EU Industry wide shortened settlement cycle for securities

T+2 EU Industry wide shortened settlement cycle for securities

Client Guide – October 2014

PUBLIC 1

CSDR and T+2: harmonising securities settlements practices in Europe

National Central Securities Depositories (CSDs) are key institutions that perform the vital post-trade process of securities settlement. In addition, they hold records of securities accounts and transactions. Following the 2008 financial crisis, the European Commission (EC) decided that CSDs needed to harmonise their practices and improve the safety and efficiency of transaction settlement.

What has driven the need for T+2? In the vast majority of European markets, the settlement period for securities is currently the transaction date plus three business days, often referred to as T+3. The move to T+2 and a shorter settlement cycle would mitigate counterparty risk for all industry participants. The European Commission set up the Harmonisation of Settlement Cycles Working Group in 2009. The group decided that T+1 would not work due to the high use of paper and low levels of straight-through processing in the industry. The group therefore recommended T+2, which would harmonise with foreign exchange settlement periods. T+2 will harmonise securities settlement periods at a maximum of two business days after the trading day, (T+2) for certain securities transactions across the EU). The Central Securities Depositories Regulation (CSDR)1, when implemented, provides for an effective T+2 date of 1 January 2015, in time for the launch of Target2-Securities (T2S) in June 2015.

Contents

Introduction 2

How are you

impacted by T+2 3

T+2 Scope 4

T+2 Key impacts 5

In scope T+2 market

details 6-18

Summary 19

1. The T+2 requirement is stated in CSDR Art5(2) PUBLIC 2

How will T+2 impact your transactions? • Market participants will now

have one less day to complete the pre-settlement stages of the trade lifecycle with even greater focus required on positively affirming trade details on trade date.

• Operational functions will be

subject to more focus across the industry in the coming months to ensure that firms are prepared for the T+2 settlement cycle.

• The impact of T+2 will not be

confined to Europe. Market participants with clients or counterparties outside Europe will need to ensure that cross-border securities transactions (e.g. euro-based bonds settling cross border) are also settled on T+2.

What will market participants be expected to do:

• Adapt their own procedures to complete the pre-settlement stages of the trade lifecycle more quickly.

• Comply with ‘same day affirmation’ or ‘SDA’ (verification of the trade on the same day the trade is executed) where possible.

• Improve exchange of information and use electronic / automated solutions when possible for communication, payment or cheque clearing.

• Ensure that their cross-border securities transactions (e.g. euro based bonds settling cross border) are also settled on T+2 when trading with counterparties outside Europe.

• Ensure internal system and process readiness to support changes to the settlement cycles in time for the main 6 October 2014 go-live date.

What benefits are expected from T+2? • The CSD Regulation introduces a

common set of rules to harmonise 'settlement discipline' across the EU. These consist of measures to prevent settlement fails, and to address these fails when they occur.

• A shortened settlement cycle

would reduce the additional margin and liquidity needs that can happen during times of economic volatility.

• T+2 will help foster a reduction

of counterparty risk by moving trades more quickly to settlement, enabling capital to be freed up faster for reinvestment and reducing credit and counterparty exposure.

• The migration to a T+2

settlement period will be a contributory factor in achieving the wider ambitions of ‘Target2-Securities’ (T2S), the European Central Bank initiative to streamline Europe's securities settlement structure, which is expected to go live in June 2015.

The migration to T+2 settlement period is expected to: • Reduce counterparty, market

and liquidity risks • Increase automation of

operational processes across organisations

• Reduce annual collateral requirements, to free up capital for investment.

Trade date Settlement date Comments

2 October 2014 7 October 2014 T+3

3 October 2014 8 October 2014 The last trade day on T+3

6 October 2014 8 October 2014 The first trade day on T+2. Settlement volumes for two trading days on 8 October 2014

7 October 2014 9 October 2014 T+2

Key T+2 regulatory dates

*1 January 2015 CSDR Regulation applies to T+2 settlement

June 2015 Compliance with ‘Target2-Securities’ settlement structure

Key T+2 market migration dates (for those countries migrating to T+2 on 6 October 2014)

*Or at least 6 months before any T2S migration but no later than 1 January 2016.

How T+2 will impact you

PUBLIC 3

T+2 Scope The majority of European Economic Area (EEA2) markets are moving to the new T+2 settlement cycle for all transactions executed on trading venues. The CSD Regulation includes some product exemptions and some countries may move at a different pace than the majority.

What instruments are in scope? The regulators have provided in-scope products at a high level and the Association for Financial Markets in Europe (AFME) is providing a best practice guide of products. Article 4.1(18) of The Markets in Financial Instruments Directive 2004/39/EC (MiFID)3

refers to the notion of “transferable securities” as classes of securities which are negotiable on the capital market (except instruments of payment), such as: • Shares and other equivalent

securities to shares in companies, partnerships or other entities and depositary receipts in respect of shares.

