ETFs traded on the LSEs ETF segment - FAQs

Transcription

1 ETFs traded on the LSEs ETF segment - FAQs SCOPE & BACKGROUND SB1. What is the go-live date? Expected live date during Q4, 2013, subject to regulatory approval. SB2. What does the flow look like? Who are my contacts? London Stock Exchange client implementation team Tel: +44 (0) clientimplementation@londonstockexchange.com LCH.Clearnet Ltd, Ian Mackenzie Tel: +44 (0) ian.mackenzie@lchclearnet.com SB3. Which securities are included? ETFs listed on London Stock Exchange new trading service ETFs - Euroclear Settlement SB4. Where will the trades settle? All settlements will take place in Euroclear Bank 1

2 SETTLEMENT S1. Is LCH.Clearnet using a settlement agent? No, we will instruct both sides of the settlement directly into Euroclear Bank under PoA. S2. Do settlement agents need to sign new Power of Attorney agreements? Yes, a new PoA will be required for this business. However existing settlement account details can be used. S3. Which settlement accounts will LCH.Clearnet be using? We will be settling in our Euroclear Account S4. What time will settlement instructions be sent? Net settlement instructions will be sent at the EOD, at approx 21:30 (UK time). Members should be aware that we make best efforts to produce the subsequent reports thereafter, but they could be subject to delay. S5. Can a trading firm use multiple Clearing Members? Yes, the static data would need to reflect the use of more than one Clearing Member. If a trading firm has multiple Bic s then multiple Clearing Members can be used. S6. Can a trading firm use multiple custodians for settlement? Yes, the static data would need to reflect the use of custodians. Provided the static data contains valid settlement accounts within Euroclear Bank and PoAs have been completed. S7. Who is counterparty to my trade? LCH.Clearnet Ltd will be the counterparty to all relevant trades. RECEIVING DATA FROM LCH.Clearnet R1. How will GCM s receive details of the trades done by their NCM s? There are several ways this data can be accessed. 1. LCH.Clearnet produces reports on its member reporting website which are updated every 30 minutes and show the accumulation of trades that day, per clearing member These reports have existed for some time and are detailed in the document Member Report LCH.Clearnet also offers an optional trade confirmation service. This will be on a gross trade basis and an MT518 message will be sent per trade via Swift or FIX to clearing member upon request. Details can also be found under on the LCH.Clearnet website. R2. Can anyone other than Clearing Members access the member reports? Normally no, however, upon specific request, this can be negotiated. 2

3 FEES & CHARGES F1. What are the charges for using the trade confirmation service? We do not charge, however, we will pass through the SWIFT message charges. This can be paid by LCH.Clearnet and billed directly to the member, or, reverse billed (as the member s message rate at SWIFT will inevitably be lower). FIX messages will be through existing connectivity and a set-up cost could be applied. F2. What clearing fees will be charged by LCH.Clearnet? These additional volumes will be cumulative with all volumes cleared through the EquityClear Service. With increased volumes members can reduce their, per unit cost. For full details please view: F3. Will LCH.Clearnet require members to increase their Default Fund contribution? No. F4. Will LCH.Clearnet pass through associated settlement fees? Yes. Please use the following link to view the fee schedule that is available on the website. MARGINING & TREASURY M1. How will margining be carried out? Margin rates per stock will be determined by our risk department and then will be margined using the day to day EquityClear margin algorithm ERA. Margining of this business will operate in the same way as for all EquityClear business. Securities allocated to the same portfolio margin bucket get complete correlation benefits within the ERA algorithm. M2. How are margin calls instructed and what currencies can be paid? Margin rates per stock will be determined by our risk department and then will be margined using ERA, so margining of this business will operate in the same way as for all EquityClear business. All securities within the ERA algorithm have complete correlation. M2. How are margin calls instructed and what currencies can be paid? If a member is uncovered following an intra-day margin run, they will be contacted by Treasury Operations by phone and advised of the additional amount that they will be required to pay. Before 2:30pm UK time, members can elect to cover ITD margin calls in EUR, GBP or USD. After 2:30pm the only acceptable currency is USD. Debit instructions are then sent to the member s PPS bank and the margin call must be confirmed by that bank within 1 hour. The member should check Banking REP00033 for written confirmation of the amount taken. This report is generally updated within 45 minutes of a margin call being processed. Overnight calls are sent to the member s PPS bank during the night and must be confirmed by the bank by 9:00am. Members should review their LCH Banking reports for confirmation. M3. What interest is paid on cash margin and Collateral charges? Our Treasury team can advise current rates. 3

