Section 07 - Transfers between CHESS accounts

Section 07 - Transfers between CHESS accounts

7.1 -Transfer Concepts

This section describes procedures for transferring holdings in approved financial products between holders on the CHESS subregister.

CHESS allows for both unilateral and bilateral transfers. The type of transfer that applies in a particular situation can be summarised as follows:

 

Transferring to

 

Transferring to

Transferring from

CHESS holding Controlled by participant “A”

CHESS holding controlled by participant “B”

CHESS holding controlled by participant “A”

Unilateral Demand Transfer / Unilateral Settlement Instruction

Bilateral Demand Transfer / Bilateral Settlement Instruction / Bilateral Demand Settlement Instruction

CHESS holding controlled by participant “B”

Bilateral Demand Transfer / Bilateral Settlement Instruction / Bilateral Demand Settlement Instruction

Unilateral Demand Transfer / Unilateral Settlement Instruction

Bilateral settlement instructions and unilateral settlement instructions received while a subregister is suspended and prior to subregister reinstatement date will be accepted by CHESS. If the suspension is still current at the next batch settlement cycle, CHESS will reschedule the instructions through the Settlement Instruction Rescheduling Process.

Where a subregister is suspended, bilateral and unilateral settlement instructions will be rescheduled the to the next business date.

CHESS housekeeping will cancel any unilateral settlement instructions and bilateral settlement instructions which are for a suspended security that transitioned to suspended 15 business days ago through the Suspended Settlement Instruction Cancellation Process.

Where a subregister is closed, bilateral and unilateral settlement instructions will be rejected by CHESS.

7.1.1 - Unilateral Transfers

Unilateral transfers enable the transfer of financial products between two CHESS holdings controlled by the same participant. For example:

  • with batch settlement, a participant may use unilateral scheduled settlement instructions to move financial products from a client account (HIN) to their settlement entrepot account to meet settlement obligations; or

  • outside of batch settlement, a participant might use unilateral transfers to move financial products from their settlement entrepot to a direct account (HIN) or client account (HIN) to apportion the financial product received.

CHESS provides two methods for effecting unilateral transfers:

  • Unilateral demand transfers, which are effected immediately upon being received and validated by CHESS, provided that settlement is not in progress. If settlement is in progress CHESS queues transfers for processing after settlement processing has been completed. Instructions for transactions via the demand method may be sent at any time. For further details, refer to section 7.2.1 and Unilateral Demand Transfer Overview.  

  • Unilateral settlement instructions, which are processed through the CHESS batch settlement cycle. Instructions for transactions via the settlement method must be received by CHESS no later than the settlement cut‐off time on the day of settlement. For further details, refer to section 7.4.2 and Unilateral Settlement Instruction Overview.

7.1.2 - Bilateral Transfer

Bilateral transfers are used to transfer financial products between two CHESS holdings controlled by two different participants.

One participant delivers financial products to another to complete the following business transactions:

  • sale or purchase of financial products through a market participant;

  • sale or purchase of financial products where settlement is via another participant; and

  • transfer of assets to or from another trustee or custodian.

CHESS provides three methods for effecting bilateral transfers:

  • Bilateral demand transfers, which are validated and matched by CHESS when received and, provided that batch settlement is not in progress, effected immediately. If batch settlement is in progress CHESS queues transfers for processing after batch settlement has been completed. Instructions for transactions via the demand method may be sent at any time. For further details, refer to Bilateral Demand Transfer Overview.

  • Bilateral settlement instructions, which are processed during batch settlement. Instructions for transactions via this settlement method must be received and matched by CHESS no later than the settlement cut‐off time on the day of settlement. For further details, refer to Bilateral Settlement Instruction Overview.

  • Bilateral demand settlement instructions, which allow two participants to match a demand transfer and effect DvP settlement on the transaction outside batch settlement, once the cash component has settled via RTGS. For further details, refer to Bilateral Demand Settlement Instruction Overview.

The receiving account (HIN) of a bilateral demand transfers or bilateral demand settlement instructions cannot be a settlement entrepot.