• Bonds or other forms of

securitised debt, including depositary receipts in respect of such securities.

• Any other securities giving the

right to acquire or sell any such transferable securities or giving rise to a cash settlement determined by reference to transferable securities, currencies, interest rates or yields, commodities or other indices or measures.

The notion of “transferable securities” determined by MiFID should be used to determine what are in scope instruments for T+2.

In scope • Cash Equities • Fixed Income Instruments • Exchange Traded Funds (ETFs) • Warrants • Securities settlement stemming

from derivatives contracts

International Capital Market Association (ICMA) recommends • Repo transactions - Repos have

been recommended to move to T+1 as per ICMA guidelines.

• International Bonds - ICMA have recommended that all International securities traded OTC, for the in scope markets, are to move to T+2.

Note: International Bonds (all XS ISINs) will default to T+2, as per infrastructure providers and recommended by industry working groups.

Out of scope • Primary issuance, Initial Public

Offerings (IPOs) and grey market transactions (i.e. secondary market transactions prior to settlement of primary market allocations).

• Undertaking for Collective Investment in Transferable Securities (UCITS).

• Money Market Instruments (MMI).

Moving to T+2: The state of play

28 markets have confirmed 6 October 2014 as their migration date:

Austria, Belgium, Croatia, Czech Republic, Cyprus, Denmark, Estonia, Finland, France, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Spain4, Sweden, Switzerland and the UK.

Romania could migrate on 6 October 2014.

Bosnia & Herzegovina has agreed to migrate on 1 January 2015.

Germany is already using T+2 for exchange activity. OTC transactions are currently on T+3 and are recommended to move to T+2, as per ICMA guidelines.

Bulgaria and Slovenia already use T+2.

Liechtenstein has not yet fixed a date for migrating to T+2.

2. EEA: European Economic Area includes the 31 European Union (EU) member states plus Iceland, Liechtenstein and Norway) 3. MiFID: The Markets in Financial Instruments Directive 2004/39/EC (known as "MiFID“) is a European Union law providing harmonised regulation for

investment services across the 31 member states of the EEA. 4. The settlement lifecycle of equities is expected to change in Q4 2015, after the implementation of the Spanish Market Reform. Iberclear, the Spanish

central securities depository (CSD), has advised (on 7 May 2014) that the settlement cycle for fixed income trades booked in electronic platforms (e.g. SENAF, BrokerTec, EuroMTS) and settled through CADE will change to T+2 as of 6 October 2014. The change will affect the settlement of both private and public debt trades. However, the settlement lifecycle of fixed income trades settling through the SCLV platform will not change in October 2014. It has not been clarified yet whether the shorter settlement cycle will apply to the primary market.

PUBLIC 4

T+2 Key impacts At a high level the operations during the life-cycle of a trade will have to be completed in two business days rather than three.

Funding Liquidity Management (and associated treasury functions), treasury managers will have one day less to ensure the necessary liquidity is present for settling the transactions of their institutions.

Timelines for FX transactions means firms will have less time to determine and place any FX trades that may be required to deliver the purchase currency without the need to borrow.

Penalties and fines In anticipation of T+2, Euroclear UK & Ireland (EUI) introduced new matching requirements with effect from 1 September 2014 whereby all trades will require to be matched by close of business on T+1 to avoid potential matching fines. This date aligns with the start of the Sept / Oct settlement discipline period. EUI proposes to introduce discounts into the regime across a number of settlement discipline periods to allow the market time to adjust to the new changes. EUI has also announced a settlement discipline 'holiday' on 8 October 2014 in anticipation of the extra volumes expected on this date.

Margin calls There will be one less day for the calculation of margin calls.

Migration There will be a spike in settlement on 8 October where T+3 and T+2 cross. This spike in settlement activity will require close monitoring of system capacity, throughput of messaging, settlement fails, CSD handling of volume and liquidity management.

HSBC recommends that clients identify critical elements of their trade processing which will be required to fit within a shorter settlement cycle. Of particular importance for post-trade activities are the affirmation, allocation, confirmation processes and pre-settlement date matching.

Buy-ins There are recommendations from the European Banking Federation (EBF), European Central Securities Depositories Association (ECSDA), ICMA and other industry associations, that the timing for the introduction or any changes to buy ins and penalties should be phased in. Euroclear Bank are reviewing the recall period relating to the stock loan/borrow process, in line with changes in the settlement cycle to T+2.

Derivatives Go to the HSBC T+2 website pages to download Derivatives and T+2

Impacts on the trade life-cycle

Conversions: Fixed Income RegS will take on a recommended T+2 settlement status. 144A securities will maintain T+3.

