Country (CSD) NBB-SSS uses propietary transaction sequence number

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1 List of issues that could hamper smooth cross-csd settlement in T2S identified by the "Task Force on Smooth Cross-CSD" that are out of scope of the Task Force Note: This list relates to the categorized market responses received to the questionnaire in Item 7.4 first and second mini-consultation and the related section. Please refer to the word document /2011/ describing the issue list for further clarifications on individual issues 2.1 Restrictions in the investor CSD market prevent the importing of some securities issued abroad Assesment of TF: This issue category is OUT of scope for this task force because restrictions created by an investor CSD does not prevent other investor CSDs from importing securities from the issuer CSD and offering them to the market. France - BE NUG Difficulties expected to handle corporate actions for some securities when acting as Investor CSD Difficulties expected to handle corporate actions for some securities when acting as Investor CSD because of CSD s general liabilities related to corporate actions Euroclear France does not accept corporate securities eligible at NBB Legal barrier for VPS to act as technical issuer CSD for securities which are not issued/registered in it Legal constraints to accept other securities than Polish Government T-bills Inability to join T2S if PLN is not brought as a settlement currency in T2S Technical restrictions to hold securities issued in foreign CSD only in beneficial owners accounts at the level of CDCP Difficulties expected to handle corporate actions for some securities when acting as Investor CSD because of CSD s general liabilities related to corporate actions Non-standard settlement processing of UKI securities, held in SIX SIS and subject to stamp duty tax, Features of UK funds processing differ from elsewhere EUI not accepting securities with their domestic market identifiers on their international links i.e. where another CSD is r CSD but the issuer is domestic REG S (US securities issued with strict restrictions on ownership) not allowed in EUI 2.2 CSD s proprietary messages not compliant with ISO standard or with T2S practice Assessment of the TF: This issue category is out of the scope of this task force because CSDs will have to adapt to ISO to use T2S according the T2S user requirements. The issue is relevant for CSD s adaptation strategies and readiness monitoring for T2S. NBB-SSS uses propietary transaction sequence number Parameters used for validation at the CSD need to be aligned with T2S parameters Additional information will have to be passed to CSDs by local participants to reflect the specific kind of operation ISO Message SecuritiesSettlementTransactionInstruction (sese ) the AdditionalInformation can be used for adding additional information Parameters used for validation at the CSD need to be aligned with T2S parameters Additional field referring to the settlement time (HH:MM:SS) used as additional matching field No BICs are used in settlement instructions for local market at the LCD but by specific Participant s code assigned by LCD Trade date is an optional field and is used for matching only if provided by both parties In intra-csd validation, matching and provisioning processes additional fields are required specific for the local needs e.g. Matching type, Cash settlement mode, Short selling indicator, the dates and rates for repo trades, securities L&B type, sell/buy-back, proprietary codes are used to check the payment occurrence The field "Buy/Sell" may not describe all scenarios (there could be a need to have option "Other" e.g. in case of free delivery between accounts due to inheritance). Alternatively, the field could be renamed "Deliver/Receive" ; extra messages will be used for managing CSD validation hold 2.3 Current CSD s validation rules not aligned to T2S validation rules Assessment of the TF: This issue category is out of the scope of this task force because T2S will provide a standard set of validations on message/instruction fields. CSDs will have to adapt to use T2S according the T2S user requirements+a66. The issue is relevant for CSD s adaptation strategies and readiness monitoring for T2S. privileges, T2S Dedicated cash/securities account of instructing party, BIC of the instructing party/counterparty, CSD of the instructing party/csd of the counterparty, Client of instructing party/counterpart, Common trade reference, External match indicator, Hold indicator, ISO transaction code, Settlement after cut-off time indicator, Priority, LInkages, Quantity breakdown, Use of blocked/reserved position, Duplicate check 1

