Settlement process – Sweden
Euroclear Sweden operates the domestic securities settlement system. The system, called the CSD system, is a DVP system in accordance with BIS Model 1. The CSD system is divided into two sections with slightly different functionalities – the AM sub-market and the PM sub-market.
- In the AM sub-market, the functionality has been developed for clearing and settlement of equities, although other financial instruments such as interest-bearing securities are also cleared and settled in the AM sub-market.
- The functionality in the PM sub-market has been developed for the clearing and settlement of fixed income securities. Those issuers for which special terms exist as regards debt instruments, known as a PM programme, are handled in the PM sub-market.
Pre-matching/matching criteria
For settlement in the AM sub-market in the CSD system, Euroclear Sweden has a pre-match system where matching begins as soon as the instructions have been registered.
The pre-match system in Euroclear Sweden is not used for fixed income (debt) instructions settled in the PM sub-market. Fixed income instructions are registered directly in the settlement system of Euroclear Sweden. This is also the case for instructions in bilaterally settled on-exchange instructions, that is, matching takes place in the settlement system.
STP instructions for matching and settlement are forwarded continuously.
Matching criteria:
- Agent BIC;
- Client of agent bank BIC;
- Intended settlement date (ISD);
- Trade date;
- Quantity/nominal amount;
- Securities/ISIN;
- Settlement amount and settlement currency.
Additional criteria for fixed income:
- SEB client’s segregated nominee account in the CSD (VPC account);
- Counterparty’s segregated nominee account in the CSD (VPC account).
Note: For matching with Clearstream Banking, the participant number is a matching criteria and the additional RECU/DECU field is required to achieve STP.
Settlement cycles
Equities: | T+2 |
Debt instruments: | T+2 |
Settlement flows
| T to T+1: | The investor provides its custodian with the settlement instructions for the trade. On-exchange transactions will be automatically downloaded by the custodian (if requested by the investor). |
| T to T+2: | The custodian provides the Swedish local custodian with the settlement instruction. The local custodian registers the instruction in the VPC settlement system. Off-exchange cash equity transactions are pre-matched in the separate VPC pre-matching system. Transactions in the pre-matching system are not binding and can be unilaterally revoked as long as they have not been released to the VPC settlement system. Matched fixed-income transactions can only ever be revoked bilaterally. |
Settlement schedule
The following settlement schedule will apply on SD:
7:00 | 8:00 | 10.00 | 12:00 | 15:30 | 17:00 | |
Equity | Euroclear Sweden opens a |
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| Settlement against and free of payment | Settlement free of payment |
| Euroclear Sweden opens a |
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| Settlement free of payment |
a. Check of delivery and payment capacity starts for pre-matched instructions.
b. Including interest and redemption.
Settlement date (SD)
Instructions that do not settle during the first cycle automatically pass on to the next cycle until they settle.
Instructions fail, as follows:
- If they do not settle on contractual SD; or
- Due to their late arrival, insufficient holdings of securities/cash or mismatch.
Failed unmatched transactions are cancelled in the VPC system after 20 days and the custodian must re-enter the transaction.
The cash is cleared at the Riksbank simultaneously with the securities. The custodian sends a settlement confirmation to the investor when the trade has been settled.
Market deadline
Equity Market versus Payment | 15:30 on SD |
Equity Market Free of Payment | 17:00 on SD |
Debt Market versus Payment and Free of Payment |
Registration in the CSD within 5-15 minutes of instruction execution, settlement until 15:30/17:00 on SD a |
a. It is technically possible to register and settle securities in the PM sub-market, the debt market, until 15:30 for DVP and 17:00 for FOP. However, the market deadlines as per the market rules stipulated by the Swedish Securities Markets Association are as follows: Registration in the CSD by 9:30 on SD; for same-day instructions (T+0), registration in the CSD within 5-15 minutes of instruction execution.
Cancellations and amendments
The possibility to cancel an instruction depends on the status of the instruction:
- An unmatched instruction can be cancelled unilaterally at all times.
- A matched instruction must be cancelled bilaterally at all times.
- A matched instruction can be cancelled bilaterally before SD, and on SD, on a reasonable efforts basis, up until the instruction settles.
