just contained in the settlement amount.

The Settlement Parties (the settlement chain) have been taken over as-is from MT 515. The responsibility for correctness of Settlement Parties rests with the Broker18.

5.1.3 "Lean" Settlement Confirmation When settlement happened in the local market the custodian sends the following settlement confirmation to the KAG: :16R:GENL :20C::SEME//9876543 Custodian's message reference :23G:NEWM :16R:LINK :20C::RELA//1234567 Link to KAG's message-Ref. :16S:LINK :16S:GENL :16R:TRADDET :98C::TRAD//20031120 Trade day :98A::ESET//20031125 "Real" settlement day :35B:ISIN DE0002029378 Security 3,75 PRCT ALLGEM.HYP.BK.RHEINB.AG PF.S.3 Narrative 37 13.9. 05 ditto /F:2500 ditto :16S:TRADDET :16R:FIAC :36B::ESTT// FAMT/4000000, Nominal :97A::SAFE//999999 Fund's account with custodian :16S:FIAC :16R:SETDET :22F::SETR//TRAD :16R:SETPRTY :95P::PSET//DAKVDEFF Central securities depository

(= CBF) :16S:SETPRTY :16R:SETPRTY :95P::REAG//BANKDEFF Broker himself is CBF member :97A::SAFE//7777000 Broker's account with CBF

(= KV-Nummer) :16S:SETPRTY :16R:AMT :19A::ESTT//EUR4101567,03 Settled Amount

18 This is important if settlement is delayed due to non matching settlement parties.


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:16S:AMT :16R:AMT :19A::CHAR//EUR49, Custodian's settlement fee :16S:AMT :16S:SETDET

The custodian charges the KAG EUR 49 for the settlement service for this trade. The settled amount is EUR 49 higher than the settlement amount. The matching tolerance was EUR 0.

5.1.4 Extended Settlement Instruction Additions to the "lean" settlement instructions are in italics. They are trade time, price, interest days, accrued interest and (possibly) fees. All fee fields that are specified for MT 515 in the BVI Transaction Standards can be used one-to-one in the MT 541/543. The amount are one-to one these that have been charged by the broker. The settlement amount is the same as in the lean settlement instruction.

:16R:GENL :20C::SEME//1234567 KAG's message reference :23G:NEWM :16S:GENL :16R:TRADDET :98C::TRAD//20031120173900 Trade day and time :98A::SETT//20031125 Settlement day :90A::DEAL//PRCT/101,79 Price :99A::DAAC//073 Interest days :35B:ISIN DE0002029378 Security 3,75 PRCT ALLGEM.HYP.BK.RHEINB.AG PF.S.3 Narrative 37 13.9. 05 ditto /F:2500 ditto :16S:TRADDET :16R:FIAC :36B::SETT// FAMT/4000000, Nominal :97A::SAFE//999999 Fund's account with custodian :16S:FIAC :16R:SETDET :22F::SETR//TRAD :16R:SETPRTY :95P::PSET//DAKVDEFF Central securities depository

(= CBF) :16S:SETPRTY :16R:SETPRTY :95P::REAG//BANKDEFF Broker himself is CBF member :97A::SAFE//7777000 Broker's account with CBF

(= KV-Nummer) :16S:SETPRTY :16R:AMT :19A::ACRU//EUR29918,03 Accrued Interest


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:16S:AMT :16R:AMT :19A::DEAL//EUR4071600, Nominal * Price :16S:AMT :16R:AMT :19A::SETT//EUR4101518,03 Settlement Amount :16S:AMT :16S:SETDET

5.1.5 Extended Settlement Confirmation Special conditions, e.g. Contractual settlement, can be signalled using field STCO: :16R:GENL :20C::SEME//9876543 Custodian's message reference :23G:NEWM :16R:LINK :20C::RELA//1234567 Link to KAG instruction :16S:LINK :16S:GENL :16R:TRADDET :98C::TRAD//20031120173900 Trade day and time :98A::ESET//20031125 "Real" Settlement day :90A::DEAL//PRCT/101,79 Price :99A::DAAC//073 Interest days :35B:ISIN DE0002029378 Security 3,75 PRCT ALLGEM.HYP.BK.RHEINB.AG PF.S.3 Narrative 37 13.9. 05 ditto /F:2500 ditto :16S:TRADDET :16R:FIAC :36B::ESTT// FAMT/4000000, Nominal :97A::SAFE//999999 Fund's account with custodian :16S:FIAC :16R:SETDET :22F::SETR//TRAD :22F::STCO/BVIT/CONT Signals special purpose of

message19 :16R:SETPRTY :95P::PSET//DAKVDEFF Central securities depository

(= CBF) :16S:SETPRTY :16R:SETPRTY

19 Advises "Contractual Settlement"; then MT545/547 is sent at the trade day. If this field is missing "Actual

Settlement" is the default.