2 privileges, Trade date, Intended settlement date, Unit quantity/nominal amount, Settlment currency, T2S Dedicated Belgium - Belgian NUG related to NBB- cash/securities account of instructing party, BIC of the instructing party/counterparty, CSD of the instructing party/csd of SSS the counterparty, Client of instructing party/counterpart, Opt-out indicator, Ex-cum indicator, Common trade reference, External match indicator, Hold indicator, ISO transaction code, Linkages, Quantity breakdown, Use of blocked/ reserved position, Non-modifiable Belgium - Belgian NUG concerning Euroclear Belgium Estonia - Estonian CSD Germany - BNP Paribas Securities Services, Frankfurt privileges, CSD of the instructing party/csd of the counterparty, Client of instructing party/counterpart, Opt-out indicator Ex-cum indicator, External match indicator, Hold indicator, ISO transaction code, Priority, Linkages, Quantity breakdown, Use of blocked/reserved position, Non-modifiable Different validation rules for T2S Dedicated cash/securities accounts in T2S, Identification of the owner of T2S securities account and its privileges/ counterpart and its privileges, Client of instructing party/counterpart, Opt-out indicator, Ex-cum Indicator, Quantity breakdown Different validation rules for Intended settlement date, Unit quantity/nominal amount, Priority, Linkages, Quantity breakdown, Ex-cum indicator, Use of blocked/ reserved position, Non-modifiable instruction indicator; have to be analysed for External match indicator, Hold indicator, Duplicate check Different validation rules for duplicate check Different validation rules for ISIN, Unit quantity/nominal amount), settlement currency, debit/credit indicator, T2S securities account of instructing party, CSD of owner of securities account, CSD of counterpart, opt-out indicator, Ex-cum Indicator, Common trade reference, External match indicator, Hold Indicator, ISO Transaction code, Settlement after cut off time indicator, Priority, Linkages, Quantity breakdown, Non-modifiable Different validation rules for ISIN, settlement currency, Opt-out Indicator, Ex-cum Indicator, Priority, Linkages, Use of blocked/reserved position, Non-modifiable Different validation rules for Intended settlement date, Priority, Linkages Different validation rules for Trade date; for most other fields detailed analysis is not yet finalised Different validation rules for ISIN, Settlement currency, Unit quantity/nominal amaount, Debit/Credit Indicator, T2S Dedicated cash account, CSD of the instructing party, CSD of the counterparty, Client of instructing party/counterparty, Opt-out indicator, Ex-cum Indicator, Common trade reference, External match indicator, Hold Indicator, Settlement after cut-off time indicator, Priority, Linkages, Use of blocked/ reserved position, Non-modifiable instruction indicator, Duplicate check privileges, Client of instructing party/counterparty, Opt-out indicator, Ex-cum Indicator, ISO transaction code, Quantity breakdown, Duplicate check Different validation rules for Intended settlement date, Opt-out indicator, Ex-cum Indicator, Common trade reference, External match indicator, ISO transaction code, Settlement after cut-off time indicator, Priority, Use of blocked/ reserved position, Non-modifiable privileges, T2S Dedicated cash/securities account of instructing party, CSD of the instructing party/csd of the counterparty, ISO transaction code, Priority, Linkages, Quantity breakdown, Use of blocked/ reserved position, Nonmodifiable privileges, Intended settlement date, Debit/Credit indicator, ISO transaction code, Settlement after cut-off time indicator, Quantity breakdown, Use of blocked/ reserved position, Non-modifiable Lithuania - LCVPD privileges, ISIN, T2S Dedicated cash/securities account of instructing party, BIC of the instructing party/counterparty, CSD of the instructing party/csd of the counterparty, Hold indicator, ISO transaction code, Settlement after cut-off time indicator, Quantity breakdown, Use of blocked/ reserved position, Duplicate check privileges, Intended settlement date, Trade date, Unit quantity/nominal amount, BIC of the instructing party/counterparty, Client of instructing party/counterpart, Opt-out indicator, Ex-cum Indicator, Common trade reference, External match indicator, Hold Indicator, ISO transaction code, Settlement after cut-off time indicator, Priority, Linkages, Use of blocked/ reserved position, Non-modifiable Different validation rules for Quantity breakdown, Use of blocked/ reserved position, Non-modifiable instruction indicator, Duplicate check privileges, Payment, Intended settlement date, Unit quantity/nominal amount, CSD of the instructing party/csd of the counterparty, Client of instructing party/counterpart, Opt-out indicator, Ex-cum Indicator, Hold Indicator, ISO transaction code, Settlement after cut-off time indicator, Priority, Linkages, Quantity breakdown, Use of blocked/ reserved position, Non-modifiable privileges, Trade date, Intended settlement date, CSD of the instructing party/csd of the counterparty, Duplicate check privileges, Trade date, Intended settlement date, ISIN, Unit quantity/nominal amount, T2S Dedicated cash/securities account of instructing party, BIC of the instructing party/counterparty, CSD of the instructing party/csd of the counterparty, Client of instructing party/counterpart, Opt-out indicator, Ex-cum Indicator, Common trade reference, External match indicator, Hold indicator, ISO transaction code, Settlement after cut-off time indicator, Priority, Quantity breakdown, Use of blocked/ reserved position, Non-modifiable 2

