HANFA officially approved new T2S related SKDD Rules and Procedures

Zagrebacka Banka d.d.
Thu, 31/08/2023

In line with the official announcement on its website, Croatian Financial Services Supervisory Agency (HANFA) approved new Rules and Procedures of the Central Depository & Clearing Company Inc. (SKDD) on 31 August 2023. Date of entry into force of the new SKDD Rules and Procedures will be determined by a special decision of the SKDD Management Board.

The most important changes are as follows:

  • Introduction of T2S Dedicated Cash Account (T2S DCA) as an account open in TARGET-HR system, used for settlement related payments in T2S.
  • New types of accounts SKDD will open in T2S and definition of their connection to the existing accounts in SKDD.
  • Introduction of daily position reconciliation on both, SKDD and T2S level.
  • Preconditions for entry of settlement instructions into T2S and settlement priority (CCP transactions will be settled first).
  • Unmatched settlement instructions will be recycled 20 business days from the scheduled settlement date or the date of the latest amendment, depending on which date is later.
  • Amendment of settlement instruction in T2S is not allowed, but SKDD will cancel the previously entered transaction in T2S and enter a new one with changed data.
  • By entry and matching of settlement instructions in T2S, instructions can be considered as irrevocable, and participant members may only cancel them bilaterally.
  • Fulfilment of settlement obligations (transaction is entered into T2S, there is sufficient securities position to deliver from designated securities account, in case of DVP there is sufficient liquidity on a specific T2S DCA account).
  • Matching of settlement instructions will take place in SKDD for indirect T2S participants.
  • Introduction of BIC code in the field of delivering or receiving party (instead of SKDD participant member code).
  • Settlement in SKDD possible only after the settlement confirmation is received from T2S (settlement instruction is deemed settled in the moment of receipt of settlement confirmation from T2S).
  • Changes to the daily schedule:
    • 7:30-18:00 CET - Verification of conditions fulfilment for entering an instruction in T2S
    • 7:30-16:00 CET - Processing of incoming settlement confirmation from T2S and settlement of DVP transactions in a real-time
    • 7:30-18:00 CET - Processing of incoming settlement confirmation from T2S and settlement of FOP transactions in a real-time
    • 7:30-18:00 CET (1-minute intervals) - Periodic batch to check sufficiency of quantity to ensure delivery of securities
    • 18:00 CET - Closure of the settlement system for participant members
  • Definition of auto-collateralization.  
  • Introduction of the Transformation, applicable for mandatory reorganisations, i.e. corporate actions resulting in change of ISIN and SKDD ticker of security.
  • Implementation of the European Corporate Actions Joint Working Group standards - SKDD Rules divide corporate actions by type and implementation method and additionally emphasize corporate actions which will trigger ISIN and SKDD ticker of security:
    • Share capital decrease by reverse stock split
    • Stock split
    • Reverse stock split
  • Definition of activities over the SKDD participant member in case of insolvency procedure.

Additionally, on the workshop organized in Croatian Chambers of Economy on 30 August 2023, SKDD confirmed that entry of all static data on financial instruments and SKDD participant members is done on T2S production, including securities accounts and linked T2S DCA accounts of SKDD participant members.

Final decisions on approval of SKDD’s entry to T2S will be taken in line with the following schedule:

  • Operational Managers Group - 1 September 2023
  • Project Manager Group - 1 September 2023
  • CSD Steering Group - 4 September 2023
  • Market Infrastructure Group - 5 September 2023

Migration process to T2S will start on Friday, 8 September 2023 after the closure of working day. On Sunday, 10 September 2023 at 6:30 CET SKDD is expected to advise market participants on the start of business operations in T2S.

Impact on investors: For information purposes

Related Newsflashes: New SKDD Rules and Procedures