Bond Connect Market Practice SWIFT Asia Pacific July 2017 2 Bond connect in SMPG operational posttrade market practice terms is a CSDCSD settlement It means that settlement takes place through a link established between an investor CSD CMU and an issuer CSD CCDC or SHCH ID: 763419
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Bond Connect Market Practice SWIFT Asia Pacific July 2017
2Bond connect, in SMPG operational post-trade market practice terms, is a CSD-CSD settlement. It means that settlement takes place through a link established between an investor CSD (CMU) and an issuer CSD (CCDC or SHCH).It results that for flows between foreign investors (eg , Asset Managers) and their (global and/or local) custodians, there will be a need to identify both CSDs to ensure proper routing of settlement, ie , via the bond connect rather than through domestic set-up. This will be done in ISO 15022 through the use of :94F::SAFE and :95P::PSET. PSET is always where the counterparty is located. PSAFE where the instructing party is located. Both fields have no legal or regulatory meanings, only operational usage.The following slides will illustrate how these fields need to be used.Note that in ISO 20022, it is easier. Delivering and receiving depositories are to be used (not place of safekeeping). Description Bond Connect
Receiving Delivering Depository and Place of SafekeepingBond Connect Settlement: BUYING Example (CCDC) BUYRGB22 provides the below settlement info to CUSTHKHH, which will be input in the instruction from CUSTHKHH to HKMAHKHC Delivering agent is DEAGCN22 Seller is SELLCN33Place of settlement (Delivering agent’s CSD) Today the CMU guidance is to use NDCCCNB1. This will be change to NDCCCNBJ for the live BIC cutover of CCDC in the future.Place of safekeeping (Receiving agent’s CSD) is HKMAHKHCCFETS trade reference number BuyerBUYRGB22 SellerSELLCN33 CustodianCUSTHKHH Clearing AgentDEAGCN22 MT 541 MT 541 HKMA CMU HKMAHKHC CCDC / SHCH NDCCCNB1 * MT 541/sese.023 or proprietary Proprietary Msg Proprietary Msg
ISO 15022 IllustrationsFrom the buyer to custodian (global or sub) MT 541 Sender: BUYRGB22Receiver: CUSTHKHH:94F::SAFE//NCSD/HKMAHKHC and :95P::PSET// NDCCCNB1 allows the custodian to identify the settlement as a bond connect settlement. CBTnnnnnnnnnnnnnn is the CFETS Trade Reference NumberNOTE: NDCCCNB1 is used as an example but will be replaced by NDCCCNBJ
ISO 15022 IllustrationsFrom the receiving sub-custodian to HKMA for the settlement at CCDC MT 541 Sender: CUSTHKHH Receiver: HKMAHKHC94F::SAFE//NCSD/HKMAHKHC and :95P::PSET// NDCCCNB1 allows the custodian to identify the settlement as a bond connect settlement. CBTnnnnnnnnnnnnnn is the CFETS Trade Reference NumberNOTE: NDCCCNB1 is used as an example but will be replaced by NDCCCNBJ