CHESS matches bilateral transfers on the following data items:

  • security code;

  • settlement date;

  • counterparty PID;

  • units;

  • basis of movement (explicit or default);

  • transaction basis;

  • settlement amount (value transactions only);

  • trade date (for value market transactions only);

  • guaranteed foreign indicator; and

  • secondary matching flag = SMAT, then supplementary reference (refer to section 7.2.4)

For additional information about matching bilateral transactions refer to section 7.5 and Matching.

Securities Lending (refer to section 7.7) also uses bilateral transfers.

7.1.3 - Warranties and Indemnities

Under ASX Settlement Operating Rules, participants are required to indemnify ASXS and/or issuers against losses incurred as a result of unauthorised transfers instructed by participants via ASXS.

The Corporations Regulations also contain statutory warranties and indemnities in relation to the transfer of financial products (including where such transfer is unauthorised).

7.1.4 - On or Off Market Designation

Bilateral trade notification and transfer requests messages are coded to differentiate between on-market and off-market movements.

7.1.5 - Transfer Requesting a Foreign to Foreign Allocation

For financial products with a foreign ownership restriction, participants can specify “foreign-to-foreign” transfers.

A foreign-to-foreign allocation ensures that, following registration, a foreign buyer is allocated the foreign securities (i.e. securities flagged as foreign in the register) from their foreign seller. A foreign to foreign allocation can be used when both the buyer and the seller are foreign and the transaction is specifically entered into on the basis that the seller will transfer financial products flagged as foreign to the buyer. Foreign-to-foreign allocation enables a foreign buyer to register a holding without the risk of subsequently being divested of that holding due to a breach of the foreign ownership restrictions.

CHESS will only process foreign-to-foreign allocations if:

  • both parties to the transaction match their settlement obligation with a Foreign Guaranteed Indicator (ORFF); and

  • if the residency indicator of the seller’s and the buyer’s account (HIN) is recorded as “foreign”.

The issuer of a financial product with foreign ownership restrictions must accept notifications of residency status through CHESS and agree to process foreign to foreign allocations of these financial products.

Participants wishing to deliver securities subject to CHESS foreign ownership restrictions as a result of foreign to foreign allocations must ensure all the following criteria are met:

  • The delivering account (HIN) of the obligation must be designated as “foreign” (refer to section 4). This includes participant settlement or accumulation entrepot HINs.

  • There are sufficient confirmed foreign securities available in the foreign designated account (HIN). These confirmed foreign securities are defined as the lesser of the current holding balance and the holding at the start of the day (adjusted by foreign-to-foreign transfers during the day, any confirmed foreign conversions during the day, and registry initiated adjustments into or out of the holding with reason code of “DVFO - Divestment for Foreign Ownership).

To ensure that transactions which are executed on the basis of a foreign to foreign allocation can be settled and registered on this basis, participants must operate a separate foreign designated account (HIN). Otherwise, when attempting to settle a sale the participant will not be able to match a transaction using the foreign guaranteed indicator.

For additional information on foreign ownership restrictions, refer to section 2.1.11.

7.1.6 - CHESS Tiered Tolerance Model for Matching Settlement Amounts

On bilateral settlement instructions and bilateral demand settlement instructions, CHESS matches settlement amounts using a three-tiered model of settlement tolerance. This model applies to bilateral notifications (DvP)

For further details, refer to Matching Settlement Tolerances.

7.2 - Demand Transfers

A demand transfer is a transaction submitted by a participant to effect a movement on a CHESS holding which they control. Demand transfers are processed within the time constraints published by the ASX Settlement Operating Rules. The transaction is not included with other transactions. Demand transactions are not part of CHESS daily batch settlement.

Demand transfers received while a subregister is suspended or closed will be rejected by CHESS (refer to sections 10.5 and 10.6).

Demand transfers may have a transaction basis of “On Market” (trade), “Off Market” or “Stock Lending Activity”.

Where an account (HIN) has sufficient financial product for delivery to be effected:

  • Unilateral demand transfers are effected immediately they are received and validated by CHESS, provided that the daily batch settlement run is not in progress.

  • Bilateral demand transfers, which are validated and matched by CHESS when received and, provided that batch settlement is not in progress, effected immediately. If batch settlement is in progress CHESS queues transfers for processing after batch settlement has been completed. Instructions for transactions via the demand method may be sent at any time.

  • Bilateral Demand Settlement Instructions are matched for DvP settlement outside of batch settlement, and settlement is effected once the cash component has settled via RTGS.