Consideration will need to be taken into account when booking both sides of this conversion to ensure that the dates are the same, as this will impact the cash value if they each default to different settlement cycles.

Conversions: Equities The move to T+2 will create a time discrepancy between American Depository Receipts (ADRs) exchanged on the US market and their underlying assets exchanged on European markets. ADR specialists have highlighted two key issues:

• Conflicts in the US (T+3) and European (T+2) settlement cycles could result in incremental capital costs for US counterparties in cases where the broker will have to borrow/lend or require cash advances for its American investor client.

• The discrepancy between the settlement cycles could complicate the payment of dividends and the determination of ex-dates.

Post-Trade

• Affirmation • Pre-settlement matching • Manual processes • Time zone differences

Settlement

• One less day for margin call calculation

• Static data management • Less time to determine

funding requirements • Shorter window to recall

stock from loan • CCP clearing functions are

not expected to be impacted

Fails Management

• Close monitoring of double settlement (8 October 2014)

• No impact to Lending and Borrowing rules

• Penalties – markets may adopt different disciplines

• Where Corporate Actions Joint Working Group (CAJWG) standards apply, events will move in-line with the new settlement cycle

• No impact on General Meetings apart from France, where the snapshot of eligible holders will take place two days prior to the meeting, rather than three

5

Corporate Actions and Asset Services

PUBLIC

http://www.hsbcnet.com/csdr-t2

Austria 6 October 2014

Useful websites:

www.oekb.at – Oesterreichische Kontrollbank AG (OeKB) – Austrian Central Depository

www.fma.gv.at – Financial Markets Authority – Austrian Capital Market Regulator

Sub Custodian (HSBC)

UniCredit Bank Austria AG

Instruments in scope

All securities instruments traded on the joint trading platform XETRA, settled via the local central securities depository and cleared by the central counterparty, OeKB and CCPA

Impact to Asset Servicing, Stock Lending and any other products

No impact.

Impact on buy-ins, settlement fines and any other securities related market practices

No impact.

Additional information CCP.A have confirmed that the netting algorithm does not change due to the implementation of T+2

Croatia 6 October 2014

Useful websites:

www.hanfa.hr – Croatian Financial Services Supervisory Agency (HANFA)

www.skdd.hr – Sredisnje klirinsko depozitarno drustvo (SKDD) – Croatian Securities Depository


Privredna Banka Zagreb

Zagrebacka banka d.d.


This change impacts all instruments traded on the Zagreb Stock Exchange i.e. Equities, Government Bonds, Municipal Bonds, Corporate Bonds, Commercial Paper and structured products (certificates). Please note that fixed income instruments are usually traded OTC and settled through the local CSD. The settlement period is agreed directly between the two counterparties.


No impact to asset servicing.

Stock Lending is not developed in the Croatian market.

For Corporate Events with record date on or after 10 October 2014, the ex-dividend date will be calculated using the standard settlement period of T+2.


No impact.

Additional information

Wednesday 8 October 2014 is a local holiday in Croatia. As a result, last T+3 and first T+2 settlements will cross on Thursday 9 October 2014.

In scope T+2 market details

PUBLIC 6

http://www.oekb.at/

http://www.fma.gv.at/

http://www.hanfa.hr/

http://www.skdd.hr/

Cyprus 6 October 2014

Useful websites:

www.cse.cy – Cyprus Stock Exchange

www.cse.com.cy – Central Depository and Central Registry of Cyprus


HSBC


All trades booked at the Cyprus Stock Exchange will migrate to T+2 (from the current T+3)


OTC trades that currently support a Trade Date (TD) equal to or less than the Settlement Date (SD) without exceeding T+3 will now align their TD to be equal to or less than the SD without exceeding T+2.

There will be no netting across the two different trade dates. The CSE will provide different settlement sub-systems to segregate on exchange settlement activity per respective Trade Date.

.


• Ex-date for Corporate Actions will move from two business days before record date to one business day before record date.

• The last day of trading which applies to conversions of shares from one category to another, e.g. a reverse split, will be set to two business days preceding the record date.

• Last trading date = Record date -2 (previously Last trading date = Record date -3).

• Stock lending is not permitted in Cyprus.


No impact.

Czech Republic 6 October 2014

Useful websites:

www.centraldepository.cz (CDCP) – The Central Securities Depository Prague

www.cnb.cz (CNB) – Capital Market Regulator


UniCredit Bank

Ceskoslovenska obchodni banka


All trades concluded on the Prague Stock Exchange. Shortened settlement period will apply to all securities that are traded on the joint trading platform XETRA, settled via the local central securities depository (CSD) and cleared by the central counterparty (CDCP).


No impact to Asset Servicing or Stock Lending.

Stock lending is mainly operated through Repo transactions, or FoP transactions with separate cash payment agreed between counterparties.