4 On collateral, we charge an accommodation fee of 10 bps for the utilised collateral balance. The charge is applied in the currency of the liability covered. DOCUMENTATION D1. Will I require a new static data form or can I use existing set-up? EquityClear members can continue with existing relationships but will be required to complete a new London Stock Exchange static data form, for further details please use the contact details: clientimplementation@londonstockexchange.com D2. How will I provide information to LCH.Clearnet for opting into this service? EquityClear members should contact us to confirm their interest in this service. We will advise the necessary documents to be completed and they will be sent to you for completion. D3. Will I need to fill in a form for testing? If you wish to test then, yes, a form will be sent to you. This needs to be completed and returned. D4. Will there be a new NCM/GCM/LCH.Clearnet agreement? No, if already in place, it will be covered by existing relationships. D5. What is the process for offering clearing services or self clearing? Those wishing to use LCH.Clearnet as a new member will be required to complete the new membership pack and associated documents. Part of the Criteria for Clearing Members ICM Capitalisation of 5m GCM Capitalisation of 10m For further LCH.Clearnet Limited membership information please use the following link. TESTING T1. Does LCH.Clearnet provide or indeed mandate member testing? We offer to our members the opportunity to test. This is entirely optional and is up to the member whether they wish to utilise this. T2. Will member testing involve LCH.Clearnet s settlement agent? No, testing is envisaged to demonstrate to clearing members that trades will be received by EquityClear and the relevant reports produced, thus enabling members to have sufficient information to reconcile within their systems. 4

5 OPERATIONAL OP1. How will buy-ins be handled? As per our standard buy-in procedures, under 2D OP2. Is netting available, is it mandatory and how does it work? We will mandate netting for this business, where trade date netting (TDN) and various aggregation options are offered. At end of day, once the gross trade reconciliation with the London Stock Exchange has completed, the day s gross trades flagged for netting will be netted and instructed into Euroclear Bank. OP3. Which calendar will be used? To determine the appropriate settlement date, the Euro currency (TARGET) calendar will be used. TECHNOLOGY / FILE CONTENT TF1. What trade source/ MIC will be used? For real time trade confirmations and member reports the trade source ID will be XIET TF2. Is the TradeSrcRef in EREP0006 equal to the LSE reference? Yes TF3. What values will we receive in TradeType field? All LSE trades will be of type TRAD TF4. Will we be notified of Cancellations? Contras get a reference in EREP0006, cancellations do not. However both will be included in the RTC s TF5. What trade source information can I expect to see within EREP0006? Members that choose to use the service will access our EquityClear reports. The LSE data will be additional information and there will be no change to the existing reports. TF6. Where can I obtain my netted transactions/positions? The net settlements are generated at end of day are listed in Member Report EREP0005 Netting Net Trades for Settlement. TF7. Will the settlement instruction reference appear on the MT518 message? No, there s no settlement information on the MT518 trade confirmation. The Trade Source reference will appear in the COMM field. TF8. Will LCH.Clearnet provide the settlement Instruction reference? LCH.Clearnet will provide its settlement instructions in reports EREP0005. On the instructions from LCH.Clearnet, it s the SEME reference On the message back from CSDs, it s the RELA reference. 5

6 FT9. FILE FORMATS MT518 Swift confirmation messages 1:F01TESTBIC1X }{2:I518LCHLGB2EAVTXN} {3:{108:LCHECLBFGB050231}} {4: :16R:GENL :20C::SEME//IBBBD :23G:NEWM :22F::TRTR/LCHL/TRAD :16R:LINK :20C::COMM//TEST7777 :16S:LINK :16S:GENL :16R:CONFDET :98A::TRAD// :98A::SETT// :90B::DEAL//ACTU/EUR4, :94B::TRAD//EXCH/XIET :19A::SETT//EUR8000, :22H::BUSE//SELL :22H::PAYM//APMT :16R:CONFPRTY :95R::SELL/LCHL/TESTBIC1XXX :22F::TRCA//PRIN :20C::PROC//TEST7777 :70C::PACO//SGCA/AAAH :16S:CONFPRTY :16R:CONFPRTY :95R::BUYR/LCHL/LCHLGB2E :22F::TRCA//PRIN :16S:CONFPRTY :36B::CONF//UNIT/2000, :35B:ISIN CH :16S:CONFDET -} 6

7 Appendix 1 CSD Codes for member reporting CSD Code EUBE XCVM EUFR EUNE OEKO MOTI APKE VPSN DAKV VPDK CRES CRST SCLV VPCS ECLR SCOM CHES CCAS JSDC CDPL CSD DESCRIPTION Indirect / Eclr BE Indirect / Interbolsa PT Indirect / Eclr FR Indirect / Eclr NL Indirect / OEKO AT Indirect / Monte Titoli IT Indirect / NCSD FI Indirect / VPS NO Indirect / Clearstream DE Indirect / VPS DK Indirect / Crest Direst / Crest Indirect / SCLV ES Indirect / NCSD SE Direct / Eclr Bank Direct / SIS Indirect / Australia Indirect / Hong Kong Indirect / Japan Indirect / Singapore 7