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:95P::REAG//BANKDEFF Broker himself is CBF member :97A::SAFE//7777000 Broker's account with CBF

(= KV-Nummer) :16S:SETPRTY :16R:AMT :19A::ACRU//EUR29918,03 Accrued Interest :16S:AMT :16R:AMT :19A::DEAL//EUR4071600, Nominal * Price :16S:AMT :16R:AMT :19A::ESTT//EUR4101567,03 Settled Amount :16S:AMT :16R:AMT :19A::CHAR//EUR49, Custodian's settlement fee :16S:AMT :16S:SETDET

5.2 Example 2: Equities Trade in UK Business details: • Customer: AKAGDEFF sold • Counter Party (Broker) BROKGB2L • Equities • Place of Trade: London Stock Exchange • Stamp duty • Place of Settlement: Crest • BROKGB2L has account 1833081 serviced by a Crest participant with Crest participant ID

AG999

5.2.1 Trade Confirmation MT 515 :16R:GENL :20C::SEME//7654321322191835 Broker's Reference :23G:NEWM :22F::TRTR//TRAD :16R:LINK :20C::RELA//NONREF :16S:LINK :16R:LINK :20C::TRRF//12345 :16S:LINK :16S:GENL :16R:CONFDET :98C::TRAD//20031013102600 :98A::SETT//20031016


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:90B::DEAL//ACTU/GBP12,93 Price :94B::TRAD//EXCH/XLON London Stock Exchange :22H::BUSE//SELL :22F::PRIC//AVER Average Price :22H::PAYM//APMT :16R:CONFPRTY :95P::SELL//AKAGDEFF :97A::SAFE//FUND 3310302 :16S:CONFPRTY :16R:CONFPRTY :95P::INVE//AKAGDEFF :97A::SAFE//999999 :16S:CONFPRTY :16R:CONFPRTY :95P::BUYR//BROKGB2L :22F::TRCA//AGEN Broker does an agent trade :16S:CONFPRTY :36B::CONF//UNIT/3000, :35B:ISIN GB0009252882 GLAXOSMITHKLINE PLC REG.SH.LS-,25 /F:1232 :16S:CONFDET :16R:SETDET :22F::SETR//TRAD :16R:SETPRTY :95P::PSET//CRSTGB22 Central securities depository is

Crest :16S:SETPRTY :16R:SETPRTY :95R::REAG/CRST/AG999 Crest ID of Crest member :16S:SETPRTY :16R:SETPRTY :95P::BUYR//BROKGB2L B/D :97A::SAFE//1833081 B/D's account with Crest member :16S:SETPRTY :16R:AMT :19A::DEAL//GBP38790, Nominal*Price :16S:AMT :16R:AMT :19A::EXEC//GBP70,58 Broker fee :16S:AMT :16R:AMT :19A::STAM//GBP7, Stamp Duty :16S:AMT :16R:AMT :19A::SETT//GBP38867,58 Settlement Amount :16S:AMT :16S:SETDET


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5.2.2 "Lean" Settlement Instruction MT 543

:16R:GENL :20C::SEME//1234567 KAG's message reference :23G:NEWM :16S:GENL :16R:TRADDET :98C::TRAD//20031013 Trade day :98A::SETT//20031016 Settlement day :35B:ISIN GB0009252882 Security GLAXOSMITHKLINE PLC REG.SH.LS-,25 Narrative /F:1232 ditto :16S:TRADDET :16R:FIAC :36B::SETT//UNIT/3000, Nominal :97A::SAFE//999999 Fund's account with custodian :16S:FIAC :16R:SETDET :22F::SETR//TRAD :16R:SETPRTY :95P::PSET//CRSTGB22 Central securities depository is