Foreign to foreign allocations

Foreign to foreign allocations should be marked accordingly (refer to section 7.1.5)

Settlement Entrepots

The receiving account (HIN) of a demand transfer cannot be a settlement entrepot.

7.2.1 - Unilateral Demand Transfers

A unilateral demand transfer is used for the transfer of financial products between two CHESS holdings that are controlled by the same participant. They are most commonly used to transfer financial products to the accumulation entrepot account or from either the accumulation entrepot account or the settlement entrepot account (HIN).

Participant groups (refer to section 3.8) allow participants to transfer financial products between holdings controlled by the parent participant and related participants. For further details, refer to Unilateral Demand Transfer Overview.

Procedure

Step

Description

Step

Description

1

The participant determines the required transfers. Typically these will correspond with individual settlement transactions for the day, or will be the aggregate of those transactions.

2

The participant initiates the Unilateral Demand Transfer Process.

Where the Unilateral Demand is initiated by a member of a Participant Group, one party to this transaction must be the parent participant.

3

On receipt of a successful demand transfer confirmation, the participant internally processes the transfer to completion.

7.2.2 - Bilateral Demand Transfer

Bilateral demand transfers allow for the transfer of financial products between two CHESS holdings which are controlled by different participants on a free of payment basis. The funds movement component may be effected outside CHESS. An “on request” settlement lock on holding transfers may be used to remove uncertainty in delivery. Upon receipt of a valid request, the full unit quantity required for the fulfilment of the bilateral demand transfer is may be locked. For further details, refer to Settlement Lock Overview.

Bilateral demand transfers may be used for settling the following types of transactions:

  • on-delivery settlements;

  • all off-market settlements that have corresponding funds movements outside of CHESS; and

  • exceptional circumstances in any situation.

To give certainty to settlement, units in the delivering account (HIN) may be locked. For transfers with locks, if the delivering participant cancels the bilateral demand transfer, units will be unlocked. For all unmatched bilateral demand transfers at end of day CHESS housekeeping will cancel these transactions and unlock the locked units.

Procedure

Step

Description

Step

Description

1

The participant determines to settle via Bilateral Demand transfer, and confirms with their counterpart. Typically these will correspond with individual settlement transactions for the day, and will settle free of payment or with cash settled outside CHESS

2

The participant initiates the Bilateral Demand Transfer Process.

3

The counterparty also initiates the Bilateral Demand Transfer Process, when the two transactions match, settlement is effected.

Unmatched bilateral demand transfers will be housekept at end of day (refer to section 7.9).

4

On receipt of demand transfer confirmation, the participants internally processes the transfer to completion.

7.2.3 - Bilateral Demand Settlement Instruction

Bilateral demand settlement instructions allow for the transfer of financial products between two CHESS holdings which are controlled by different participants on a DvP basis outside of batch settlement. The funds movement is effected via RTGS messages transmitted by CHESS at the time of the transfer. An “on request” settlement lock on holding transfers may be used to remove uncertainty in delivery. Upon receipt of a valid request, the full unit quantity required for the fulfilment of the bilateral demand settlement instruction may be locked. For further details, refer to Settlement Lock Overview.

Bilateral demand settlement instructions may be used for settling the following types of transactions:

  • on-delivery settlements;

  • settlements that have corresponding funds movements via RTGS payment; and

  • exceptional circumstances in any situation.

To give certainty to settlement, units in the delivering account (HIN) may be locked, until the bilateral demand settlement instruction is settled. For bilateral demand settlement instructions with locks, if the bilateral demand settlement instruction is cancelled, units will be unlocked. For all unmatched bilateral demand settlement instruction at end of day CHESS housekeeping will cancel these transactions and unlock the locked units.

Procedure

Step

Description

Step

Description

1

The participant determines to settle via bilateral demand settlement instruction, and confirms with their counterpart. Typically these will correspond with individual settlement transactions for the day.

2

The participant initiates the Bilateral Demand Settlement Instruction Process.

3

The counterparty also initiates the Bilateral Demand Settlement Instruction Process, when the two transactions match, CHESS initiates step 4.

4

CHESS generates an RTGS payment message, once funds movement is complete, movement of the securities occur, completing settlement of the transaction.

5

On receipt of a confirmation from CHESS, the participant internally processes the transfer to completion.