3 privileges, Trade date, Settlement currency, Intended settlement date, ISIN, Unit quantity/nominal amount, BIC of the instructing party/counterparty, CSD of the instructing party/csd of the counterparty, Client of instructing party/counterpart, Opt-out indicator, Ex-cum Indicator, Common trade reference, External match indicator, Hold indicator, ISO transaction code, Settlement after cut-off time indicator, Priority, Linkages, Quantity breakdown, Use of blocked/reserved position, Non-modifiable Different validation rules for Unit quantity/nominal amount, Settlement currency, Debit/Credit indicator, BIC of the instructing party/counterparty, CSD of the instructing party/csd of the counterparty, Client of instructing party/counterpart, Opt-out indicator, Ex-cum Indicator, External match indicator, Hold indicator, ISO transaction code, Settlement after cut-off time indicator, Priority, Linkages, Quantity breakdown, Use of blocked/reserved position, Nonmodifiable privileges, CSD of the instructing party/csd of the counterparty, Client of instructing party/counterpart, Opt-out indicator Ex-cum Indicator, Common trade reference, External match indicator, Hold indicator, ISO transaction code, Settlement after cut-off time indicator, Priority, Linkages, Quantity breakdown, Use of blocked/ reserved position, Non-modifiable privileges, Intended settlement date, Trade date, Settlement currency, Debit/Credit indicator, Unit quantity/nominal amount, BIC of the instructing party/counterparty, CSD of the instructing party/csd of the counterparty, Client of instructing party/counterpart, Opt-out indicator, Ex-cum Indicator, External match indicator, Hold indicator, ISO transaction code, Settlement after cut-off time indicator, Priority, Linkages, Quantity breakdown, Non-modifiable Different validation rules for Unit quantity/nominal amount, Client of instructing party/counterpart, Opt-out indicator, Excum Indicator, Hold indicator, ISO transaction code, Settlement after cut-off time indicator, Priority, Linkages, Quantity breakdown, Non-modifiable Different validation rules for T2S Dedicated cash account of instructing party, CSD of the instructing party/csd of the counterparty, Client of instructing party/counterpart, Opt-out indicator, Ex-cum Indicator, Common trade reference, External match indicator, Hold indicator, ISO transaction code, Settlement after cut-off time indicator, Priority, Linkages, Quantity breakdown, Use of blocked/ reserved position, Non-modifiable privileges, Intended settlement date, Settlement currency, Settlement amount, Debit/Credit indicator, Unit quantity/nominal amount, T2S Dedicated cash/securities account of instructing party, CSD of the instructing party/csd of the counterparty, Opt-out indicator, Ex-cum Indicator, External match indicator, Hold indicator, Linkages, Duplicate check privileges, Intended settlement date, Unit quantity/nominal amount, T2S Dedicated cash/securities account of instructing party, CSD of the instructing party/csd of the counterparty, Ex-cum Indicator, External match indicator, Hold indicator, Settlement after cut-off time indicator, Priority, Linkages, Quantity breakdown, Use of blocked/ reserved position, Nonmodifiable privileges, Intended settlement date, Debit/Credit indicator, Unit quantity/nominal amount, BIC of the instructing party/counterparty, Opt-out indicator, Ex-cum Indicator, External match indicator, Hold indicator, ISO transaction code, Settlement after cut-off time indicator, Priority, Quantity breakdown, Use of blocked/ reserved position, Non-modifiable 2.4 Current CSD s matching rules not aligned to T2S matching rules Assessment of the TF: This issue category is out of the scope of this task force because T2S will provide a standard set of matching fields according to the ECSDA standard. CSDs will have to adapt to use T2S according the T2S user requirements. The issue is relevant for CSD s adaptation strategies and readiness monitoring for T2S. Belgium - BE NUG Estonia - Estonian CSD Germany - BNP Paribas Securities Services, Frankfurt No pre-matching for intra-csd settlement Common market practice for processing unmatched instructions of indirectly connected parties needs to be agreed for CSDs in T2S Reason code is mandatory matching field; Client of instructing party/counterpart may need to be provided by DCPs or in case of cross-csd settlement to identify end client account Optional (and not additional) matching on client level might result in mismatch when settling in direct holding markets Client of the counterparty is mandatory matching field; in order to avoid cross-matching the possibility to link the instruction to received allegement instruction ID could be useful; delivery of pledged securities is not practised crossborder as additional information needs to be provided Registration basis code is a mandatory matching field. In principle, non matching additional information can be sent after the original instruction has been entered. Matching at Clearstream is done on account level. The future implementation of matching on party level (CSD/Participant BIC11) is currently not ensured For cross border trades the final beneficiary information is mandatory fleld. The settlement time is used as an additional matching field The 22F field in SETR ( ISO15022) is used by HELEX as a matching field; Client of instructing party/counterpart may need to be provided by DCPs or in case of cross-csd settlement to identify end client account KELER applies additional matching rules in case of repos (e.g. settlement type of a repo, repo interest rate, expiry date of a repo transaction) and securities lending (e.g. expiration date of a lending transaction, lender s and borrower s accounts, collateral given by the borrower, number and ISIN of securities lent, number and ISIN of securities given as collateral, cash account of the collateral provider, collateral rate, tolerance limit in %, lending fee) that have to be maintained in T2S The CSD understands that the trading venue will not be a matching field in T2S 3

