Whole Section

  • Rule 8 — The Settlement Bank

    • 8.1 The Settlement Bank

      • 8.1.1

        The Settlement Bank shall agree to abide by these DVP Rules as a condition of its participation in DVP Settlement. The Settlement Bank shall act as the paying and collecting agent for each Principal which it represents for the settlement of the Net Debit Balance or Net Credit Balance (as the case may be).

      • 8.1.2

        CDP shall be irrevocably authorised by the Principal to pay the Net Credit Balance to, and/or to receive the payment of the Net Debit Balance from, the Settlement Bank in accordance with these DVP Rules. CDP shall not be responsible or liable to the Principal for any delay or failure of the Settlement Bank to pay the Net Credit Balance to the Principal.

      • 8.1.3

        The Settlement Bank shall maintain such communications facilities and on-line access to CDP as may be required from time to time by CDP.

    • 8.2 Netting of Net Credit and Net Debit Balances

      • 8.2.1

        The Settlement Bank shall, on behalf of all Principals which it represents, settle with CDP on a net-net basis on each Settlement Day. The aggregated Net Credit Balance of all Principals which settle through the Settlement Bank and which have Net Credit Balance(s) on that Settlement Day shall be set-off against the aggregated Net Debit Balance of all Principals which settle through the same Settlement Bank and which have Net Debit Balance(s) on that Settlement Day to achieve a single Net-Net Debit Balance payable by the Settlement Bank to CDP or a single Net-Net Credit Balance payable by CDP to the Settlement Bank for that Settlement Day.

        Amended on 26 April 201326 April 2013.

      • 8.2.2

        The Settlement Bank shall subscribe to CDP's communications system for on-line access to monitor the Net Debit Balance or Net Credit Balance of each Principal which the Settlement Bank represents. The Settlement Bank shall be responsible for collecting the Net Debit Balances from, and paying the Net Credit Balances to, the Principals represented by the Settlement Bank.

    • 8.3 Settlement Bank Net Money Settlement Statement

      • 8.3.1

        CDP shall issue a Settlement Bank Net Money Settlement Statement to the Settlement Bank via SWIFT or any other mode of communication as CDP deems fit, at the time prescribed in the Timetable on each Settlement Day.

        Amended on 3 October 20093 October 2009.

      • 8.3.2

        The Settlement Bank Net Money Settlement Statement shall contain the following details:

        (a) the Net Credit or Net Debit Balance of each Principal (identified by a reference to its Depository Agent) which the Settlement Bank represents on that Settlement Day; and
        (b) the Net-Net Debit or the Net-Net Credit Balance on that Settlement Day.

        Amended on 26 April 201326 April 2013.

      • 8.3.2A

        Unless otherwise notified by CDP to the Settlement Bank, settlement of the Net-Net Debit Balance or Net-Net Credit Balance for each Settlement Day between CDP and the Settlement Bank shall be effected by such time as set out in the Timetable on that Settlement Day, save that in the case of settlement in a foreign currency, if the Settlement Day is not a Common Banking Day, settlement shall be effected at the same time on the next Common Banking Day.

        Payment of the Net-Net Debit Balance or the Net-Net Credit Balance shall not be considered to have been made to the intended recipient (i.e., CDP or the Settlement Bank) until the payment sum is irrevocably and unconditionally received, in immediately available funds, in such account of the intended recipient as is nominated by the intended recipient.

        Such nomination shall, in the case of nomination by the Settlement Bank, be in writing to CDP, and in the case of nomination by CDP, be by way of circular or otherwise.

        Added on 26 April 201326 April 2013.

      • 8.3.3

        Save for manifest error, for each Settlement Day, the Settlement Bank Net Money Settlement Statement shall be deemed binding and conclusive on the Settlement Bank as to the Net-Net Debit Balance payable by the Settlement Bank or the Net-Net Credit Balance payable by CDP (as the case may be) for that Settlement Day.

        Amended on 26 April 201326 April 2013.