7.2.4 - Secondary Matching Flag

Participants can use the Secondary Matching Flag field in conjunction with the Supplementary Reference Field. Refer to Matching for further details.

In the case where a participant leaves the Secondary Matching Flag field blank the supplementary reference is not required. In the case where a participant populates the Secondary Matching Flag field with “SMAT”, the supplementary reference field becomes a mandatory field for matching, provides additional matching criteria to reduce the occurrence of settlement mismatches.

Refer to Holding Transfer Overview for details on when Secondary Matching Flags are used.

A settlement link Id can be provided on the message for unilateral settlement instructions and bilateral settlement instructions. The settlement link Id is non-matching and remains private to the submitting party.

On request, ASX validates the message to ensure the settlement link id is unique to a participant and is for the same security, basis of movement and delivering into, or out of the same HIN. The ASX however does not validate quantities on request which allows for one-to-many and many-to-many links.

On settlement, ASX uses the link to evaluate whether a delivering instruction can be fulfilled based on the participant’s relevant linked receiving instruction:

  • if any receiving leg(s) fail or are part settled then the delivering leg(s) will also fail or be part settled;

  • if the delivering and receiving unit quantities do not balance ASX attempts to settle taking into account part settlement.

For further details, refer to Settlement Link ID.

7.3 - Transfers between subregisters

Refer to Section 06 - Transfers and conversions between subregisters for details on transfers between subregisters.

7.4 - Settlement Transfer Process

Foreign to foreign allocations

Foreign to foreign allocations should be marked accordingly (refer to section 7.1.5)

7.4.1 - Notified Trades and (Novated Gross Market Trades (NGMTs))

Notified trades (novated gross market trades (NGMTs)) apply only to market participants. Additional details on notified trades are available in Section 09 - Settlement.

7.4.2 - Unilateral Settlement Instruction

CHESS includes unilateral settlement instructions and other settlement transactions for the same holding in the unit position check for batch settlement. In certain circumstances, CHESS will part settle a transfer. CHESS will never part settle a transfer where it is marked as not available for part settlement or where a trust amount is greater than zero (refer to section 7.5.3).

Transfers can be designated either cum or ex if the transfer is initiated during a corporate action ex period otherwise default basis of movement will be applied, refer to Basis of Movement. If not completed by the record date the settlement transfer may be diary adjusted if designated cum.

For further details refer to Unilateral Settlement Instruction Overview.

For information on cancelling a transfer, refer to section 7.8.

Unilateral settlement instructions may be used by participants to transfer financial products from a settlement entrepot account to a client account (HIN) or a direct account (HIN) during batch settlement (but a settlement lock cannot be applied by the participant for this particular unilateral settlement instruction because the settlement entrepot account (HIN) is the delivering account).

Settlement locks may be used to remove uncertainty in delivery, refer to Settlement Lock Overview for further details.

Where the transaction is initiated by a settlement participant and the transaction results in a movement of financial products from:

  • an accumulation entrepot to a settlement entrepot,

  • a direct or sponsored account to a settlement entrepot account, or

  • a settlement entrepot account to a direct or sponsored account,

refer to Trust Amount requirements

From December 2012, the RBA FSS standards, were updated to; among other matters, cover Segregation and Portability and require that “a central counterparty should have rules and procedures that enable the segregation of positions of a participant’s customers and the collateral provided to the central counterparty with respect to those positions”.

The focus of Client Account Segregation is on the treatment of client financial products and monies during the settlement process between Trade date (T) and Settlement date (T+2) in order to support the purpose of achieving a materially equivalent protection of client assets to that offered through a client omnibus account for the purposes of paragraph 13.2.10 of the Financial Stability Standards for Central Counterparties.

All Clearing and Settlement Participants and Payment Providers are impacted by the Client Account Segregation measures. Clearing and Settlement participants record the trust amount on unilateral settlement instructions. The net trust amount is notified by the CSP to the payment provider of each settlement participant at a payment facility level, refer to Trust Amount.

Settlement only participants (e.g. custodians, institutions and PISPs) are not effected.