Crest :16S:SETPRTY :16R:SETPRTY :95R::REAG/CRST/AG999 Crest ID of Crest member :16S:SETPRTY :16R:SETPRTY :95P::BUYR//BROKGB2L B/D :97A::SAFE//1833081 B/D's account with Crest member :16S:SETPRTY :16R:AMT :19A::SETT//GBP38867,58 Settlement Amount :16S:AMT :16S:SETDET

5.2.3 "Lean" Settlement Confirmation MT 547 When settlement has happened in the local market (PSET) the custodian sends the settle-ment confirmation to the KAG: :16R:GENL :20C::SEME//9876543 Custodian's message reference :23G:NEWM :16R:LINK :20C::RELA//1234567 Link to KAG instruction :16S:LINK :16S:GENL


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:16R:TRADDET :98C::TRAD//20031013 Trade day :98A::ESET//20031016 "Real" Settlement day :35B:ISIN GB0009252882 Security GLAXOSMITHKLINE PLC REG.SH.LS-,25 Narrative /F:1232 ditto :16S:TRADDET :16R:FIAC :36B::ESTT//UNIT/3000, Nominal :97A::SAFE//999999 Fund's account with custodian :16S:FIAC :16R:SETDET :22F::SETR//TRAD :16R:SETPRTY :95P::PSET//CRSTGB22 Central securities depository is

Crest :16S:SETPRTY :16R:SETPRTY :95R::REAG/CRST/AG999 Crest ID of Crest member :16S:SETPRTY :16R:SETPRTY :95P::BUYR//BROKGB2L B/D :97A::SAFE//1833081 B/D's account with Crest member :16S:SETPRTY :16R:AMT :19A::ESTT//GBP38916,58 Settled Amount :16S:AMT :16R:AMT :19A::CHAR//GBP49, Custodian's settlement fee :16S:AMT :16S:SETDET

The custodian charges the KAG GBP 49 for the settlement service for this trade.

5.2.4 Extended Settlement Instruction MT 543

:16R:GENL :20C::SEME//1234567 KAG's message reference :23G:NEWM :16S:GENL :16R:TRADDET :98C::TRAD//20031013102600 Trade day and time :98A::SETT//20031016 Settlement day :90A::DEAL//ACTU/GBP12,93 Price :35B:ISIN GB0009252882 Security GLAXOSMITHKLINE PLC REG.SH.LS-,25 Narrative /F:1232 ditto :16S:TRADDET


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:16R:FIAC :36B::SETT//UNIT/3000, Nominal :97A::SAFE//999999 Fund's account with custodian :16S:FIAC :16R:SETDET :22F::SETR//TRAD :16R:SETPRTY :95P::PSET//CRSTGB22 Central securities depository is

Crest :16S:SETPRTY :16R:SETPRTY :95R::REAG/CRST/AG999 Crest ID of Crest member :16S:SETPRTY :16R:SETPRTY :95P::BUYR//BROKGB2L B/D :97A::SAFE//1833081 B/D's account with Crest member :16S:SETPRTY :16R:AMT :19A::DEAL//GBP38790, Nominal*Price :16S:AMT :16R:AMT :19A::EXEC//GBP70,58 Broker fee :16S:AMT :16R:AMT :19A::STAM//GBP7, Stamp Duty :16S:AMT :16R:AMT :19A::SETT//GBP38867,58 Settlement Amount :16S:AMT :16S:SETDET

Remark: The KAG reports to the custodian also all fees, charges and taxes amounts as had been charged by the B/D. The Settlement amount stays the same.

5.2.5 Extended Settlement Confirmation MT 547

:16R:GENL :20C::SEME//9876543 Custodian's message reference :23G:NEWM :16R:LINK :20C::RELA//1234567 Link to KAG instruction :16S:LINK :16S:GENL :16R:TRADDET :98C::TRAD//20031013102600 Trade day and time :98A::ESET//20031016 "Real" Settlement day :90A::DEAL//ACTU/GBP12,93 Price :35B:ISIN GB0009252882 Security


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GLAXOSMITHKLINE PLC REG.SH.LS-,25 Narrative /F:1232 ditto :16S:TRADDET :16R:FIAC :36B::ESTT//UNIT/3000, Nominal :97A::SAFE//999999 Fund's account with custodian :16S:FIAC :16R:SETDET :22F::SETR//TRAD :22F::STCO/BVIT/CONT Signals special conditions20 :16R:SETPRTY :95P::PSET//CRSTGB22 Central securities depository is