The ex-date for local dividend payments will move to one day prior to record in line with the change of settlement period.


Buy-ins are not applicable for OTC transactions.

PUBLIC 7

http://www.cse.cy/

http://www.cse.com.cy/

http://www.centraldepository.cz/

http://www.cnb.cz/

Denmark 6 October 2014

Useful websites: www.dbmf.dk – Danish Securities Dealers Association www.finanstilsynet.dk - (FSA) – Danish Capital Market Regulator www.vp.dk (VP) - Danish Central Securities Depository


SEB


Applicable to any operations in transferable securities which are executed on trading venues and settled in on Regulated market, MTF or a OTF (if and when applicable). UCITS are not in scope, however, with regards to transactions in transferable securities executed on a trading venue, the intended settlement date shall be no later than on the second business day.


Danish market is a record date market and ex-date is one settlement cycle – one business day before record date. This will not change however with the change in settlement period, ex date will move one business day closer to record date.

No impact to Stock Lending.

Impact on buy-ins, settlement fines and any other securities related market practices The buy-in period for failed transactions, the recycling rules and the lending and borrowing rules and processing will not be impacted by T+2.

Additional Information

FAQ Document is available via the Danish Bankers Association Danish Securities Dealers Association: www.dbmf.dk

All OTC transactions executed on a trading venue will be on T+2, unless both parties agree to a different date. OTC transactions outside a trading venue (even if reported to the exchange) are not included in T+2.

Estonia 6 October 2014

Useful websites: www.fi.ee (FSA) – Estonian Financial Supervision Authority www.nasdaqomxbaltic (ECSD) – Estonian Central Securities Depository


SEB


All quoted securities that are CSD eligible.


Impact to Asset Servicing is undecided at this stage. Booking of distributions will change (currently cash distributions are carried out by CSD directly to investor accounts). In future, cash distributions will move through a T2S Dedicated Cash Account (DCA).

No impact to Stock Lending. Whilst legally allowed, due to lack of procedural rules and appetite, it is not widely practised in the market. Similar functionality is executed mostly through Repo transactions.


No impact to buy-ins.

No impact to settlement fines.

PUBLIC 8

http://www.dbmf.dk/

http://www.finanstilsynet.dk/

http://www.vp.dk/

http://www.dbmf.dk/

http://www.fi.ee/

http://www.nasdaqomxbaltic/

Finland 6 October 2014

Useful websites: www.euroclear.com – Finland Central Securities Depository www.fin-fsa.fi (FSA) – Finland Financial Supervisory Authority


SEB

Instruments in scope Applicable to all trades that settle in Euroclear Finland, if they are traded: • on a regulated market moving to T+2, such as

NasdaqOMX Nordic (also including non-regulated First North markets)

• on a Multilateral Trading Facility (MTF) or an Organised Trading Facility (OTF), is and when applicable,

• for OTC the recommended cycle is T+2, unless both parties agree to a different date

Additional Information Clearing – HEXClear optimisation is not linked to Trade Date. All transactions that are booked for Settlement Date 8 October 2014 will be included in same ‘netting’ Q&A document from Euroclear Finland: https://www.euroclear.com/dam/EFi/Campaigns/T-2_cycleQuestionsAndAnswers.pdf


The change will affect corporate actions, if the record day follows the settlement cycle. After 6 October, the record day will follow T+2 cycle instead of T+3. After the settlement cycle change the record date of the dividend cannot be earlier than two trading days after the Annual General Meeting (AGM). Currently the record date cannot be earlier than three trading days after the AGM.


Impact on buy-ins, settlement fines and any other securities related market practices No information has been provided. Intended Settlement date is referred to as regards buy-in rules and settlement fines.

Euronext 6 October 2014

Useful websites:

www.euronext.com - Euronext


BNP Paribas


All asset classes traded on the following regulated markets will adopt T+2:

• Euronext Cash Markets UTP/TCS (Amsterdam, Brussels, Paris) i.e. ESES/EB/NBB – SSS

• Euronext Cash Markets UTP.TCS (Lisbon) i.e. Interbolsa - Equiduct Market (Borse Berlin) i.e. EB/(ESES) Interbolsa

• Luxembourg Market (Bourse de Luxembourg) i.e. EB/CBL – Bond/Match/ Galaxy Market (Trading Screen) i.e. EF/EB Interbolsa and Euroclear Belgium


Ex-date will be defined as one business day prior to record date. Pay date will remain one day after record date. There will be no impact to Stock Lending.

Impact on buy-ins settlement fines and any other securities related market practices

No impact to buy-ins.

Some markets may adopt a different settlement discipline over the transition period.