      • 8.3.4

        Notwithstanding:

        (a) any manifest error in:
        (i) the electronic statement referred to in Rule 7.3.1; or
        (ii) the Settlement Bank Net Money Settlement Statement; or
        (b) any failure by any Principal represented by the Settlement Bank to pay the Net Debit Balance to the Settlement Bank,

        the Settlement Bank shall pay to CDP the Net-Net Debit Balance or CDP shall pay to the Settlement Bank the Net-Net Credit Balance as stated in the Settlement Bank Net Money Settlement Statement in accordance with Rule 8.3.2A irrespective of any dispute between the Settlement Bank and CDP as to the amounts stated in any of those statements.

        Any dispute shall be considered by CDP only after CDP has completed payment of Net-Net Credit Balances to Settlement Banks and Settlement Banks have completed payment of Net-Net Debit Balances to CDP for that Settlement Day. Any monies to be refunded or deducted shall be refunded or deducted free of interest to or from the relevant Settlement Bank by crediting or debiting the amount to or from that Settlement Bank's Net-Net Debit Balance or Net-Net Credit Balance (as the case may be) as soon as practicable after the dispute is resolved.

        Amended on 26 April 201326 April 2013.

      • 8.3.5

        The receipt by a Settlement Bank of the Net-Net Credit Balance from CDP shall operate as a complete release and discharge on that Settlement Day:

        (a) to CDP of its obligation to pay the Net Credit Balance payable to a Principal represented by that Settlement Bank; and
        (b) to a Principal represented by that Settlement Bank of its obligation to pay the Net Debit Balance payable to CDP.

        Added on 25 February 201125 February 2011 and amended on 26 April 201326 April 2013.

      • 8.3.6

        The receipt by CDP of the Net-Net Debit Balance payable by a Settlement Bank shall operate as a complete release and discharge on that Settlement Day:

        (a) to CDP of its obligation to pay the Net Credit Balance payable to a Principal represented by that Settlement Bank; and
        (b) to a Principal represented by that Settlement Bank of its obligation to pay the Net Debit Balance payable to CDP.

        Added on 25 February 201125 February 2011 and amended on 26 April 201326 April 2013.

      • 8.3.7

        If CDP is of the opinion that payment of the Net-Net Debit Balances or Net-Net Credit Balances or both is unlikely to commence by the scheduled time stated in the Timetable, CDP shall inform Settlement Banks of the following matters:

        (a) that payment of the Net-Net Debit Balances or Net-Net Credit Balances or both is unlikely to take place at the scheduled time; and
        (b) the estimated time at which the delayed payment shall be made.

        CDP shall provide adequate time for Settlement Banks to make payment and and Settlement Banks shall effect payment by such time as stipulated by CDP.

        Added on 25 February 201125 February 2011 and amended on 26 April 201326 April 2013.

    • 8.4 Setting of Principal Net Debit Cap

      • 8.4.1

        The Settlement Bank may establish a Principal Net Debit Cap for each Principal which it represents and shall inform CDP of the amount through the on-line communications system in accordance with such procedures as may be established by CDP from time to time. The Settlement Bank, may on a real-time basis, increase or decrease the amount of the Principal Net Debit Cap for any Principal it represents at any time throughout the Settlement Day.

      • 8.4.2

        Where the Principal Net Debit Cap has been decreased by the Settlement Bank, any subsequent receiving instructions (advance or otherwise) that would have the effect of increasing the Net Debit Balance or total Net Debit Balance (as the case may be) to a value that exceeds the value of the decreased Principal Net Debit Cap shall not be matched and validated. However, any subsequent delivery instructions (advance or otherwise) submitted by the Principal shall be matched and validated. This would have the effect of reducing the Principal's net debit balance or the total net debit balance (as the case may be). Where the net debit balance or the total net debit balance (as the case may be) falls below the value of the decreased Principal Net Debit Cap, receiving instructions (advance or otherwise) submitted by the Principal shall continue to be matched and validated provided that the value of such transactions do not cause the net debit balance or the total net debit balance (as the case may be) to exceed the value of the decreased Principal Net Debit Cap.

