Entitlement Compensation Rules - Romania
Bonds
| Market compensation basis: | Record date eligible underlying instructions |
| Automatic Compensation Managed by Local CSD: | Yes |
| Restriction on custody events/transaction types: | Market claims are only generated for underlying against payment transactions |
Additional information
Market claims are applicable for the distribution events supported by the CSD (Bonus Issues BONU, Cash Dividend Distributions DVCA, Interest Payments INTR etc). The complete list of distributions processed by the CSD can be found in the applicable technical requirements issued by the CSD.
The market claims are generated by the CSD at record date, end of day and throughout the applicable detection period, 20 business days after record date.
The generation takes place in accordance with European Market Standards (CAJWG) and T2S CASG standards provisions.
Market claims are opposite instructions that form a transaction, between the two involved counterparties, as following:
- If the entitlement of the distribution in cash (for example DVCA), the market claim consists of a FOP transaction
- If the entitlement of the distribution is securities (for example BONU), the market claims consists of a PFoD transaction, in which the cash is redistributed to the entitled party.
The generation process is the following:
- At record date and end of day, the system checks all the eligible transactions (for example, unsettled trades having the trade date prior to Ex Date and ISD after record date or settled trades having trade date more than or equal to ex-date and actual settlement date less than or equal to record date)
- The eligibility also takes into consideration the “opt-out” and “ex/cum” indicators of the underlying transactions
The already matched market claims instructions have the Trade Date=Record Date and the ISD=the Payment Date of the event or by case, the following BD, in case Payment Date<Current Date
Settlement:
- The settlement of FOP market claims takes place automatically at Payment Date, before the opening of the settlement system, under the condition for the Seller to hold the securities
- The settlement of PFoD market claims takes place via Romanian RTGS system (ReGIS) if the currency is RON or in T2S if the currency is EUR
- The process is semi-automated, as the “Buyer” has to make available the necessary funds for settlement at its RON settlement bank or by case, its T2S Dedicated Cash Account.
Notification:
The CSD notifies the involved counterparty regarding the generation and settlement of market claims through either its GUI interface (Arena Post-Trading) or SWIFT (MT564 for generation or cancellation and MT566 for settlement).