4 Trade date not a mandatory field for FREE settlement instructions; no tolerance amount applied when matching settlement amounts; Client of instructing party/counterpart - mandatory matching field for deregistration instructions matched at LCD; proprietary codes for identification of different types of instructions are used and are matching fields; common trade reference is mandatory and matching field for bilateral instructions; LCD requires additional fields that are matching fields but are not included in standard T2S instruction Trade date - matching field only if filled by both parties; CSDs are not matching criteria; Client of instructing party/ counterpart is a matching field Currently additional validations for legal reasons (as in the case of RRs or distinction account P/T) or market practices applicable for participants which opt for domestic matching; one tolerance amount applied for matching at Iberclear Instruments (lottery bonds) with specific matching requirements (e.g. trade sequence); Swedish market suggests to make "Client of instructing party/client of counterparty" additional matching field CSD is following a different set of matching rules (using only mandatory (and not optional or additional) matching fields; matching not only at ISIN but also at position types i.e. Swiss registered shares, UK stock liable to stamp duty) Stamp Duty is typically assessed on matching; compliant with the understanding that identifier of the trading venue is not matching field in T2S ESES matching system accepts instructions with ISINs not yet created in ESES securities database - French Market will adapt to the new T2S rules Differences either on mandatory or additional matching field related to currently missing: CSD of the counterparty, Client of the counterparty, Opt-out indicator, Ex-cum indicator Belgium - Euroclear Belgium Some of the mandatory matching fields in T2S not required in SR instructions Currently tri-party matching and the settlement without tolerance of the amount are carried out by KDPW system; In intra- CSD settlement more fields are currently required in KDPW as mandatory than in standard T2S instructions Some of mandatory matching fields in T2S not required in DC instructions; no tolerance amount CDCP currently does not have in its system all matching fields that will be in T2S; Matching rules at the present time in CDCP are not compliant to the binding matching principle in T2S (e.g. Trade date) 2.5 Current CSD s instruction maintenance rules not aligned to T2S instruction maintenance rules Assessment of the TF: This issue category is out of the scope of this task force because T2S CSDs will have to adapt to use T2S according the T2S user requirements with regards to modifications of instructions. The issue is relevant for CSD s adaptation strategies and readiness monitoring for T2S. Not possible to hold released instruction; Amendment: T2S process indicators not supported No maintenance of instructions is allowed (cancel and replace are used); unilateral cancellation mechanism for customer accounts; unmatched instructions cancelled at the end of day of the intended settlement date No cancellation of the pending part of a partially settled instruction is permitted as partial settlement is not currently allowed Instruction maintenance possible when both parties have released their transactions. In this case the settlement of the transaction will be attempted at least once; Possible to cancel unilaterally given that both participants have released their instructions Currently a transaction can be instructed without a securities account. The securities account can be added later and amended till settlement attempt (technically up to 200 securities accounts per instruction (i.e. trade half) are allowed). End investor securities account(s) is often not known at the time of instructing the main transaction and there would be a need of allowing users to input this information at a later stage, without having to bilaterally cancel the original instructions. Unmatched instructions are automatically cancelled 25 business days after trade date Hold & release and amendments do not exist in ESES currently. In ESES system, the current number of days before canceling unmatched instruction is 10 after ISD. French Market will adapt to the new T2S rules The detailed analysis is not yet finalized, but Clearstream will adopt T2S instruction maintenance possibilities if necessary Instructions cannot be amended at any stage; doesn t recycle the unmatched instructions; recycles the unsettled transactions for ten working days Not cancellation of the pending part of a partially settled instruction is permitted as partial settlement is not currently allowed KELER allows for customers to modify priority (as defined by a proprietary code) of an instruction; cancellation rules depend on transaction types; unsettled instructions are recycled for 5 days before cancelation; unsettled instructions can be cancelled unilaterally until value date Unmatched instructions have to be re-entered