Settlement of BETa market transactions
Settlement in KELER of cash transactions concluded at the BETa market of the Budapest Stock Exchange (BSE)In November 2011 the Budapest Stock Exchange launched the BETa market that allows to trade foreign securities in HUF.
Clearing and settlement rules at the BETa market are identical to the rules of the BSE Equities Section. KELER Ltd. completes settlement, KELER CCP Ltd. undertakes to guarantee transaction performance.
KELER accepts transactions in line with the provisions of the trilateral cooperation agreement concluded by the BSE, KELER and KELER CCP.
The data of transactions transmitted cannot be modified subsequently by the clearing member, KELER accepts a request on the modification of data on trading from the stock exchange only.
At the time of concluding the stock exchange transaction concerned information is to be given whether the deal is made for own account or on behalf of clients.
In line with the provisions of the Act on the capital market own securities and funds and client securities and funds are to be managed in a segregated manner in the clearing house, therefore KELER maintains dedicated accounts for securities and cash performance.
BETa market transactions are confirmed at own, non-clearing member and consolidated client level.
Netting and confirmation of transactions
KELER completes multilateral netting by clearing member, by securities with a segregated breakdown, showing the segregated sell or buy positions of the clearing member consolidated by securities and calculated for Day T.
Furthermore KELER completes the segregated financial netting by clearing members of transactions for Day T, showing by settlement currencies the segregated sell or buy position of the clearing member calculated for Day T. KELER informs the clearing member until 7:30 hrs on T+1 Day on the financial and securities netting in the electronic customer relationship system KID or in the form of SWIFT messages in RCMS.
Principles of multinet settlement
Multinet settlement is completed as follows for the cash transactions concluded in the BETa market (except for fix and auction deals):
·†††††††† settlement is completed in a rolling manner (settlement takes place daily and not only at the end of the month)
·†††††††† settlement cycle is T+3 in the BETa market,
·†††††††† multilateral netting is completed (by securities and in foreign currency a net buy or a net sell position is defined for each clearing member) (where T is trade date, number of days refers to business days).
The Delivery versus Payment (DVP) principle is applied during settlement, accordingly financial and securities settlement are interdependent, therefore if one is not completed, the other cannot be completed either.
Multinet settlement can be completed on the consolidated client and own accounts of the clearing member, on the accounts opened by the clearing member for non-clearing members and also on the accounts opened for settlement agent clearing members and non-clearing members.
KELER CCP Ltd. acts as the central counterparty. The essence of CCP is that the central counterparty guarantees transaction performance and in case of eventual default it acts as seller toward the buyer and as buyer towards the seller (this process is called novation), thus guaranteeing the transactions it accepted, therefore the central counterparty is liable for performance as a contractual counterparty. If either party fails to meet obligations, the central counterparty is obliged to honor obligations resulting from the transactions even with the use of its capital.
Transactions concluded in the BETa market are considered stock exchange transactions guaranteed by KELER CCP.
KELER†CCP undertakes to guarantee performance after multilateral netting.
Order of settlement
The net securities seller on Day T is obliged to make sure that at the latest until 14:00 hrs on SD the securities required for the performance of transactions on Day T are available on the segregated stock exchange securities settlement sub accounts.
The net securities buyer on Day T is obliged to make sure that at the latest until 14:00 hrs on SD the HUF and foreign currency cover required for the performance of transactions to be settled on SD is available in a segregated manner at its bank accounts.
From the start of the real time processing of SD KELER takes the securities required for the SD settlement as an item with distinguished priority from the stock exchange securities settlement sub accounts of the clearing member and the stock exchange settlement sub accounts opened by non-clearing members and credits the securities on the technical stock exchange settlement account of KELER CCP that is used for settlement.
Simultaneously KELER makes an entry with distinguished priority to debit the funds required for SD settlement to the segregated bank accounts of the clearing member or if the HUF bank account of the clearing member is kept by the NBH from the bank account kept by the NBH and credits the amount to the stock exchange technical bank account of KELER CCP.
KELER continuously verifies cover for the debit entries initiated and if sufficient cover is available on the accounts of the clearing member, the entry is made immediately. If the bank account is kept by the NBH, KELER inputs a debit order in VIBER to the NBH, and the NBH verifies cover and makes the entry to the account. In this case based on the advice of the NBH KELER credits the stock exchange technical bank account.
The clearing member / settlement agent receives information on obligations related to the stock exchange multinet settlement from the call sent by KELER or from the stock exchange settlement.
Having regard to the DVP principle applied for settlements clearing members involved can access securities or amounts due to them if the other side of the transaction (financial or securities performance) is completed. In the system of KELER the balances of central securities and cash accounts supporting stock exchange settlement are checked to verify that the other side of the transaction was performed. As soon as the securities of net sellers and the funds due to net buyers are fully credited to the central account KELER immediately makes securities and financial credit entries against the central account to transfer securities to the buyers and funds to the sellers. Performance on the securities and cash side is final and irrevocable.
Consequently the final deadline of multinet settlement is 14:00 hrs, however if the necessary securities and/or funds are available on the technical accounts of each member prior to the final deadline, settlement can take place earlier.
In case of multinet settlement performed after 14:00 hrs (default) KELER is entitled to invoice late fee and collect default basic fee and default surcharge as defined in the Fee Schedules of KELER and KELER CCP respectively.
In the period from the trade date of cash transactions with multinet settlement (Day T) until settlement date (SD, that is T+3 in case of B…Ta market deals) clearing members are obliged to provide collateral. KELER CCP publishes the extent of this obligation in an Announcement.
More details are available at: