Whole Section

  • Rule 7 — Money Settlement

    • 7.1 Money Settlement with Principal

      • 7.1.1

        The settlement of money obligations between CDP and the Principal shall be in accordance with these DVP Rules. The Principal shall do, or procure to be done, all things which may be necessary or prudent or required by CDP to give effect to these DVP Rules.

    • 7.2 Netting of Balances

      • 7.2.1

        When a Principal submits a receiving instruction which is due for settlement on that Settlement Day, the total amount due to CDP upon matching and validation of such instruction shall be debited to the Principal's daily balance for that Settlement Day. When a Principal submits a delivery instruction which is due for settlement on that Settlement Day, the total amount due from CDP upon matching and validation of the delivery instruction shall be credited to the Principal's daily balance for that Settlement Day.

        Amended on 3 October 20093 October 2009.

      • 7.2.2

        When a Principal submits a receiving instruction for matching and validating in advance, the total amount due to CDP upon matching and validation of such instruction shall be debited to from the Principal's daily balance for the Settlement Day of such instruction. When a Principal submits a delivery instruction for matching and validation in advance, the total amount due from CDP upon matching and validation of such instruction shall be credited to the Principal's daily balance for the Settlement Day of such instruction.

        Amended on 3 October 20093 October 2009.

      • 7.2.3

        Throughout the Settlement Day up to the Cut-Off Time for DVP Validation, all debits and credits to the Principal's daily balance shall be set-off on a continuous basis as to arrive at a net balance, known as a net debit or net credit balance, at any particular point of time during the Settlement Day. Setting-off shall also be conducted on a consecutive basis so that transactions which are matched and validated first shall be set-off first. The final Net Debit Balance for that Settlement Day shall be referred to as the Net Debit Balance and the final net credit balance for that Settlement Day shall be referred to as the Net Credit Balance.

        Amended on 3 October 20093 October 2009.

    • 7.3 CDP Net Money Settlement Statement

      • 7.3.1

        At the time as stated in the Timetable on each Settlement Day, CDP shall issue an electronic statement to the Principal's DA.

        Amended on 3 October 20093 October 2009.

      • 7.3.2

        Save for manifest error, such statement shall be deemed binding and conclusive on the Principal as to the Net Debit Balance payable to CDP or the Net Credit Balance payable by CDP (as the case may be), on that Settlement Day.

        Amended on 3 October 20093 October 2009.

    • 7.4 Principal Net Debit Cap

      • 7.4.1

        The Principal's Settlement Bank may from time to time establish a limit on the net debit balance of the Principal. This limit shall be known as the Principal Net Debit Cap. The Principal Net Debit Cap may be adjusted at any time on a Settlement Day in accordance with Rule 8.4.1. The net debit balance and the total net debit balance of the Principal at any time on a Settlement Day shall not exceed the Principal Net Debit Cap applicable at that time.

    • 7.5 Total Net Balance

      • 7.5.1

        Throughout the Settlement Day, the value of the Principal's transactions matched and validated in advance shall be added to the value of the Principal's other matched and validated transactions due for settlement on the Settlement Day and set-off on a continuous basis so as to arrive at a total balance, known as the total net debit or net credit balance, at any particular point of time during the Settlement Day.

        Amended on 3 October 20093 October 2009.

      • 7.5.2

        The total net balance at any particular point of time during the Settlement Day shall be calculated by the following formula:

        [(A - B) + (C - D)]

        where A = is the total value of all matched and validated receiving instructions due for settlement on the current Settlement Day
        B = is the total value of all matched and validated delivery instructions due for settlement on the current Settlement Day
        C = is the total value of all receiving instructions matched and validated in advance on the current Settlement Day
        D = is the total value of all delivery instructions matched and validated in advance on the current Settlement Day.

        Amended on 3 October 20093 October 2009.

    • 7.6 Limits on DVP Validations

      • 7.6.1

        Validations of DVP instructions can only take place upon satisfaction of the following conditions:

        (a) The value of the proposed DVP instruction shall not cause the Principal's net debit balance for the current Settlement Day to exceed the Principal Net Debit Cap applicable at the time the validation is to be made; and
        (b) The value of the proposed DVP instruction shall not cause the Principal's total net debit balance to exceed the Principal Net Debit Cap applicable at the time the proposed validation is to be made.

        Amended on 3 October 20093 October 2009.