into the system; only cancellation is allowed It is possible to amend the securities account; unmatched instructions recycled for 30 days Unmatched instructions currently automatically cancelled at the end of the intended settlement date; Unsettled instructions are cancelled 3 days after the end validity date No hold and release exists at the LCD; Unmatched settlement/cancellation instructions cancelled at the end of settlement date Lithuania - LCVPD Unilateral revocation of matched instruction before the start of settlement process; automatic cancelation of unmatched and unsettled instructions after the end of designated settlement date Hold of already released instruction not possible. Other indicators do not exist; In ESES the recycling period of unmatched instructions is 10 business days after the ISD VPS cancels unmatched instructions after 20 working days; In VPS it is possible today to unilateral cancel a settlement instruction after (intended) settlement day has been reached; Not all options for instructions maintenance are available in VPS In SR there are no maintenance instructions: hold and release, amendment; Matching in Securities Register (SR) is binding and there is no possibility of cancellation of matched instructions; Unmatched instructions are cancelled at the end of ISD Unmatched instructions are cancelled at the end of ISD Matching for dual-listed securities will be achieved at issuer CSD level Unilateral cancellation of instructions that have not settled is possible by the prejudiced party No hold and release mechanisms; amendments not allowed as DC does not use process indicators for settlement instructions 4

5 Already matched transactions cannot be cancelled; unmatched instructions cancelled at the end of the intended settlement day Maintenance of instructions in CDCP not compliant to that in T2S Unmatched instructions are cancelled at the end of the intended settlement day Instructions cannot be amended Unmatched instructions are cancelled at the end of the intended settlement day Amendment instructions are not possible in IBERCLEAR; Hold and Release is not always possible In case of bilateral trades for equities, the automatic cancellation takes place within two days for unmatched instructions. Unmatched fixed income instructions will be automatically cancelled at the end of the settlement date. There is currently additional functionality offered in a pre-mach system, allowing for amendments until the pre-match system has routed transactions onwards to the ordinary settlement system. These differences are not likely to be maintained Currently, information about client account (T2S securities account of delivering/receiving party) is mostly instructed as a separate account allocation instruction (deposit/withdrawal). As this information can be instructed directly in T2S, there would in principle be no need for an additional allocation instruction Client account is often not known at the time of registration and there would be a need of allowing users to input this information at a later stage, without having to bilaterally cancel the original instructions. There is additional functionality offered in a pre-mach system, allowing for unilateral cancellation until the pre-match system has routed transactions onwards to the ordinary settlement system. SIX SIS does not allow stock-exchange transactions to hold SIX SIS has several fields that can be modified by the member. There is no initiative planned to eliminate differences. It is assumed that T2S rules will apply on all transactions outsourced to T2S Already matched OTC-transactions can be unilaterally cancelled. Stock exchange transactions cannot be cancelled at all If T2S allows for the amendment of securities accounts in an unsettled transaction, EUI would need to be able to validate the tax status of the new account. This business validation cannot take place after settlement in T2S Currently, can also amend securities a/c in EUI. Will need to change current UK practice to comply with T2S criteria EUI currently cancels unmatched transactions after 30 days. 2.6 Current CSD s settlement processes not aligned to T2S settlement processes Assessment of the TF: This issue category is out of the scope of this task force because T2S will provide standard settlement functionalities and CSDs can adapt to use T2S according the T2S user requirements. The issue is relevant for CSD s adaptation strategies and readiness monitoring for T2S. Belgium - Euroclear Belgium for registered securities CSD is compliant to the settlement eligibility conditions of T2S except, VP as CSD needs to preclude an ISIN by checking for any intraday restrictions; partial settlement allowed for CCP trades only Some legal and technical obstacles related to private limited companies shares the selll of these shares is by default Estonia - Estonian CSD subject to pre-emptive rights that could be exercised by other shareholders of the company. Partial buy or sell of private limited companies shares is also possible. Conditional Securities Delivery or CSD Validation Hold needed to solve this. The settlement conditions must be fulfilled at the moment of settlement attempt i.e. validation at the moment when instruction is entered into CSD system is not enough., hold and release indicators and linkage condition Most of the validations described