What is Reforma 3?

With the approval of Law 6/2023, of March 17, on Securities Markets and Investment Services, a new phase of reform in the Iberclear Securities Settlement System, known as Reforma 3, was initiated.

The most notable operational change introduced by this reform is the decommissioning of the Post-Trade Interface (PTI), leading to significant modifications in previous procedures and formats. Reforma 3 represents the final step in a nearly ten-year journey to align Spanish settlement practices with European standards.

One of the central changes brought by Reforma 3 is the removal of the obligation for Central Securities Depositories (CSDs) to maintain an Information System, commonly known as the Post-Trade Interface (PTI). Until 2015, Iberclear used Registry References (RRs) for the identification and traceability of securities transactions, from trade execution through to settlement.

Following the elimination of RRs, the PTI was introduced to ensure continued traceability of transactions throughout the entire value chain. With its elimination, the Spanish market achieves greater alignment with European settlement frameworks.

By eliminating the PTI, the requirement to link registration management with the settlement process is removed, significantly reducing operational risks and costs. This reform brings Spanish settlement practices in line with the rest of Europe, improving market efficiency and competitiveness.

Key benefits include:

• Simplification and harmonization of transaction types, reducing barriers to cross-border investment and settlement.
• Greater operational efficiency, minimizing the volume of failed trades on settlement dates.
• Preparation for the transition to a T+1 settlement period, expected to be implemented in the near future, further reducing risks and enhancing market stability.

Reforma 1: The first phase introduced a new equity settlement system (ARCO), replacing the previous registration system based on registry references (RRs) with the PTI. This phase also established Central Counterparty Entities (CCPs), eliminated underwriting principles, and shifted the moment of finality from trading to settlement, aligning Spain’s post-trade process with other European markets.

Reforma 2: The second phase harmonized the fixed income settlement system by incorporating it into ARCO and migrating it to Target2-Securities (T2S), a pan-European platform designed by the Eurosystem to enhance market interconnectivity and improve securities settlement efficiency.

Reforma 3: The final phase eliminates the PTI, along with special accounts for financial intermediaries, while explicitly recognizing the custody of securities through a chain of intermediaries. This marks the beginning of a new era for Spanish securities post-trade operations.