Settlement Process for Securities Market

Settlement Process for Securities Market

Our streamlined settlement position management process ensures efficient, accurate, and secure transfers of securities and funds via generation of matched settlement instructions.

Cycle and Process:

The AD Clear settlement position management process follows a T+2 rolling settlement cycle, meaning trades are settled in AD CSD settlement system two business days after the trade execution date (T-Day).

  • T-Day: The day when trade is executed at ADX (buy or sell securities) and AD Clear generates Tier 2 (Client level-gross) settlement instructions real time.
  • T+1: The first business day after the trade, with no exchange of funds or securities where Member can execute post-trade management activities such as updating Member level settlement positions. AD Clear then generates Tier 1 (Member level-netted) settlement instructions at the end of day.

T+2 (Settlement Day):

Settlement process is handled by AD CSD where cash and securities are exchanged across Client, Member and AD Clear involving Delivery versus Payment (DVP) for Member level settlement instructions.

Fail Management:

 

AD Clear is managing fail management process for Member level overdue settlement position following tolls listed below:

  • Fails Margin: Imposed if delivery obligations are not met on Intended settlement date (T+2).
  • Voluntary Buy-in (T+2 to T+3): Generated if delivery obligations are not met on settlement date, then AD Clear allows failing member to place buy-in order in respective Exchange Board on T+2 and T+3, called voluntary buy-in. Buy-in trades have settlement date cycle as T+0.
  • Mandatory Buy-in (T+4): If related Member level settlement position is still not settled on T+4 before last settlement batch in AD CSD, then AD Clear initiates a buy-in order on behalf of failing Member in respective Exchange Board.
  • Buyer Cash Substitution (after T+4 EOD): If Member still has overdue settlement position after last AD CSD settlement batch on T+4, AD Clear will close Member level settlement position of failing Member together with impacted parties' position as well. Then, AD Clear will generate payment instruction from failing Member to impacted Member/s.

    Securities fail

Settlement Default:

If a Clearing Member or Settlement Agent fails to pay on settlement date, it may result in Settlement Default.