      • 7.6.2

        Validations of DVP instructions prior to their Settlement Day can only take place upon satisfaction of the following conditions:

        (a) The value of the proposed DVP instruction shall not cause the Principal's net debit balance for the Settlement Day on which the advance matching and validation is due for settlement to exceed the Principal Net Debit Cap applicable at the time the validation is to be made; and
        (b) The value of the proposed DVP transaction shall not cause the Principal's total net debit balance to exceed the Principal Net Debit Cap applicable at the time the validation is to be made.

        Example 1: Assume that the Principal's Principal Net Debit Cap is $1 million on Settlement Day 1 and the net debit balance on Settlement Day 1 is $600,000. The net debit balance on Settlement Day 2 is $200,000 as a result of the advance affirmations. The total net debit balance is therefore $800,000.

        Proposed DVP instruction: A receiving instruction of $300,000.

        This proposed DVP instruction will not be accepted for DVP Settlement because although it satisfies Rule 7.6.1(a), it does not satisfy Rule 7.6.1(b); the value of the proposed submission would cause the Principal's total net debit balance on Settlement Day 1 to exceed the Principal Net Debit Cap of $1 million.

        Proposed DVP instruction submitted for advance matching and validation: A receiving instruction of $200,000 which is due on Settlement Day 2.

        This proposed instruction will be accepted for DVP Settlement because it satisfies Rule 7.6.2(a) and (b); i.e. it will not cause the Principal's net debit balance for Settlement Day 2 to exceed the Principal Net Debit Cap ($200,000 + $200,000 = $400,000) and neither will it cause the Principal's total net debit balance to exceed the same. The total net debit balance would be $1 million after the advance matching and validation.

        Example 2: Assume that the Principal in Example 1 does not submit any of the proposed instructions referred to in Example 1. The Principal then submits a delivery instruction which is due on Settlement Day 1 of $100,000. This would have the effect of reducing his net debit balance on Settlement Day 1 to $500,000. His net debit balance on Settlement Day 2 is unaffected and remains at $200,000. His total net debit balance would be reduced to $700,000. After submitting this delivery instruction, he proposes to submit the following instruction:

        Proposed DVP instruction: A receiving instruction of $300,000.

        This proposed instruction will be accepted for DVP settlement because it now satisfies Rule 7.6.1(a) and (b). After submitting this instruction, the Principal's net debit balance for Settlement Day 1 will be $800,000 and the total net debit balance will be $1 million. The Principal's net debit balance for Settlement Day 2 remains unchanged at $200,000.

        Proposed DVP instruction submitted for matching and validation in advance: A receiving instruction of $400,000 which is due on Settlement Day 2.

        (Assume that the above receiving instruction of $300,000 is not submitted.) This proposed instruction for advance matching and validation will be accepted for validation as it satisfies Rule 7.6.2(a) in that it will not cause the Principal's net debit balance for Settlement Day 2 to exceed the Principal Net Debit Cap (the Principal's net debit balance for Settlement Day 2 would now stand at $600,000). However, it does not satisfy Rule 7.6.2(b) because it would cause the total net debit balance to exceed the Principal Net Debit Cap ($700,000 + $400,000 = $1.1 million) and will not be accepted for DVP Settlement.

        Amended on 3 October 20093 October 2009.

    • 7.7 Limits on Cancellations

      • 7.7.1

        In order to cancel a matched and validated DVP transaction which is due on a Settlement Day, the following conditions must be satisfied:

        (a) The value of the proposed cancellation shall not cause any Principal's net debit balance for the current Settlement Day to exceed the Principal Net Debit Cap applicable at the time the proposed cancellation is to be made; and
        (b) The value of the proposed cancellation shall not cause any Principal's total net debit balance to exceed the Principal Net Debit Cap applicable at the time the proposed cancellation is to be made.

        Amended on 3 October 20093 October 2009.

      • 7.7.2

        In order to cancel a DVP transaction which has been matched and validated in advance,, the following conditions must be satisfied:

        (a) The value of the proposed cancellation shall not cause any Principal's net debit balance for the Settlement Day on which the DVP transaction is due for settlement to exceed the Principal Net Debit Cap applicable at the time when the proposed cancellation is to be made; and
        (b) The value of the proposed cancellation shall not cause any Principal's total net debit balance to exceed the Principal Net Debit Cap applicable at the time the proposed cancellation is to be made.

        Amended on 3 October 20093 October 2009.