Additional Information Clearing – In accordance with the migration timetable, Tuesday 7 October 2014 EOD, LCH Clearnet SA will net trades per ISIN and per Delivery Account for trades from Friday 3 October and from Monday 6 October 2014 into a single settlement instruction for Intended Settlement Date 8 October 2014.

Clearing (Portugal)

Guaranteed trades: single file will be sent on the 7 October 2014 by LCH Clearnet SA to Interbolsa aggregating the two stock exchange dates, 3 and 6 October 2014.

Non-Guaranteed trades: LCH Clearnet SA will send on the 3 and 6 October 2014 the trades of the two respective dates, Interbolsa will aggregate the two files with settlement to take place on 8 October 2014.

PUBLIC 9

http://www.euroclear.com/

http://www.fin-fsa.fi/



https://www.euroclear.com/dam/EFi/Campaigns/T-2_cycleQuestionsAndAnswers.pdf



http://www.euronext.com/

France 6 October 2014

Useful websites: www.euroclear.com – Central Securities Depository

Sub Custodian (HSBC) CACEIS BNP Paribas


T+2 settlement cycle includes any operation, settled in a CSD or ICSD, if traded on a regulated market or a MTF, or an OTF (whenever applicable) or an OTC market unless both parties decide otherwise.

Listed UCITs are included in the scope. Non-listed UCITs and Primary issues are out of scope.

On 20 August 2014, The Agence France Tresor (AFT) announced that trades of French Government Debt on secondary markets that are conducted through regulated markets must settle on a T+2 settlement cycle form 6 October 2014. As a result, ATF will settle all BTF, BTAN and OAT auctions on T+2.


Annual General Meetings – record dates are currently positioned three days before the General Meeting based on traded transactions. A decision to leverage from the T+2 to align the French Market with the future European General Meetings standards has led to fix the record date two days before the General Meeting based on settled transactions.



No impact.

Additional information Clearing – In accordance with the migration timetable, Tuesday 7 October 2014 EOD, LCH Clearnet SA will net trades per ISIN and per Delivery Account for trades from Friday 3 October and from Monday 6 October 2014 into a single settlement instruction for Intended Settlement Date 8 October 2014.

Greece 6 October 2014

Useful websites:

www.hcmc.gr – Hellenic Capital Market Commission

www.helex.gr – Depository for Greek Equities and Corporate Bonds

www.bankofgreece.gr – Depository for Government Debt


HSBC


All Equities, Corporate Bonds, ETFs and Warrants booked in HELEX will migrate to T+2 (from the current T+3 for Equities and T+1 for Bonds) on effective date.


Clearing – There will be no netting across the two different trade date. HELEX will provide two different settlement subsystems to segregate on exchange settlement activity per respective trade date. Priority will be given on 8 October 2014 to the settlement of those trades with a trade date of 3 October 2014.


Ex-date for Corporate Actions will move from 2 business days before record date to 1 business day before record date. The last day of trading which applies to conversions of shares from one category to another, e.g. the reverse split, will be set to 2 business days preceding the record date.

Last trading date = Record date -2 (previously Last trading date = Record date -3)



No impact.

PUBLIC 10


http://www.hcmc.gr/

http://www.helex.gr/

http://www.bankofgreece.gr/

Hungary 6 October 2014

Useful websites: www.keler.com (Keler) – Hungarian Central Securities Depository www.fome.hu (FSA) – Hungarian Financial Supervisory Authority


UniCredit Bankn


The shortened settlement period will apply to all securities that are traded on the joint trading platform XETRA, settled via the local central securities depository (CSD) and cleared by the central counterparty, KELER and KELER CCP.

Also applicable to the Equities section of the Budapest Stock Exchange and the BETA Market.


Effective from 6 October 2014, the ‘cum date’ will be shifted from the current E-8 to E-7 for equities listed on the Budapest Stock Exchange. Consequently, E-7 will be the last day of trading when ownership rights related to the corporate event are bought and sold together with the securities. ‘E’ is equal to the date of the corporate event and the calculation is made based on business days.


No impact.


Clearing – KELER CCP will cross net the trades for 8 October 2014 i.e. there will be one cycle for on exchange clearing on that day.

Iceland 6 October 2014

Useful websites:

http://en.vbsi.is/ - Icelandic Securities Depository

www.fme.is – Iceland Financial Supervisory Authority

Sub Custodian (HSBC)*

Landsbankinn


Applicable to all securities traded on its Main Market and First North Iceland. Please note that Fixed Income instruments will be lengthened by one day (currently T+1).

*HSS does not currently offer a service in this market.


No impact.

Stock Lending is not permitted in Iceland.


Changes in respect of buy-in rules will only apply to changes of settlement cycle from T+1 for fixed instruments to T+2 and for Equities from T+3 to T+2.


