Recommendations for the Use of Fees and Taxes within Omgeo Central Trade Manager SM

Transcription

1 Recommendations for the Use of Fees and Taxes within Omgeo Central Trade Manager SM

2 Definitions The following definitions will be used throughout this document: Acronym/Term FTT MT541 MT543 SMPG Settlement Notification Definition was proposed by the European Commission in September 2011 and is intended to be taxation on the financial sector so it makes a fair and substantial contribution to public finances. SWIFT Receive against payment instruction SWIFT Deliver against payment instruction Securities Market Practice Group has representation from buy side, sell side, custodian banks, central securities depositories and regulators. Its focus is on defining and enhancing security industry practices. An optional component to Omgeo CTM that offers buy side clients the ability to send SWIFT notifications to a single or multiple interested parties. Introduction This document is intended to communicate Omgeo s current recommendations on the population of fee and tax fields in Omgeo Central Trade Manager SM (Omgeo CTM). With the completion of our recent migration of clients from our legacy solution to Omgeo CTM, there is an opportunity, or some would say a requirement, to expand the number of fee and taxes fields supported today, such as, when considering a suitable fee or tax field to use when populating (FTT) across global markets. Our intention is to review these current practices with our client community, obtain your feedback and use that feedback as a point of reference to discuss the future needs of fee and tax fields for our investment manager, broker/dealer and global custodian user community worldwide.

3 Supported Fee and Tax Types Omgeo CTM supports a wide range of fee and tax fields that can be applied to the numerous markets that Omgeo CTM clients trade in. A complete list of the Omgeo CTM fee and tax fields can be found below:

4 Current Usage Although Omgeo CTM can support a wide range of fee and tax types, our legacy solution could only support four generic fee and tax types: Other Amount (OTHR) Omgeo CTM buy side clients subscribe to either receive the four generic fee and tax fields or the complete set of Omgeo CTM Fees and Taxes fields. This is handled through subscription option, OGCO. Due to the dependency on our legacy solution, the overwhelming majority of Omgeo CTM clients are setup to receive only the four generic fee and tax fields. A change to the current subscription to receive the complete set of fees and taxes could require investment for automated clients. Current Recommendations for the Population of Fee and Tax Fields To help ensure efficient trade processing and reduce manual intervention, Omgeo provides best practice recommendations on how to populate fees and taxes and will strive to be aligned with recommendations from the Securities Market Practice Group (SMPG). Most of these recommendations have been in existence for many years and combine SMPG best practices with established Market Best Practices. Listed below are the current recommendations for how Omgeo CTM clients should be populating fees and taxes. Items highlighted in red have yet to be determined and we are seeking both client and SMPG feedback for suitable recommendations:

5 Table 1: Marketplace Fee and Tax Fields Market Australia Canada France Hong Kong India Indonesia** Current Omgeo CTM Code Transaction Tax ((TRAX) Other Amount (OTHR) Description of Charge Follow the guidelines of the Securities Market Practice Group (SMPG) for this market. Clearing Fee (for exchange traded option trades only). Goods and Services Tax (GST) (applicable to Australian domiciled funds only).* SEC/Ontario Securities Commission (OSC) Fee on a sell order. OSC Fee on buy order. Taxe sur la Valeur Ajoutee (TVA) French. Trading Fee. Transaction Levy and Investor Compensation Levy. Central Clearing & Settlement System (CCASS) Clearing Fee/ Contract Stamp. Sales Tax, Service Tax, Securities Transaction Tax. Transfer Fee. Levy or Exchange Fee Value Added Tax, Stamp Duty, Sales Tax Italy Other Amount (OTHR) Italian. Japan Korea** Broker custody fee (Hogo Azukari). Consumption Tax. Capital Gains. Inhabitant Tax. Agricultural and Fishery Tax, Trade Tax. Proposed Omgeo CTM Code

6 Market Latin America Malaysia Pakistan** Philippines** Shanghai** Shenzhen** Singapore** South Africa Current Omgeo CTM Code Other Amount (OTHR) Any applicable Transaction Tax. Description of Charge Clearing Fee. Contract Stamp. Bank Charge, Central Depository Company of Pakistan (CDC) Fee. Clearing Fee/Transfer Fee. Levy. Other Charges. Philippine Central Depository, Inc. (PCD Fee), Securities Clearing Corporation of the Philippines (SCCP) Fee. Sales Tax, Value Added Tax (VAT), Documentary Stamp. Other Charges (Administration fee, broker remittance fee). Transaction Levy, Clearing Fee. Stamp Duty. Other Charges. Transaction Levy, Transfer Fee, and Clearing Fee. Stamp Duty. Other Charges. Clearing Fee, Singapore Exchange (SGX) Trading Access Fee. Contract Stamp, Goods, and Services Tax (GST). Insider Trading Levy + State Fees Strate Settlement Charge (SSC). Marketable Securities Tax (MST). Proposed Omgeo CTM Code

7 Market Sri Lanka** Switzerland Taiwan** Thailand** United Kingdom USA Current Omgeo CTM Code Description of Charge Colombo Stock Exchange (CSE) Fee and Central Depository Systems (Pvt) Ltd (CDS) Fee. Government Tess and Securities and Exchange Commission of Sri Lanka (SEC) Tess. Consumption Tax. Sales Tax. Bank Charge (Fees). Contract Stamp, Value Added Tax (VAT). Panel of Take-overs and Mergers (PTM) Levy. Contract Stamp Tax.* SEC Fee on a sell order. Proposed Omgeo CTM Code * Please refer to the section of this document entitled, Omgeo CTM Settlement Notification Mapping, for more information. ** SMPG not currently available for this market

8 Omgeo CTM Settlement Notification Mapping Omgeo CTM modifies fee and tax information for SWIFT settlement notifications as follows: When Omgeo CTM encounters multiple instances of a charge tax type, it aggregates and reports them as a single total amount on the SWIFT message. This behavior holds true for all marketplaces. When broker/dealers supply TRAX on trades that settle in: - Australia, Omgeo CTM reports the amount as VATA on the SWIFT MT541/543 - United Kingdom, Omgeo CTM reports the amount as TRAX on the SWIFT MT541/543 For additional information about SWIFT notifications, see the Settlement Services Reference: SWIFT MT541/543 and CSV Mapping. Next Steps A questionnaire has been sent to all Omgeo CTM clients for their feedback regarding these recommendations for the population of Fees and Taxes. Once gathered, Omgeo will communicate the feedback received and determine further actions. If you have any feedback you would like to share directly please reach out to: EMEA - Catherine Allison catherine.allison@omgeo.com AMERICAS - Shaun Howe shaun.howe@omgeo.com APAC - Paul Marchant paul.marchant@omgeo.com