Central Securities Depository Regulation

Transcription

1 Central Securities Depository Regulation Alignment of T+2 Settlement Period in Relation to Convertible Bonds

2 Central Securities Depository Regulation Overview The Central Securities Depository Regulation (CSDR) will harmonise settlement periods across the European Economic Area (EEA) plus Switzerland, aligning the settlement cycle for transactions in transferable securities executed on trading venues, i.e. Regulated Markets (RM), Multilateral Trading Facilities (MTFs) and Organised Trading Facilities (OTFs) to T+2. This document provides an update on CSDR developments pertaining to convertible bonds, and should be read in conjunction with the previous CSDR newsletters issued by Deutsche Bank, available here: Markets within the EEA and Switzerland, that have announced their intention to change their settlement cycle to T+2, effective trade date 6 October 2014, are listed below. Already T+2: Bulgaria Germany (Equities) Slovenia 6 Oct 2014: Austria Belgium Croatia Q4 2015: Cyprus Czech Republic Denmark Estonia Finland France Germany (Fixed Inc) Greece Hungary Iceland Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Norway Portugal Poland Romania Slovakia Spain (Fixed Income) Sweden Switzerland Spain (Equities) United Kingdom (excl. Gilts) Additional Updates in relation to Convertible Bonds Although not explicitly required by the regulation, Deutsche Bank will ensure uniformity in its settlement of OTC convertible bond transactions, where the underlying is an in scope instrument. To this end, the settlement cycle for OTC transactions will match that of those traded on trading venues. Table 1.1 below identifies a list of countries where the underlying is in scope of the CSD regulation and effective trade date 6th October settlement will occur on T+2. In line with anticipated market standards Deutsche Bank will default the settlement of all convertible bonds, where the underlying is an in-scope security, to T+2 from trade date 6th October Furthermore, ISIN codes prefixed with XS, which are not country specific will settle on a T+2 cycle effective trade date 6th October if the reference security is in scope of the regulation. 1

3 For convertible bonds traded OTC Deutsche Bank will implement the following changes: 1. Spain Convertible bonds traded on Spanish regulated markets or MTFs are in scope of the CSD regulation and will therefore settle on a T+2 cycle from trade date 6th October Spanish shares will not migrate to T+2 settlement cycle until Q (expected). For example, the convertible bond Sol Melia 4.5% 2018, ISIN - XS will settle on T+2 effective trade date 6th October. The Spanish listed equity underlying, MEL SM EQUITY Melia Hotels International, ISIN - ES , will remain at T+3 per the existing settlement cycle, until Q (expected). 2. South Africa 3. US Shares in South African securities are not impacted by the CSD Regulation and will continue to settle on T+5 basis. Convertible bonds, prefixed XS, which reference a South African underlying will continue to settle T+3. For example, the convertible bond Steinhoff 6.375% 2017, ISIN - XS will remain on the existing T+3 settlement cycle. The South African listed equity underlying, SHF SJ Steinhoff International Holdings, ISIN - ZAE , will remain at T+5 per the existing settlement cycle. Shares in US securities are not impacted by the CSD Regulation and will continue to settle on T+3 basis. Convertible bonds, prefixed XS, which reference a US underlying will continue to settle T+3. Where the convertible bond references an out of scope security but has an in scope European ISIN, for example Golar 3.75% 2017 NO , the convertible bond will be settled T+2 effective trade date 6th October. 4. Asia Shares in Asian securities are not impacted by the CSD Regulation and will continue to settle in line with the current settlement rules. Convertible bonds, prefixed XS, which reference an Asian underlying will continue to settle T+3. Where the convertible bond references an out of scope security but has an XS ISIN, for example China Unicom 0.75% 2015 the convertible bond will be settle T+3 effective trade date 6th October although the underlying, HK will continue to settle in line with current Hong Kong rules on T+2. 2

4 TABLE 1.1 below is a list where the underlying security will be in scope for amendment to T+2 Event Country / Region ISIN Prefix Country/ Region ISIN Prefix Country/ Region ISIN Prefix Austria AT Germany DE Norway NO Belgium BE Greece GR Poland PL Bulgaria BG Hungary HU Portugal PT Croatia HR Iceland IS Romania RO Cyprus CY Ireland IE Slovakia SK Czech Republic CZ Italy IT Slovenia SI Denmark DK Latvia LV Spain (Eq Q4 2015) ES Estonia EE Lithuania LT Sweden SE European Union EU Luxembourg LU Switzerland CH Finland FI Malta MT United Kingdom GB France FR Netherlands NL Not country specific XS 3

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