Eligible changes will be applicable to all instruments registered with the Icelandic Securities Depository. Details in the following link:

http://en.vbsi.is/BookentryIssues/IssuedISINnumber/

PUBLIC 11

http://www.keler.com/

http://www.fome.hu/

http://en.vbsi.is/

http://www.fme.is/

http://en.vbsi.is/BookentryIssues/IssuedISINnumber/

Latvia 6 October 2014

Useful websites:

www.nasdaqomxbaltic.com – Latvia Central Securities Depository

www.fktk.lv – Latvia Financial Supervisory Authority


SEB


The shortened settlement cycle will cover all securities admitted to trading at all three Baltic exchanges and

respective First North Market.


No impact to Asset Servicing.

Stock Lending is not traditionally practiced in Latvia, Repos are utilised.


The CSD / SE fee for a delay of the settlement date: EUR 70 + 0.1% transaction value per delay day (max EUR 500).

The service fee for the postponement of the settlement date due to the default of the transaction consist of fixed proceeding fee and added percentage of transaction value for every trading day (working day). This proceeding fee shall be paid as one off fee and added percentage shall be paid for every trading day by which the actual settlement date of the transaction differs from the initial settlement (Value) date of the transaction.

PUBLIC 12

Italy 6 October 2014

Useful websites: www.montetitoli.it – Italian Central Securities Depository www.consob.it – Italian Capital Market Regulator


BNP Paribas


The shortened settlement cycle will apply to all trades on regulated markets and multilateral trading facilities (MTFs). This will affect the following financial instruments: Shares, pre-emptive rights, warrants, convertible bonds and market-related closed-end funds, government securities and supranational bonds, corporate bonds and other debt securities, securitised derivatives (certificates and covered warrant), exchange traded funds (ETFs) and exchange traded commodities and notes (ETCs/ETNs).


No impact to the Asset Servicing or Stock Lending.

Please note that the record date will move from Ex date +2 to Ex Date +1 and the payment date will move from Ex date +3 to Ex date +2.

Impact on buy-ins, settlement fines and any other securities related market practices No impact.


The settlement cycle of the derivative contracts that provide the delivery of shares underlying the future and option contracts will also be harmonised to T+2.

Clearing – CC&G (Cassa di Compensazione e Garanzia) has confirmed that for the transition to T+2 they will combine trades for trade date 3 October 2014 and trade date 6 October 2014 into one single net with expected settlement date of 8 October 2014.

In order to facilitate clients reconciliation process, BNP Paribas, for instruments guaranteed by CC&G traded on 3 October and 6 October with expected settlement date 8 October, will calculate and book to client accounts separate nets for each trade date.

BNP Paribas will process such trade date netting algorithm for value date October 8 to guaranteed instruments traded on the following markets: MTA, MIV, TAH, ETFPlus, Idem, Domestic MOT, Euro MOT - for financial instruments to be settled in Monte Titoli, ExtraMOT - for financial instruments to be settled in Monte Titoli, Euro TLX - for financial instruments to be settled in Monte Titoli. Monte Titoli (due to the operational impact and extra volumes anticipated as part of the move to T+2) will not apply penalties on fails on 8, 9 and 10 October 2014.

http://www.nasdaqomxbaltic.com/

http://www.fktk.lv/

http://www.montetitoli.it/

http://www.consob.it/

Lithuania 6 October 2014

Useful websites:

www.csdl.lt – Lithuania Central Securities Depository

www.lb.lt – Bank of Lithuania


SEB


The shortened settlement cycle will cover all securities admitted to trading at all three Baltic exchanges and respective First North Market.


No changes to Asset Servicing deadlines anticipated.

No impact to stock lending.


No impact or changes to buy-ins and settlement fines.

PUBLIC 13

Malta 6 October 2014

Useful websites:

www.borzamalta.com.mt – Malta Stock Exchange and Central Depository

www.mfsa.com.mt – Malta Financial Services Authority


Market not supported by HSBC


T+2 settlement cycle will apply to the settlement of trades executed on the regulated market and settled in MaltaClear, in equities, corporate bonds, Malta Government Stocks, Treasury Bills and in any other financial instruments that may be traded in the future.


No impact


No impact.

http://www.csdl.lt/

http://www.lb.lt/

http://www.borzamalta.com.mt/

http://www.mfsa.com.mt/

PUBLIC 14

6 October 2014

Useful websites:

www.kdpw.pl – Poland Central Securities Depository

www.knf.gov.pl – Poland Financial Supervisory Authority


Bank Pekao SA


The instruments affected by the shortened settlement cycle are shares, rights to shares, Depository Receipts, Exchange-Traded Funds (ETFs) and Investment Certificates.


No impact.


No impact.

