SCoRE standards: TEFRA D changes to processing
As part of its continuous improvement to comply with the Securities Market Practice Group (SMPG) standards and in anticipation of the future implementation of the new European Collateral Management System (ECMS platform) and the Single Corporate Action Rulebook SCoRE, Clearstream Banking1 AG will change the TEFRA-D processing for German domestic securities and the securities safekept by CBF via its investor CSD link, including U.S. and Swiss securities. This change will be effective
18 November 2024
Background
Securities under TEFRA D regulations are subject to investment restrictions and cannot be held on behalf of a U.S. resident (as final beneficiary) for a period of 40 days after the issue date.
For these securities Clearstream Banking must obtain a certification for any position held on behalf of non-U.S. resident or qualified investor. Failure to receive the requested certification before the deadline will imply the blocking of the uninstructed position.
Impact on clients
The current "strict" and "flexible" TEFRA D procedure will no longer be offered to clients. The handling of the TEFRA D event will move from a full settlement processing to an asset servicing processing.
Clients will be notified via MT564 Corporate Action Notification with an event type Certification (Swift qualifier is CERT).
The MT564 Corporate Action Notification (CERT) will contain the following structured fields in Sequence E:
- :22F::CETI//NDOM for option “QINV”;
- :94C::NDOM//US for options “QINV”;
- :98C::MKDT// for options “QINV” and “NOQU”;:98C::RDDT// for options “QINV” and “NOQU”.
Clients will be required to instruct Clearstream Banking and certify whether their holdings are held by qualified (QINV) or unqualified (NOQU) beneficial owners. Reminders for uninstructed position are sent 10 and 2 business days before the Certification Date.
Clients are requested to reply via MT565 or Xact Web Portal. Any certifications provided via Xact Web Portal or Swift message shall have the same effect as a signed certificate.
Clients must send an MT565 instruction specifying the relevant instruction quantity, corporate action reference ID and the corporate action option code.
Note: Please refer to the Xact via Swift User Guide for more details about the structured fields.
A securities position held by a Qualified TEFRA Investor will not be blocked and will receive entitlements.
After the grace period of four Business days, the MT565 will automatically be rejected. All late instructions must be sent by MT599/Xact Web Portal Message Exchange and unblocking will be handled via settlement instruction. The final execution will happen only once the Issuing Agent/Lead Manager has accepted the delivery and the instruction has settled on the agent account (XXXX-670).
Reporting
The positions are visible and kept on the client 7-digit account on which the securities were bought or are held. The positions will no longer be blocked on sub-account XXXX-671.
Note: Sub-account XXXX-671 will be closed after migration is fully completed.
Positions are blocked on the certification event date in case of no certification. Position type will change from AWAS to RSTR and will be visible on Client sub-account XXXX-851.
Billing
The formatted TEFRA D instruction will be charged at the cost of a standard corporate action instruction fee. Please refer to the Fee schedule for further details.
Migration
Migration details will be provided in due course.
Further information
For further information please contact ECMS.programme@clearstream.com, Clearstream Banking Client Services or your Relationship Manager.
1. This Announcement is published by Clearstream Banking AG (CBF), registered office at Mergenthalerallee 61, 65760 Eschborn, Germany, registered with the Commercial Register of the District Court in Frankfurt am Main, Germany, under number HRB 7500.