Crest :16S:SETPRTY :16R:SETPRTY :95R::REAG/CRST/AG999 Crest ID of Crest member :16S:SETPRTY :16R:SETPRTY :95P::BUYR//BROKGB2L B/D :97A::SAFE//1833081 B/D's account with Crest member :16S:SETPRTY :16R:AMT :19A::DEAL//GBP38790, Nominal*Price :16S:AMT :16R:AMT :19A::EXEC//GBP70,58 Broker fee :16S:AMT :16R:AMT :19A::STAM//GBP7, Stamp Duty :16S:AMT :16R:AMT :19A::ESTT//GBP38916,58 Settled Amount :16S:AMT :16R:AMT :19A::CHAR//GBP49, Custodian's settlement fee :16S:AMT :16S:SETDET

The custodian reports back the additional fields if so agreed. The custodian does not touch the broker fees. Rather the custodian charges GBP 49 for his settlement service for this trade and reports this using an additional amount field (Qualifier "CHAR").

5.3 Example 3: Equities Trade in Finland Business detail:

20 Advises "Contractual Settlement"; then MT 545/547 is sent at the trade day. If this field is missing "Actual

Settlement" is the default.


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• Customer: AKAGDEFF sold • Equities • Average price • Place of Trade: Helsinki Stock Exchange • Place of Settlement: APK • APK participant: ABCDFIHH • Counter Party (Broker): BANKDEFF holds account "02 2000 22560006 8" with

ABCDFIHH

The KAG effects a trade with broker "BANKDEFF". BANKDEFF is remote member of the Helsinki Stock Exchange and executes the trade there directly. To settle the securities at the Finish' Central Securities Depository BANKDEFF is using Bank ABCDFIHH as his clearing agent.

5.3.1 Trade Confirmation MT 515

:16R:GENL :20C::SEME//7654321321995699 :23G:NEWM :22F::TRTR//TRAD :16R:LINK :20C::RELA//NONREF :16S:LINK :16R:LINK :20C::TRRF//12345 :16S:LINK :16S:GENL :16R:CONFDET :98C::TRAD//20031010110200 :98A::SETT//20031015 :90B::DEAL//ACTU/EUR14,755 :94B::TRAD//EXCH/XHEL :22H::BUSE//SELL :22H::PAYM//APMT :22H::PRIC//RDAV :16R:CONFPRTY :95P::SELL//AKAGDEFF :97A::SAFE//FUND 27724 :16S:CONFPRTY :16R:CONFPRTY :95P::INVE//AKAGDEFF :97A::SAFE//999999 :16S:CONFPRTY :16R:CONFPRTY :95P::BUYR//BANKDEFF :22F::TRCA//AGEN :16S:CONFPRTY


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:36B::CONF//UNIT/10000, :35B:ISIN FI0009000681 NOKIA CORP.REG.SHARES EO 0,06 /F:1222 :16S:CONFDET :16R:SETDET :22F::SETR//TRAD :16R:SETPRTY :95P::PSET//APKEFIHH :16S:SETPRTY :16R:SETPRTY :95P::REAG//ABCDFIHH :16S:SETPRTY :16R:SETPRTY :95P::BUYR//BANKDEFF :97A::SAFE//02 2000 22560006 8 :16S:SETPRTY :16R:AMT :19A::DEAL//EUR147550, Nominal*Price :16S:AMT :16R:AMT :19A::EXEC//EUR147,55 Broker fee :16S:AMT :16R:AMT :19A::SETT//EUR147697,55 Settlement Amount :16S:AMT :16S:SETDET

5.4 Example 4: Fixed Income Trade, settled via Euroclear Business details: • Customer: AKAGDEFF bought • Fixed Income • Place of Trade: Over the counter • Place of Settlement: Euroclear • Counter Party (Broker) = Euroclear participant: BANKDEFF