The trust amount value is mandatory on all unilateral settlement instructions where the message is initiated by a Settlement Participant with the role of Settlement Participant (Broker) and either the receiving or delivering account (HIN) is the settlement entrepot account. The trust amount may be zero. Where the trust amount is greater than zero the instruction is not eligible for part settlement. There are two types of Trust Amounts: Trust Deductible and Trust Receivable. For further details, refer to Trust Amount.

Procedure

Step

Description

Step

Description

1

The participant determines the required transfer.

2

The participant initiates the Unilateral Settlement Instruction Process.

3

On receipt of the unilateral settlement confirmation, the participant internally processes the transaction to completion.

7.4.3 - Bilateral Settlement Instruction

Bilateral settlement instructions may be used for the following transactions:

  • on-market settlements;

  • off-market settlements;

  • settling other classes of transactions such as “allocation interests” for primary market facilities (PMFs) admitted under the ASXS Settlement Operating Rules; and

  • settling transactions for other licensed market operators.

Bilateral settlement instructions between participants may be for value (DvP) or not for value (free of payment or FOP). A settlement lock has been introduced to remove uncertainty in delivery, refer to Settlement Lock Overview .

Settlement notifications for both DvP and FOP must be matched with the counterparty before settlement cut-off on settlement day.

Full DvP settlement of off-market transactions between participants is allowed for all classes of transactions between market participants, non-market participants and market participants, and non-market participants, such as “allocation interests” for PMFs, admitted under the ASXS Settlement Operating Rules.

Settlement notifications of transactions executed or reported on the market of an Approved Market Operator which has been provided with a settlement facility service must be identified with the transaction basis Facility for Non-reportable Transactions (FNRT) (refer to section 7.4.4).

Settlement of transactions will, once matched, be scheduled in batch settlement with all other settlements for that day.  

The override basis of movement indicates ex or cum for each current corporate action. For further details, refer to Basis of Movement.

During the ex period of a corporate action, the basis of movement designations of transactions must match. CHESS rejects on initiation settlement instructions where the settlement date lies outside the underlying ex period if an override basis of movement is specified. However CHESS will allow participants to reschedule already initiated settlement instructions with an override basis of movement beyond the record date; in this case, CHESS diary adjusts the outstanding cum transaction.

For information on cancelling a transfer refer to section 7.8.

For bilateral settlement instruction, prior to matching the request is merely a single-sided message and the request to cancel does not have to be agreed by the counterparty.  Once a match has taken place the request to cancel needs to be agreed by the counterparty and cancellation requests must be submitted and matched by both sides. 

If the cancellation does not succeed prior to the settlement cut-off on settlement day, the bilateral settlement instruction will be settled in the batch.

Procedure

Step

Description

Step

Description

1

The two participants involved in the transaction agree to the details.

2

One of the participants (the “originating” participant) initiates the Bilateral Settlement Instruction Process.

3

The counterparty initiates the Bilateral Settlement Instruction Process.

4

An unmatched response from CHESS implies that either the counterparty has not yet submitted their corresponding settlement instruction or the counterparty has submitted an instruction but the two instructions do not match. If the two instructions do not match and the mismatch is not due to different counterparty identifiers, CHESS sends the participant an unmatched settlement notification message on the basis of the counterparty’s notification to CHESS. CHESS cannot resolve these differences. Counterparties must resolve differences between themselves within the time constraints of the fixed period settlement discipline.

5

Participants cannot correct unmatched settlement notifications: they must be cancelled (refer to section 7.8) and a new transaction created.

7.4.4 - Transaction Basis

The below table, summarises the validations that CHESS applies to Bilateral Settlement Instruction messages for differing values of the Transaction Basis field.

Transaction Basis

Settlement Amount

Trade Date

Market (MRKT)

FREE

not permitted

Payment (APMT)

mandatory

Off‐market (XOFF)

FREE

not permitted

Payment (APMT)

not permitted

Facility for Non Reportable Transactions  (FNRT)

 

FREE

optional

Payment (APMT)

optional

IPO (IPOO)

FREE

optional

Payment (APMT)

optional

Stock Lending Activity (SECL)

FREE

not permitted

Payment (APMT)

not permitted

7.5 - Matching Settlement Notifications

When two participants move financial products, both are required to notify CHESS of the details. However, there is no requirement for participants to uniquely identify the transaction and CHESS does not match on this basis. For further details on the fields which CHESS matches (including supplementary reference fields) refer to section 7.1.2.

