Settlement process - Iceland
Settlement cycles
All trades executed on Nasdaq Iceland hf. are cleared and settled by the domestic CSD, Nasdaq CSD SE.
Settlement takes place in the CSD system for all instruments issued by the CSD. Settlement in the Icelandic SSS is in batches.
The full lifecycle process of a settlement instruction can be managed via GUI and ISO messaging, and the process is the same in each case.
Settlement flow
All times below are GMT.
Trading process
Trading takes place between 9:30 and 15:25 on banking days.
Settlement process
The CSD provides settlement in batches throughout the working day, and as per below table.
Free of Payment | DVP | |
Start of day | 08:00 | |
| Settlement batches | Every 10 minutes | 09:15 |
End of day | 17:00 |
The settlement against Icelandic krona takes place at designated cash account owned by participants at the Central Bank of Iceland. The CSD uses netting and optimizes the settlement.
Matching
For two settlement instructions to match, the mandatory matching fields must be present in both instructions, and their value should be identical (with the exception of the trade price being within the cash tolerance, including the CRDT/DBIT code, that must be opposite).
Non-mandatory matching fields are classified as either optional or additional matching fields.
Additional matching fields will only match if the same value is present in the additional fields of both instructions.
Optional matching fields will match if the same value is present in the additional fields of both instructions, or if one of the fields has been left blank, and the other instruction has a value in this field.
Partial Settlement
Partial settlement is not market practice in Iceland.
Registration
Book-entry securities owned by foreign investors are generally registered in the name of the trustee (nominee-registered). This can be either in the name of the custodian or local sub-custodian; however, segregated accounts on beneficial owner basis are also possible in the market.
Registration takes place automatically upon settlement.
Details on how to register for an AGM/EGM are available in “Organisation of AGM/EGMs”.
Stamp duty
Stamp duty is not applicable in the Icelandic market.
Penalties
Cash penalties
Penalties will be calculated and applied on matched settlement instructions that fail to settle, in full or in part, on and after their intended settlement date (ISD), if both the settlement instruction and the relevant financial instrument are subject to cash penalties.
Instruments subject to cash penalties
Any financial instrument listed in the Financial Instruments Reference Data System (FIRDS) database maintained by ESMA will be subject to cash penalties. However, cash penalties will not apply to shares listed in the Short Selling Regulation (SSR) exemption list.
Buy-ins
No official agreed procedures exist in the market but, if a trade fails, Nasdaq CSD SE can call the buy-in to the defaulting party.
The following Nasdaq Iceland hf. buy-in rules apply to SE transactions that are not cleared and settled through the CCP environment:
- If the seller has not delivered the securities by SD+3 (N as Notification date), the buyer may send the first notification of a possible buy-in to the seller.
- The first possible execution date for the actual buy-in is N+5 (SD+8) at 08:45 GMT at the earliest and the buyer must send an updated notification to the seller informing that the buy-in has started.
Duty on transactions
Stamp duty is not applicable in Iceland. However, if one of the parties is resident in Iceland, there is a transfer tax for off-exchange trades.