:16R:GENL :20C::SEME//7654321001137130 :23G:NEWM :22F::TRTR//TRAD :16R:LINK :20C::RELA//NONREF :16S:LINK :16R:LINK


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:20C::TRRF//12345 :16S:LINK :16S:GENL :16R:CONFDET :98C::TRAD//20031124192900 :98A::SETT//20031209 :90A::DEAL//PRCT/99,481 :99A::DAAC//000 :94B::TRAD//OTCO/BLOOMBERG System KAG and B/D are using :22H::BUSE//BUYI :22H::PAYM//APMT :16R:CONFPRTY :95P::BUYR//AKAGDEFF :97A::SAFE//FUND 961 :16S:CONFPRTY :16R:CONFPRTY :95P::INVE//AKAGDEFF :97A::SAFE//999999 :16S:CONFPRTY :16R:CONFPRTY :95P::SELL//BANKDEFF :22F::TRCA//PRIN :16S:CONFPRTY :36B::CONF//FAMT/600000, Nominal :35B:ISIN XS0181571364 UNION FENOSA SA 5 PRCT 09/12/2010 :16S:CONFDET

:16R:SETDET :22F::SETR//TRAD :16R:SETPRTY :95P::PSET//MGTCBEBE Euroclear :16S:SETPRTY :16R:SETPRTY :95R::DEAG/ECLR/99999 B/D account with Euroclear :16S:SETPRTY :16R:SETPRTY :95P::SELL//BANKDEFF B/D :16S:SETPRTY :16R:AMT :19A::DEAL//EUR596886, Nominal*Price :16S:AMT :16R:AMT :19A::SETT//EUR596886, Settlement Amount :16S:AMT :16S:SETDET


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5.5 Example 5: Fixed Income Trade in US Securities Business details: • Customer: AKAGDEFF bought • Fixed Income • Place of Trade: Over the counter • Place of Settlement: Federal Reserve US • Federal Reserve participant identified by Fedwire No. 021000018 • Counter Party (Broker): BANKDEFF • Other Party: asset manager ADVSUS33 (insourcing from AKAGDEFF) who submitted the

original order


:16R:GENL :20C::SEME//7654321000967959 :23G:NEWM :22F::TRTR//TRAD :16R:LINK :20C::RELA//NONREF :16S:LINK :16R:LINK :20C::TRRF//12345 :16S:LINK :16S:GENL :16R:CONFDET :98C::TRAD//20031112102000 :98A::SETT//20031117 :90A::DEAL//PRCT/96,078125 Price :99A::DAAC//094 :94B::TRAD//OTCO/CANTORS HYPERSPACE System ADVS and B/D are using :22H::BUSE//BUYI :22H::PAYM//APMT :16R:CONFPRTY :95P::BUYR//AKAGDEFF KAG :97A::SAFE//FUND 0230-369130.S1 :16S:CONFPRTY :16R:CONFPRTY :95P::INVE//AKAGDEFF KAG :97A::SAFE//999999 Account with custodian :16S:CONFPRTY :16R:CONFPRTY :95P::SELL//BANKDEFF B/D :22F::TRCA//PRIN :16S:CONFPRTY :36B::CONF//FAMT/700000, Nominal


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:35B:ISIN US912828AU42 3,875 PRCT USA TREASURY NOTES V.03 15.F/A 02.13 :16S:CONFDET :16R:SETDET :22F::SETR//TRAD :16R:SETPRTY :95P::PSET//FRNYUS33 "Fed" :16S:SETPRTY :16R:SETPRTY :95R::DEAG/USFW/021000018 "Fed" user (Prop.-Code) :97A::SAFE//BK OF NYC/BAFRA :16S:SETPRTY :16R:SETPRTY :95P::SELL//BANKDEFF B/D :97A::SAFE//123456789 B/D's account with Fed user :16S:SETPRTY :16R:AMT :19A::ACRU//USD6928,67 Accrued Interest :16S:AMT :16R:AMT :19A::DEAL//USD672546,88 Nominal*Price :16S:AMT :16R:AMT :19A::SETT//USD679475,55 Settlement Amount :16S:AMT :16S:SETDET :16R:OTHRPRTY :95P::MEOR//ADVSUS33 Asset Manager :16S:OTHRPRTY