If parties determine that like transactions have been mismatched, the parties should agree on the transaction to be failed and adjust their records accordingly. One option is for both parties to cancel all the transactions, then re-enter those to be settled.

When a mismatch occurs, the two parties will need to negotiate to determine who should adjust their records.

7.5.1 - Unmatched Settlement Transactions

For further details refer to the Housekeeping section of Matching.  

7.5.2 - Matched Settlement Notifications

As a part of the Sufficient Unit Check Process, CHESS notifies the relevant parties where a transaction fully fails and is rescheduled to the next settlement date.

As a part of the Sufficient Unit Check Process, CHESS will also notify the relevant parties where part-settlement occurs.

When a transaction is part settled, CHESS reschedules the remaining portion of it and notifies participants prior to batch settlement completion (refer to Settlement Notifications and Completion Process).

Participants can flag transactions in CHESS as ineligible for part settlement (refer to section 7.5.3).

Upon receipt of a message from CHESS advising a transaction has been rescheduled, participants should check their records to ensure no like transactions exist.

For further details, refer to Batch Settlement Overview.

If by the scheduled time on a Business Day, a Source Holding, or during an Ex Period, a Cum Entitlement Balance for a Source Holding has insufficient units to meet a Participants obligation, ASX Settlement will fail and reschedule the relevant Scheduled Settlement instruction to the next Business Day through the Settlement Instruction Rescheduling Process. Refer to Settlement Instruction Rescheduling Overview for additional scenarios where a scheduled settlement instruction may be rescheduled.

7.5.3 - Accepting Part Settlement

Unilateral and bilateral settlement instructions may be partly settled by CHESS if the part settlement indicator is Partial Settlement Allowed (PART). Any settlement obligation is unavailable for part settlement by CHESS if the part settlement indicator is Partial Settlement NOT Allowed (NPAR), or for a Unilateral Settlement instruction where the trust amount is greater than zero.

Where the part settlement indicator is Partial Settlement NOT allowed (NPAR), ASX reserves the right to ignore this indicator at its discretion to assist for the resolution of an issue during settlement. This is not a part of the routine settlement process and can only be applied after there has been a payment default by a participant as a part of the back-out algorithm.

If a delivering party has insufficient financial products to fully meet its settlement obligations and has indicated that the transaction is eligible for part settlement, CHESS may part settle the transaction for the available financial product. For DvP, CHESS calculates the funds payable in proportion to the number of units being settled.

When a transaction is to be part settled CHESS reschedules the failed portion to the next settlement period and notifies the participant of the rescheduled portion.

A participant may be left with insufficient financial product as the result of a knock- on effect from other settlement failures that were not directly a result of their own failure to cover the net financial product obligation by settlement cut-off time.

Participants may reduce the risk of internal knock-on failure by ensuring there are sufficient financial products to cover their overall delivery position which includes their novated net delivery position (NNDP) in their delivering holdings by settlement cut-off time. This eliminates the need for relying on receiving the financial products from other parties to cover their total obligations.

Either party to a bilateral transaction may prevent CHESS from receiving or delivering partial amounts by specifying a settlement transaction as unavailable for part settlement. Participants can also restrict part settlement of any unilateral settlement Instructions by specifying a settlement transaction as unavailable for part settlement. Where a Trust Amount is greater than zero part settlement is not allowed refer section 7.4.2. If not specifically excluded by one party, transactions are considered eligible for part settlement. The part settlement indicator is a mandatory field, which can be either partial settlement not allowed, or partial settlement allowed.

Procedure

Step

Description

Step

Description

1

During batch settlement CHESS identifies transactions for part settlement according to the settlement algorithm and notifies participants of these transactions through the Sufficient Unit Check Process.

Unilateral settlement instructions, bilateral settlement instructions and non-novated gross market trades with insufficient units to fully settle will be processed through the Non-Novated Settlement Obligations Process.

Novated settlement obligations (calculated NNDPs and NRIs) with insufficient units to fully settle will be processed through the Novated Settlement Obligations Process.

Refer to section 9.3.3 for further details on the settlement algorithm.

2

The participant processes the part settlement for their own records, including splitting the transaction, rescheduling the failed portion, and notifying the appropriate parties.

