CSDR “CCP penalties”: Change of the Clearstream Banking reporting and payment processing – Reminder
Effective
2 September 2024
Clearstream Banking1 will adapt its reporting and payment processing for penalties related to settlement fails of cleared transactions submitted by central counterparties (CCPs) to comply with the Delegated Regulation (EU) 2023/1626 of 19 April 2023 on amending the regulatory technical standards laid down in Delegated Regulation (EU) 2018/1229.
Today, in line with the RTS Article 19 (penalty payment when the CSD participant is a CCP) of the CSDR Settlement Discipline Regime published in May 2018, penalties related to CCP-cleared transactions (CCP penalties) are calculated and reported by Clearstream Banking AG (CBF) but excluded from its payment (that is, collection and distribution) process.
As of the effective date, as it is the case for any other penalties already today, CCP penalties shall be paid via the CSDs towards their participants and no longer by the CCPs towards their clearing members, leading to a streamlined single mechanism for the collection and distribution of cash penalties for both, cleared and non-cleared transactions.
Impact on clients
To identify settlement fails penalties for CCP-cleared transactions, CBF relies on the information provided by TARGET2-Securities (T2S).
From 2 September 2024, T2S will only change the flagging of the CCP penalties by using another already existing, active qualifier in its reporting to T2S central securities depositories (T2S CSDs) and T2S directly connected parties (T2S DCPs). Hence, no system changes or new technical developments apply.
CBF will adapt its processing of CCP penalties as follows.
Current process: CCP penalties for failed settlement instructions before 2 September 2024
For settlement instructions related to CCP-cleared transactions for which the MT537 PENA “DACO” (date of computation) is up to and including 1 September 2024, T2S identifies and reports CCP penalties to T2S CSDs and T2S DCPs with the qualifier “CCPA” in field “TRCA” (Trading Party Capacity).
As a result, the CBF daily and monthly MT537 PENA client reports are labelled “:17B::CMPU//N” in the field “CMPU” (Amount Computed), indicating that such penalties are not subject of the monthly payment process and “global net amount” calculation by CBF.
In Xact Web Portal, the field “Amount Computed Flag” shows “No” for such instances.
Future process: CCP penalties for failed settlement instructions on or after 2 September 2024
For settlement instructions related to CCP-cleared transactions for which the MT537 PENA “DACO” (date of computation) is on or after 2 September 2024, T2S will identify and report CCP penalties to T2S CSDs and T2S DCPs showing the qualifier “CSDP” in field “TRCA”. This means that the code “CCPA” will no longer be used by T2S (see T2S Change Request CR806 for details).
As a result, the CBF daily and monthly MT537 PENA client reports will be labelled “:17B::CMPU//Y” in the field “CMPU” when “TRCA” (PENACUR) is “:22F::TRCA//CSDP”, indicating that such penalties are subject of the monthly payment process and “global net amount” calculation by CBF.
In Xact Web Portal, the field “Amount Computed Flag” will show “Yes” for any instances.2
No changes apply to the Clearstream Banking and T2S penalties “appeals” deadlines, daily/monthly reporting and payment dates.3
For penalty payments due in October 2024 and thereafter, CCPs will no longer be required to confirm the actual payment execution towards their clearing members to Clearstream Banking.
Further information
For further information, please contact Clearstream Banking Client Services or your Relationship Officer.
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1. Clearstream Banking refers to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.
2. In insolvency situations, the indicator „N“ may still be used in the CBF reporting.
3. Note: Due to T2S system limitations, the “re-allocation” of CCP penalties will not be possible between 1 and 18 September 2024, that is, the end of the T2S penalties “appeals” period.