Poland

Norway 6 October 2014

Useful websites: www.vps.no – Norway Central Securities Depository www.finanstilsynet.no – Norwegian Financial Supervisory Authority


SEB


The shortened settlement cycle will apply to all trades in equities, equity certificates, exchange traded funds (ETFs), exchange traded notes (ETNs), fixed income and warrants at Oslo Bors, Oslo Axess and Nordic ABM.

It will also apply to all cleared derivatives traded at Oslo Bors and Oslo Connect, as the delivery of the underlying instrument will settle two days after the derivative is expired or exercised. In addition, derivatives cash settlements that are currently not settled on T+2 will change.


No impact.


No impact.

http://www.kdpw.pl/

http://www.knf.gov.pl/

http://www.vps.no/

http://www.finanstilsynet.no/

PUBLIC 15

6 October 2014

Useful websites:

www.kdpw.pl – Poland Central Securities Depository

www.knf.gov.pl – Poland Financial Supervisory Authority


Bank Pekao SA


The instruments affected by the shortened settlement cycle are shares, rights to shares, Depository Receipts, Exchange-Traded Funds (ETFs) and Investment Certificates.


No impact.


No impact.

Poland Slovak Republic 6 October 2014

Useful websites:

www.cdcp.sk – Central Securities Depository of Slovak Republic

www.nbs.sk – National Bank of Slovak Republic and Market Regulator


Ceskoslovenska obchodna banka


The shortened settlement cycle will affect trades booked in the electronic order book of the BSSE (Bratislava Stock Exchange), as well as trades booked in BSSEs multilateral trading facility (MTF).

However, negotiated and repo deals that are only reported via the BSSE for settlement, and over-the-counter (OTC) trades that are settled directly at the Slovakian Central Securities Depository (CDCP) will continue to follow their current settlement periods, which can range from T+0 to T+15.


No impact.


No impact.


The Debt and Liquidity Management Agency announced that primary market of state debt securities will move to T+2 settlement cycle from 6 October 2014.

6 October 2014

Useful websites: www.bvb.ro – Bucharest Stock Exchange www.cnvmr.ro – Romanian National Securities Commission www.depozitarulcentral.ro – Central Securities Depository


Citibank


The settlement of BSE trades, trades executed on alternative trading systems and outside of the regulated market will follow the T+2 cycle.


No impact.


The market settlement fee of 0.0085 percent of trade value will not be applicable for settlement instructions related to the trade allocations made by local brokers against clients’ accounts at the local custodian. However the clients should note that this fee will be paid by the brokers for the settlement of the on-exchange transactions.

Romania

http://www.kdpw.pl/

http://www.knf.gov.pl/

http://www.cdcp.sk/

http://www.nbs.sk/

http://www.bvb.ro/

http://www.cnvmr.ro/

http://www.depozitarulcentral.ro/

Sweden 6 October 2014

Useful websites:

www.euroclear.com – Swedish Central Securities Depository

www.fi.se – Swedish Financial Supervisory Authority


SEB


Applicable to any operations in transferable securities which are executed on trading venues and settled in an (I)CSD on a Regulated Market, MTF or an OTF meaning Cash Equity, Listed funds (ETFs) are in scope, domestic debt securities, International debt securities (Eurobonds) and securities settlement stemming from derivatives contract, convertible bonds listed on a regulated market and warrants.

The following securities are not applicable: UCITS funds, other investment funds, primary issuance (including trading on grey markets) repo transactions and NASDAQ OMX Nordic’s physically settled derivatives on government and mortgage bonds.


The Swedish market is a record date market and ex-date is one settlement cycle – one business day before record date. This will not change but due to the settlement cycle moving from T+3 to T+2, ex date will be moved one business day closer to record date.



No impact.


Q&A for Swedish market:

http://www.fondhandlarna.se/index.php/regler/cat_view/36-regler/218-t2

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Spain 6 October 2014

Useful websites:

www.iberclear.es – Spanish Central Securities Depository


BNP Paribas


Iberclear, the Spanish CSD, has advised that the settlement cycle for Fixed Income trades booked in electronic platform (e.g. SENAF, Brokertec, EuroMTS) and settled through CADE will change to T+2 as of 6 October 2014.

The change will affect the settlement of both private and public sector trades. However, the settlement lifecycle of fixed income trades settling through the SCLV platform will not change in October 2014. It has not been clarified yet whether the new settlement cycle will apply to the primary market.


No impact.


No impact.


Please note that the settlement cycle for equities is not expected to change until November 2015, post Spanish Market Reform.


http://www.fi.se/







http://www.iberclear.es/

UK & Ireland 6 October 2014 Switzerland 6 October 2014

Useful websites:

www.six-securities-services.com – Swiss Central Securities Depository

www.finma.ch – Swiss Financial Supervisory Authority


UBS

Credit Suisse


The shortened settlement cycle will apply to all securities that are traded on SIX Swiss Exchange and SIX Structured Products Exchange and settle through SIX SIS, the Swiss Central securities depository.