7.6 - Change Settlement Transaction Details

Participants may, under certain circumstances, change the details of a transaction they have sent to CHESS.

Unilateral settlement instructions cannot be changed, but may be cancelled up until settlement cut-off on the day of settlement. For further details, refer to Unilateral Settlement Instruction Overview.

Bilateral settlement instructions can be changed (where applicable) or cancelled up until settlement cut-off. For further details, refer to Bilateral Settlement Instruction Overview.

7.6.1 - Maintain Bilateral and Unilateral Settlement Instruction

Maintain Settlement Instruction allows participants to request a change to the settlement detail of a scheduled settlement instruction without recourse to the counterparty as the change will not affect the settlement obligation.

Participants are able to change:

  • the HIN (either receiving or delivering);

  • the part settlement indicator;

  • underlying reference;

  • settlement link Id (added or removed).

If a participant wishes to change any other details of the settlement instruction they must first cancel the settlement instruction and then create a new settlement instruction with the updated details. Refer to section 7.8 for further details.

Procedure

Step

Description

Step

Description

1

The participant identifies the incorrect transaction and sends a change request to CHESS.

2

CHESS validates the change request. If the request is valid, CHESS changes the relevant transaction details. CHESS notifies the participant that the change has been effected or rejected. 

7.6.2 - Removing or Cancelling a Settlement Instruction from Settlement.

Details on removing or cancelling a settlement instruction from settlement will be made available in a subsequent release.

7.7 - Securities Lending 

Settlement Participants that enter securities lending transactions under securities lending arrangements are required to tag transactions (using transaction basis ‘SECL’– Stock Lending Activity ) to allow for the identification of securities lending activity in CHESS.

All forms of lending activity; returns, recalls, and collateral (for both non‐cash collateral lending and cash collateral lending) are to be entered under the Transaction Basis of ‘SECL’. This applies to all CHESS messaging where a Transaction Basis is entered.    

 

7.8 - Cancellation Concepts

Once a transaction has been settled in CHESS, it cannot be cancelled.

For further details on Holding Transfer Traits, refer to Holding Transfer Overview.

For bilateral settlement transactions (BSSIs), if matching has occurred, both participants must request the cancellation and those cancellation requests must be matched by CHESS prior to the settlement cut-off for the settlement date. If one or both participants have requested the cancellation of a scheduled BSSI but the cancellation requests have not matched by the cut-off and the scheduled BSSI is not successfully cancelled, CHESS processes the transaction normally in batch settlement subject to the settlement algorithm. However, if no match of the cancellation requests is achieved when CHESS receives the requests, CHESS notifies both participants of the unmatched cancellation requests as cancelation allegements.

Participants are not required to cancel unmatched transactions as CHESS housekeeping automatically cancels them and notifies both participants after the relevant cut-off at end of day of the scheduled settlement date. However, participants should note that if the cancelling of an unmatched transaction is left to CHESS housekeeping, the counterparty can still match the transaction up to the relevant cut-off.

Participants may elect to cancel unmatched transactions after the relevant cut-off and before CHESS housekeeping is performed.

If a transaction is not required or in an error, a participant may cancel it.

Procedure

Step

Description

Step

Description

1

The participant identifies a transaction requiring cancellation.

2

The participant initiates a cancellation procedure appropriate for the type of transaction they wish to cancel:

7.9 - Removing a Cancellation Request

If a bilateral demand settlement instruction was cancelled in error, and is currently in “unmatched cancel” the controlling participant may request the cancellation request be withdrawn refer to Bilateral Settlement Instruction Cancellation Withdrawal Process.

7.10 - CHESS Housekeeping For Unmatched Transactions

CHESS automatically removes unmatched transactions and notifies all participants involved in the transaction.

The following criteria are is used by CHESS to initiate housekeeping:

Transaction Type

Housekeeping Criteria

Unmatched settlement for value

Settlement cut-off has passed on the day of settlement

Unmatched settlement for non-value

Settlement cut-off has passed on the day of settlement

Unmatched demand

End of day on the request date if still unmatched

Suspended settlement

Case by case basis

Unmatched change or cancellation request

when target settlement instruction is cancelled or settled

Procedure

Step

Description

Step

Description

1

If the above criteria are is satisfied, CHESS will initiate the appropriate housekeeping process:

 

 

 

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