        Example 3: Assume that the Principal's Net Debit Cap is $1 million and that prior to the Principal Net Debit Cap being decreased by the Settlement Bank, the net debit balance is $600,000. Assume also that there are no instructions submitted to be matched and validated in this case. The Settlement Bank then decreases the Principal Net Debit Cap to $500,000. Thereafter, any further receiving instructions submitted by the Principal shall not be matched and validated. However, delivery instructions submitted by the Principal shall continue to be matched and validated. Assuming that the value of such affirmations is $300,000, this would have the effect of reducing the net debit balance to $300,000. In such an event, receiving instructions submitted by the Principal shall continue to be matched and validated provided that the aggregate value of such transactions does not cause the net debit balance to exceed $500,000.

        Example 3A: Assume that the Principal in Example 3, prior to the Principal Net Debit Cap being decreased to $500,000 by the Settlement Bank, has a net debit balance of $600,000 and has submitted instructions to be matched and validated in advance with a net debit value of $200,000. His total net debit balance is therefore $800,000. After the Settlement Bank has decreased his Principal Net Debit Cap to $500,000, further receiving instructions (advance or otherwise) submitted by the Principal shall not be matched and validated. However delivery instructions (advance or otherwise) submitted by the Principal shall continue to be matched and validated.

        If, assuming that the Principal's current Settlement Day DVP delivery instructions is a net credit value of $300,000 and the instructions matched and validated in advance is a net credit value of $100,000, this would have the effect of reducing the net debit balance to $300,000 and reducing the total net debit balance to $400,000.

        In such an event, delivery instructions (advance or otherwise) submitted by the Principal shall continue to be matched and validated provided that the aggregate value of such transactions does not cause the total net debit balance to exceed $500,000; i.e. the aggregate of such transactions is limited to a net debit value of $100,000.

        Amended on 3 October 20093 October 2009.

      • 8.4.3

        Where the Principal Net Debit Cap has been increased by the Settlement Bank, subsequent receiving instructions (advance or otherwise) submitted by the Principal that would have the effect of increasing the net debit balance or the total net debit balance (as the case may be) up to a value that equals the value of the increased Principal Net Debit Cap, shall be matched and validated.

        Amended on 3 October 20093 October 2009.

    • 8.5 Setting Principal Net Debit Cap to Zero

      • 8.5.1

        In the event that the Settlement Bank desires to prevent a Principal from submitting further receiving instructions, the Settlement Bank may set the Principal Net Debit Cap to zero. When the Principal Net Debit Cap has been set to zero, any further instructions accepted for matching and validation shall be restricted to only delivery instructions. Whilst the Principal's net debit balance will be reduced by the subsequent matching and validation of delivery instructions, further receiving instructions submitted shall not be matched and validated.

        Amended on 3 October 20093 October 2009.

      • 8.5.2

        Notwithstanding that at the time the Principal Net Debit Cap has been set to zero the Principal has a net credit balance, further receiving instructions submitted by the Principal shall not be matched and validated. In the event that the Settlement Bank does not desire to prevent the Principal from making further submissions for receiving instructions where the Principal has a net credit balance at the time of adjustment of the Principal Net Debit Cap, the Settlement Bank should set the Principal Net Debit Cap to a value above zero.

        Amended on 3 October 20093 October 2009.

      • 8.5.3

        Where the Principal Net Debit Cap has been set to zero, any subsequent receiving instructions for matching and validating in advance submitted by the Principal shall not be accepted. Only subsequent delivery instructions submitted by the Principal shall be matched and validated. Rules 8.5.1 and 8.5.2 shall apply, mutatis mutandis, to subsequent submissions of receiving instructions.

        Amended on 3 October 20093 October 2009.

    • 8.6 Guaranteed Value

      • 8.6.1

        The Settlement Bank's liability for a Principal under the Letter of Guarantee and Indemnity on any Settlement Day shall be the Net Debit Balance of the Principal on that Settlement Day, together with interest thereon.

      • 8.6.2

        The Settlement Bank's maximum liability for a Principal under the Letter of Guarantee and Indemnity at any time on a Settlement Day (exclusive of liability for a Block Trade affirmed in accordance with Rule 13) shall be a value that is equal to the highest positive value (together with interest thereon) derived from any of the following formulae; i.e.