No impact to the Asset Servicing or Stock Lending.


The existing Stock Exchange Regulation with respect to buy-ins and any other securities related market practice will remain unchanged. In order to allow for a smooth transition, SIX SIS will grant a fee holiday for the ‘Late Settlement Regime’ on 8 October, 9 October and 10 October 2014.

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http://www.six-securities-services.com/





http://www.finma.ch/

18 PUBLIC

UK & Ireland 6 October 2014


HSBC


For the UK and Irish markets, transferable securities traded on UK/Irish based Recognised Investment Exchanges (RIEs), Multi-lateral Trading Facilities (MTFs), Organised Trading Facilities (OTFs) and settled in the CREST system are in scope.

T+2 will not apply to:

• Undertaking for Collective Investment in Transferable Securities (UCITS)

• Money Market Instruments (MMI)

• Primary issuance

Impact to Asset Servicing, Stock Lending and any other products The period between the ex-date and the record date will be shortened by one day: (ex-date = record date -1). This will usually fall on a Thursday, with the record date being on a Friday. It is expected that as a result of the shortening of the time between ex and record dates, the number of market claims generated will be reduced.



No impact to tax services are expected.

CCPs will continue to adopt trade date netting over the transition period. Therefore, participants will have two settlements in the same instrument on 8 October 2014.

Useful websites: www.fca.org.uk – Financial Conduct Authority www.londonstockexchange.com – London Stock Exchange www.euroclear.com – Euroclear UK & Ireland


In anticipation of T+2, Euroclear UK and Ireland (EUI) introduced new matching requirements with effect from 1 September 2014 whereby all trades will require to be matched by close of business on T+1 to avoid potential matching fines. This date aligns with the start of the Sept / Oct settlement discipline period. EUI proposes to introduce discounts (see below) into the regime across a number of settlement discipline periods to allow the market time to adjust to the new changes. EUI has also announced a settlement discipline 'holiday' on 8 October 2014 in anticipation of the extra volumes expected on this date.

The Matching Discipline Regime includes deliveries, residual deliveries and stock loans relating to the following CREST security categories:

• FTSE 100

• FTSE mid 250

• Irish Equivalent 100

• Irish Equivalent 250

• Other UK and Irish settleable

• Residual UK and Irish

From Monday, 1 September 2014, there will be a 100% matching target on T+1 for all qualifying transactions.

In order to allow clients time to adjust to the new target, EUI is taking a phased approach to implementation:

September and October 2014 (Period 97) ‐ 50% discount on matching fine total charge

November and December 2014 (Period 98) ‐ 25% discount on matching fine total charge

January and February 2015 (Period 99) and after ‐ Full matching fines ‐ No Discount

http://www.fca.org.uk/

http://www.londonstockexchange.com/


This document is issued by HSBC Bank plc (“HSBC”). Registered in England - Number 14259. Registered office: 8 Canada Square, London,

E14 5HQ. HSBC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential

Regulation Authority . It is a member of the HSBC Group of companies (“HSBC Group”). Sources have not been independently verified.

Except in the case of fraudulent misrepresentation, no liability is accepted whatsoever for any direct, indirect or consequential loss arising from

the use of this document. HSBC is under no obligation to keep current the information in this document. Neither HSBC nor any of its affiliates

are responsible for providing you with legal, tax or other specialist advice and you should make your own arrangements in respect of this

accordingly. This is not a financial promotion. This document is intended for the use of clients who are professional clients or eligible

counterparties under the rules of the FCA only and is not intended for retail clients. This document is intended to be distributed in its entirety.

Reproduction of this document, in whole or in part, or disclosure of any of its contents, without prior consent of HSBC or any associate, is

prohibited. Unless governing law permits otherwise, you must contact a HSBC Group member in your home jurisdiction if you wish to use

HSBC Group services. Nothing herein excludes or restricts any duty or liability of HSBC to a customer under the Financial Services and

Markets Act 2000 or the rules of the UK regulators.

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Summary: Market migration dates

• Slovenia • Bulgaria • Germany (for

exchange activity – OTC transactions are currently on T+3 and are recommended to move to T+2 as per ICMA guidelines)

• Austria • Belgium • Croatia • Czech Rep. • Cyprus • Denmark • Estonia • Finland • France

• Greece • Hungary • Iceland • Ireland • Italy • Latvia • Lithuania • Luxembourg • Malta

• Netherlands • Norway • Poland • Portugal • Romania • Slovakia • *Spain • Sweden • Switzerland • UK

• Bosnia & Herzegovina

• Liechtenstein

*Bonds only, equities not expected to change until Q4 2015

EU Industry wide shortened settlement cycle for securities

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