are compliant but the detailed analysis is not yet finalized by Clearstream Difficulties to manage registration in the context of partial settlement - further discussions with the registrars needed. An unacceptable alternative would be to not participate in partial settlement and for EUI to manage an auto-splitting process (cancel and replace). Hold and Linkage indicators not used Part of settlement eligibility criteria not applied at LCD Lithuania - LCVPD and linking of transaction possible Some of settlement eligibility criteria in T2S (hold instruction, linkage condition, intraday restrictions) not required and partial settlement is not applied in SR The instruction status Hold is not yet currently a criterion for settlement eligibility Partial settlement is defined in the rules of the system and it is not possible for participants to opt-out or opt-in Partially compliant to criteria for settlement eligibility in T2S (note: e.g. not compliant to the linkage condition) due also to legal barriers In IBERCLEAR the criteria for settlement eligibility is compliant to T2S except the requirement about the linkage condition or cut-off times, or the fact that the settlement date is the current settlement date No linkage condition In the Swiss Market, CSD-supported partial settlement is applied for CCP-transactions only 5

6 Difficulties to manage registration in the context of partial settlement - further discussions with the registrars needed. An unacceptable alternative would be to not participate in partial settlement and for EUI to manage an auto-splitting process (cancel and replace). 2.7 Current CSD s schedule/calendar definitions not aligned to T2S schedule/calendar definitions+a195 Assessment of the TF: This issue category is out of the scope of this task force because with T2S a standard daily schedule and calendar will be followed. Participation in the night time settlement will be mandatory for CSDs. CSDs will have to adapt to use T2S according the T2S user requirements. The issue is relevant for CSD s adaptation strategies and readiness monitoring for T2S. Estonia - Estonian CSD NBB-SSS currently only settles on Euro-Target Days. For non-eur currencies joining T2S, we shall adapt our services to be compatible with the calendars. The cost of the night-time settlement is an obstacle for the CSD; also settlement on National Holidays and Christian Orthodox Holidays that differ from T2S Calendar On large corporate action days, the calculation of the transactions might require a longer time period than the span between EOD and start of the appropriate sequences in the NTS. In these cases VP will preclude the given ISINs Numerous concerns to participate in night-time settlement for CSDs, participants and issuers: need for technical adaptation of systems, dificulties to process big corporate actions, higher operational costs and risks, need for overnight credit for issuers Need to have harmonised definitions of irrevocability of instructions and finality of settlement to facilitate cross-border settlement. Adoption of harmonised settlement cycle could help in this respect. Market points out that having a single calendar for all countries whose currency is accepted in T2S would be extremely helpful Clearstream will use T2S calendar Reservations regarding settlement days outside of the T2S calendar for non-euro currencies, such as the 1st of May. In this case an assessment has not yet been concluded Currently settlement in another CSD which is open for settlement whereas the Hungarian market is closed is supported by KELER the way that instructions are sent out to the local markets through the external account holders, however, even if the settlement takes place the related bookings in our systems occur one day following the national holiday No Irish settlement banks participate in euro settlement. UK settlement banks providing euro services may have concerns exists at the LCD. No specific activities planned to participate in T2S night-time settlement yet Since the Schedule of the Settlement Day is not yet finalized it is not possible to conclude on a topic like this., mainly batch daytime settlement KDD does not currently envisage offering night-time settlement, however directly connected members will still be able to use T2S settlement facilities that do not require response from KDD Night time settlement of foreign ISINs on KDD members T2S securities accounts that do not require use of CSD Validation Hold functionality will be enabled Night-time settlement only for fixed income securities Numerous concerns to participate in night-time settlement for CSDs, participants and issuers: need for technical adaptation of systems, dificulties to process big corporate actions, higher operational costs and risks, need for overnight credit for issuers Swiss market does not have the concept of night time settlement and day time settlement During settlement - there is a possible requirement to suppress night-time settlement; this is not a feature present in the UK market today, and work needs to be undertaken to assess the impact of overnight settlement given the structure of the UK market payment system Due to the tiered nature of the UK banking system (small number of RTGS participants versus the large number of CSD participants), moving to overnight settlement is viewed by some participants as