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

        where A = is the total value of all matched and validated receiving instructions due on the current Settlement Day
        B = is the total value of all matched and validated delivery instructions due 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.

      • 8.6.3

        Notwithstanding anything herein and subject to Rule 13.3.2, the maximum liability of the Settlement Bank for a Principal under the Letter of Guarantee at any time on a Settlement Day shall not exceed the Guaranteed Value. The Guaranteed Value shall be a value equal to the highest Principal Net Debit Cap fixed by the Settlement Bank for the Principal for the period beginning from the earliest Settlement Day for which transactions whose due date for settlement is the current Settlement Day could be matched and validated in advance and ending on the current Settlement Day together with all interest thereon.

        Example 3B: Assume that on Settlement Day 1, the Principal Net Debit Cap stands at $2 million at 9.00 a.m. The Principal proceeds to submit a receiving instruction valued at $2 million for settlement on Settlement Day 2. Assume also that the earliest Settlement Day for which advance submission whose due date for settlement is on Settlement Day 2 is Settlement Day 1. The Settlement Bank then reduces the Principal Net Debit Cap to $1 million at 12 noon on Settlement Day 1 and the Principal Net Debit Cap remains unchanged at $1 million on Settlement Day 2.

        Settlement Bank's Liability: The Principal's liability on Settlement Day 1 is zero and therefore the Settlement Bank's liability for the Principal under the Letter of Guarantee and Indemnity on Settlement Day 1 is zero. However, the Principal is liable on Settlement Day 2 to pay CDP $2 million. The Settlement Bank's liability for the Principal under the Letter of Guarantee and Indemnity on Settlement Day 2 is $2 million, notwithstanding that the Principal Net Debit Cap on Settlement Day 2 is $1 million. The Guaranteed Value for the purposes of Settlement Day 1 is $2 million, as this is the highest Principal Net Debit Cap for Settlement Day 1 and the Guaranteed Value for the purposes of Settlement Day 2 is also $2 million as this is the highest Principal Net Debit Cap for the period beginning from the earliest period for which advance submission due for settlement on Settlement Day 2 could be made (i.e. Settlement Day 1) and ending on the current Settlement Day (i.e. Settlement Day 2).

        Amended on 3 October 20093 October 2009.

    • 8.7 Default of Principal in Payment of the Net Debit Balance

      • 8.7.1

        Upon any default of the Principal in payment of the Net Debit Balance, the Settlement Bank shall inform CDP by a written notice (the "Default Notice"). The Default Notice shall be delivered to CDP as soon as possible upon, and in no event later than one hour after the occurrence of the default. The Default Notice shall specify the name of the defaulting Principal and the amount of the default.

      • 8.7.2

        A Principal who is the subject of a Default Notice (the "defaulting Principal") shall be subject to such disciplinary action, including fines and suspension, as may be deemed appropriate by CDP.

      • 8.7.3

        CDP may also terminate the defaulting Principal's participation in DVP Settlement with effect from the date of receipt of the Default Notice in accordance with Rule 9.

    • 8.8 Termination of Payment Facilities to Principal by the Settlement Bank

      • 8.8.1

        Where the Settlement Bank has terminated any payment facilities granted to the Principal or where the Settlement Bank ceases to act as the Principal's agent for the purposes of DVP Settlement, the Settlement Bank shall notify CDP by a written notice (the "Termination Notice"). The Termination Notice shall be deemed to take effect on the same day in the week following the day of receipt by CDP of the said Notice but shall not affect any accrued rights or liabilities of the Settlement Bank to CDP. If the day on which the Termination Notice is deemed to take effect is a public holiday, then the Termination Notice shall be deemed to take effect on the following Settlement Day.

      • 8.8.2

        The Settlement Bank shall set the Principal Net Debit Cap of the Principal whom it is terminating to zero on the date of the issue of the Termination Notice, failing which the Settlement Bank shall be liable for all DVP transactions submitted by the Principal (advance or otherwise) up to the date on which the Termination Notice is to take effect.

        Amended on 3 October 20093 October 2009.