CSDR: KDD Rules and Regulations amended

UniCredit Bank Slovenija d.d.
Amendment of KDD Rules and Regulations will be effective as of 1 February 2022
Wed, 12/01/2022

Local CSD (KDD) has distributed to its members the draft versions of amended Rules (KDD Operations Rules) and Regulations (KDD Regulatory Technical Procedures). The new Rules and Regulations will be effective as of February 1st 2022. The draft versions of amended Rules and Regulations are currently available in Slovene language only. 

Amendments to the Rules and Regulations are driven by the implementation of CSDR Settlement Discipline Regime.  

1. Proposed amendments to KDD Operations Rules: 

  • A system member with high settlement failure rates (either numerically or by transaction value) must cooperate with KDD in the analysis and elimination of the causes of failed settlements (by imposing stricter requirements for the client for whom the cause of failed settlements, etc.).
  • KDD may suspend a system member from accessing the information system in part or in full if the said member persistently and systematically violates settlement discipline.
  • Buy-In:

- KDD supports buy-in in line with CSDR.

- Instruction to settle buy-in has to include relevant indicator in line with matching and settlement standards.

- Buy-in has to be reported in line with the European Central Securities Depositories Association (ECSDA) template.

- Currently valid buy-in procedure for Ljubljana Stock Exchange trades is no longer applicable and is removed from KDD Operations Rules.

  • Penalties - applicability:

- Penalties are applicable to settlement instructions for all securities traded on trading venues (in line with definition in item 24 of Article 4 (1) of Directive 2014/65/EU).

- Penalties are not applicable to unmatched instructions.

  • Penalties – calculation basis:

- Shares and similar securities listed on Ljubljana Stock Exchange (XLJU) or other trading venues: the last price, if it exists.

- Bonds: the last price on the most liquid market (regardless of whether it is a regulated market or other trading venue), if it exists.

- If the penalties calculation basis cannot be determined in line with previous two items (i.e. the price does not exist), the penalties calculation basis shall be the basis for calculating safekeeping fee according to valid KDD price list.

  • Penalties – calculation:

- Penalties shall be calculated and applied for each settlement day from the intended settlement day to whichever is the earlier:

a) the actual settlement day,

b) the day of deletion of the instruction from the central register.

- Penalties are calculated for late matching or late settlement.

- Penalties are calculated by T2S.

  • Penalties – appeals:

- Appeals regarding the correctness of the penalty calculation must be submitted within the deadlines provided by T2S.

- After these deadlines, the calculation of the penalty becomes final and irrevocable.

  • Penalties – payment:

- KDD system members shall pay/receive penalties on monthly frequency.

- Penalties (netted in one amount) are paid/received to DCA (Dedicated Cash Account) of each KDD member.


2. Proposed amendments to KDD Regulatory Technical Procedures:

  • All settlement instructions are settled on the T2S level so CSDR penalties can be calculated and applied.
  • KDD enables each system member to receive CSDR penalties information in digital format (either via CRVP application or web services).
  • Currently valid buy-in and sell-out procedures for Ljubljana Stock Exchange trades are no longer applicable and are removed from KDD Regulatory Technical Procedures.

KDD members can provide feedback on the draft versions of Rules and Regulations by 21 January  2022.

Impact on investors: Clients should take note of the above amendments to the KDD Rules and Regulations due to implementation of the CSDR Settlement Discipline Regime.