introducing risk in terms of the exposure between a settlement bank and its client (particularly where the client is a large investment bank). Today, the situation exists where the issuer CSD market may be closed but settlement in investor CSDs may continue (and vice versa). Clearly, if the issuer CSD market is closed, investor CSDs can only perform internal settlement cross border settlement (including between 2 investor CSDs which require realignment in the issuer CSD) will not be possible on that day The current timetable, with its phased approach to closing the settlement day (including the DBV window that currently exists at the end of day) will need to be carefully analysed in the context of the T2S schedule and functionality (particularly in relation to auto-collateralisation unwinding at the end of day. EUI operates between in line with CSD member and BoE requirements. In order to accommodate cross- CSD settlement fully, EUI may require an extended operating window, or alternatively EUI could opt to reduce the hour available for settlement of local securities. The daily timeline may change as a result of harmonisation 2.8 s reported in mini consultations but not considered The Regulations of NBB-SSS currently only foresee the acceptance of fixed income securities as a result of the application of the so-called X/N tax regime within NBB-SSS All the participants must open at least an own account and a customer account to be able to segregate the holdings In case of non-euro denominated securities, it is to be known that such a settlement will still be linked to the Euro-Target days, if and only if WT is involved in the transaction. The link with the Euro-Target days will be maintained in case of WT related transaction. The CSE operates a Direct Holding System and maintains the Registries of all rs listed at the CSE, therefore it should be ensured at any time that : 1) the sum of the holdings kept with the T2S (Settlement) Accounts administered by each Operator equals the sum of holdings in the DSS Accounts in the Registry for all the clients of each Operator and 2) there are no changes in the balances of the T2S (Settlement) Accounts due to settlement that are not immediately reflected in changes in the balances of end clients in the DSS 6

7 Italy Conditional Securities Delivery is currently not applied in KELER For allocation it might be necessary to include account numbers of owners in the Settlement instructions. According to the current regulation financial instruments entered into central depositories should, in principle be freely transferable. However, financial instruments that do not meet such conditions may be entered in the central depository but should be kept in a separate record until the condition of free transferability is met According to the Financial Instrument Market Law LCD participants own holdings have to be segregated from the LCD participants clients holdings LCD registers Rights to money securities (resulted from final squeeze-out procedures), which are considered as temporary securities to realize specific role in the CSD and are not transferable between counterparties T2S will have an impact on the way CSD s will link to each other (technically and contractually) to act as Investor CSD, e.g. ESES is holding non-eses securities via Euroclear Bank (Relayed Links, technically and contractually) with other CSD s DE Stock Exchange related services offered on CASCADE LION Legal obligations: Only financial institutions that are authorized to provide securities related services in Portugal are authorized to become participants (affiliates) and open accounts in the centralized system. This includes not only domestic financial institutions but also foreign institutions operating under the European Passport or by establishing a branch in Portugal The securities issued in another CSD must be fungible in all aspects and not only from settlement processing perspective - no initiatives have been planned to accept non fungible securities in the system Suggestion to rename the field Buy/Sell to Deliver/Receive to secure that all legal reasons of transfer are covered by the settlement instruction not only trades e.g. transfer of inherited securities. The previous does not apply in case the field can assume values Deliver/Receive. For beneficiaries resident in Sweden, there is an obligation to segregate by beneficial owner at VPC. With respect to our role as investor CSD we follow the market practice of the local market If restrictions exist, SIX SIS uses sub-custodians market to get full connectivity into that market Swiss Interbank Clearing System (SIC) for CHF-settlement: Members can chose to settle Inhouse CHF in Central Bank Money or Commercial Bank Money at SIX SIS. If at least one side of a matched settlement transaction uses Central Bank Money, then the transaction is sent to SIC for confirmation first before securities settle Euro-SIC for Euro-settlement: Members can chose to settle Inhouse EUR at Euro-SIC or Commercial Bank Money at SIX SIS. If at least one side of a matched settlement transaction uses Euro-SIC, then the transaction is sent to Euro-SIC for confirmation first before securities settle. 2.9 s reported in mini consultations with status closed Change in legislation to allow all participants to hold all types of securities on omnibus accounts 7