6 Appendix A: List of Countries with Documented SMPG-Standards for Settlement

Source: www.smpg.info as of 2007-02-16. Country Document Size Author Date AT AT_del1_v5.0_V1.1.pdf 104.7

kb Alexandre Kech

2003-06-24

AU & NZ S&R AU_NZ_del1_v5_1.pdf 499.6 kb

Alexandre Kech

2006-08-11

BE S&R BE_del1_v5_3.pdf 123.3 kb

Alexandre Kech

2006-11-20

BR S&R BR_del1_v4_1.pdf 233.7 kb

Alexandre Kech

2006-08-11

CA (Canada) S&R CA_del1_v5_2.pdf 792.8 kb

Alexandre Kech

2004-12-31

CH CH_del1_v5.0.pdf 40.8 kb

Alexandre Kech

2002-07-03


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DE S&R DE_del1_v5.3.pdf 358.1 kb

Alexandre Kech

2003-01-24

DK S&R See Nordic S&R 16.9 kb

Alexandre Kech

2006-11-14

ES S&R v5.5 ES_del1_v5_5.pdf 445.7 kb

Alexandre Kech

2005-10-14

FI S&R See Nordic S&R 16.9 kb

Alexandre Kech

2006-11-14

FR FR_del1_v5.0.pdf 43.9 kb

Alexandre Kech

2002-07-03

FR S&R MP Addendum FR S&R MP Addendum (Settle-ment in Euroclear France for Euroclear).pdf

59.4 kb

Alexandre Kech

2003-09-26

GR S&R GR_del1_v4_1.pdf 103.7 kb

Alexandre Kech

2004-12-31

HK S&R 5.2 HK_del1_v5_2.pdf 472.8 kb

Alexandre Kech

2004-06-18

IC S&R See Nordic S&R 16.9 kb

Alexandre Kech

2006-11-14

ICSD ICSD_del1_v5.0.pdf 207.3 kb

Alexandre Kech

2002-07-03

IL S&R IL_del1_v5_1.pdf 339.4 kb

Alexandre Kech

2004-12-13

IN S&R v3.1 IN_del1_v3.1.pdf 120.5 kb

Alexandre Kech

2004-05-17

IT (S&R) IT_del1_v5_1.pdf 159.4 kb

Alexandre Kech

2004-08-04

JP S&R JP_del1_v5_3.pdf 331.2 kb

Alexandre Kech

2006-04-10

LU LU_del1_v5.0.pdf 75.3 kb

Alexandre Kech

2002-07-03

MY S&R MY_del1_v5.0.pdf 155.5 kb

Alexandre Kech

2003-09-18

NL S&R CSD participants 2005 NL_CSDparticipants2005.pdf 109.4 kb

Alexandre Kech

2005-10-14

NL S&R v5.1 NL_del1_v5.1.pdf 153.9 kb

Alexandre Kech

2005-10-14

NO S&R See Nordic S&R 16.9 kb

Alexandre Kech

2006-11-14

Nordic (DK, FI, IC, NO, SE) S&R MP v5.1

Nordic Market Practice SR Ver 5_1.pdf

332.6 kb

Alexandre Kech

2006-11-14

PL S&R v4.0 PL_del1_v4_0.pdf 294.5 kb

Alexandre Kech

2005-11-04

PT S&R PT_del1_v5_3.pdf 95.2 kb

Alexandre Kech

2007-02-07

SE S&R See Nordic S&R 16.9 kb

Alexandre Kech

2006-11-14

Settlement MP Summary sheet Settlement MP Summary sheet v4_2.pdf

23.8 kb

Alexandre Kech

2004-12-31

TR S&R TR_del1_v5_3.pdf 355.3 kb

Alexandre Kech

2004-12-31

UK&IE S&R UK&IE_del1_v5_10.pdf 514.9 kb

Tim Taylor 2006-10-30

US S&R Settlements Market Practice

ISITC-SWG-MP-54X-v24.pdf.zip 746.8 kb

Joshua Derrick

2006-05-03

ZA S&R ZA_del1_v5_1.pdf 117.1 kb

Alexandre Kech

2005-03-08

* * *


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7 Contacts BVI Bundesverband Investment und Asset Management e.V. Eschenheimer Anlage 28 60318 Frankfurt Tel.: +49 69 154090-0 Fax: +49 69 5971406 [email protected] www.bvi.de

S.W.I.F.T. Germany GmbH

Dr. Thomas Redelberger

Regional Manager

Tel.: +49 69 7541-2280

Fax: +49 69 7541-2290

[email protected]

www.swift.com

SMPG

Alexandre Kech

Secretary General

[email protected]

www.smpg.info

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