Over-the-counter (OTC) trades
The OTC market is a separate market within the stock exchange and any OTC transaction in a listed company must always be followed by a special registration in the trading system.
Partial settlement
Euroclear Sweden’s system will only attempt to perform partial settlement for transactions in the AM/equities sub-market that meet a number of CSD system requirements. Given the CSD system structure and partial settlement system requirements, this means that Euroclear Sweden’s partial settlement functionality is limited to transactions in the AM/equities sub-market that are:
- matched in the pre-match system, that is, OTC and CCP (not on-exchange transactions settled bilaterally); and
- where the counterparties are two separate clearing identities (that is, only for external transactions, not between two clients/accounts under the same CSD member); and
- where the delivery instruction is either fully or partially released for settlement.
If none of the above mentioned conditions is met, the CSD system cannot attempt partial settlement for the transaction.
Partial settlement, in the form of split settlement, is supported:
- PM sub-market partial settlement will be performed on a manual bilateral basis.
- There is no support for partial settlement for securities in Euroclear Sweden’s PM/fixed income sub-market and on-exchange instructions settled bilaterally.
Registration
Nominee registration is allowed. If the beneficial owner wants to vote by proxy or attend general meetings, temporary registration in the name of the beneficial owner is mandatory.
Stamp duty
Stamp duty is not applicable in the Swedish market.
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 listed in the Short Selling Regulation (SSR) exemption list.
Nasdaq Stockholm buy-in rules
Buy-in procedures are included in the Nasdaq Nordic Member Rules for Nasdaq Stockholm and thus binding for members of this exchange. According to these procedures, it is the buying member who has the right but not the obligation to initiate a buy-in procedure by sending a written notification form to the selling member.
This means that sub-custodians are not taking any direct part in the process.
The buy-in procedure of Nasdaq Stockholm comprises trading in securities that are bi-laterally cleared and settled.
Buy-in timeline of Nasdaq Stockholm (non-CCP instructions):
- Notification of buy-in: SD+2
- Buy-in execution: SD+7
CCP buy-in rules
Following the introduction of a CCP in the Swedish market, there is a separate Buy-in procedure for the CCP-cleared instructions, these procedures are governed and administrated by the CCPs.
Cboe Clear Europe N.V. buy-in rules
Buy-in timeline Cboe Clear Europe N.V.:
- Notification of buy-in: ISD+4
- Buy-in execution: ISD+5
- For ETFs: Notification of buy-in: ISD+7, buy-in execution: ISD+8
If a settlement instruction is still failing due to lack of cash or incorrect instructions by the receiving participant on ISD+5, Cboe Clear will start the “Sell-out procedure”. Cboe Clear may employ a broker for the sell-out process or offer the position for tender (the reverse of the buy-in process) to the clearing participants at its own discretion. The failing participant will be informed of the sell out on the processing date and receive an overview after the execution detailing all additional costs. The participant is obliged to pay these costs within two business days.
For more information: Regulation-fees-and-penalties-20231106.pdf (cboe.com)
LCH.Clearnet buy-in rules
Prior to executing a buy-in on a failed settlement the clearing house will determine whether there are corresponding settlements due from the clearing house prior to the settlement due date of the potential buy-in. The clearing house will buy-in any resulting net fail using commercially reasonable efforts. The buy-in execution date (“Buy-in Day”) will be ISD+5 unless the failed settlement is covered by the registered market maker scheme in which case it will be ISD+11.
For more information: https://www.lch.com/resources/rules-and-regulations/ltd-rulebooks
SIX x-clear buy-in rules
If the selling member does not deliver securities after ISD+4, a buy-in procedure will be started. A buy-in notification will be sent to the selling party and the execution of the buy-in will be started (ISD+5). Also, x-clear is entitled to charge the selling member for external and internal costs (expenses, commissions and other charges) where buy-ins are used.
In the event that the buy-in facility is not successful, the transaction that is not performed will be cancelled and replaced by a payment for compensation.
If the buy-in attempts of x-clear are not successful after a market-specific time, a cash compensation claim will be calculated and credited to the selling member. The standard cash settlement process will be initiated on ISD+20.
For more information: Clearing Services - Your leading choice for Multi-Asset Clearing | SIX (six-group.com)