Securities Registration Services

The system incorporates all securities represented by book entries that are listed for trading in the securities markets, the AIAF Fixed Income Market and the Book-Entry Public Debt Market. It also incorporates securities listed for trading in other official secondary markets, regulated markets and multilateral trading facilities provided that their governing bodies appoint Iberclear as the entity responsible for the book-entry register.

Foreign securities are incorporated into the system either through accounts opened by Iberclear in other central securities depositories or clearing and settlement systems, or through an entity  acting as a link between the security’s country of origin and the Spanish registration system.

As an exception, it may also include securities represented by physical certificates which will be subject to blocking in Iberclear.

In addition, Iberclear nay maintain a register of securities that are not listed for trading in official secondary markets, regulated markets, or multilateral trading facilities if the issuer determinem it necessary.

Iberclear will apply the same registration system to all securities in the system, including foreign securities. This will not change the representation system corresponding to them in accordance with their law of origin.

The securities incorporated into the system will be identified by their security code (ISIN code). The number of securities or the total face amount of each security code registered in the system will be known as a control sum. Equity securities are generally recorded based on the number of securities,  whereas fixed-income securities are recorded based on their face value. 

Finally, Iberclear has obtained authorization to provide the initial registration and maintenance of securities accounts for non-equity securities issued under the laws of France, Germany, Luxembourg, the Netherlands and Austria. This passport is in addition to the one Iberclear already held for providing these services under UK law. According to the CSDR regulation, Iberclear is authorized to provide these services with respect to non-equity securities, such as bonds, warrants, other structured products, promissory notes, and exchange-traded funds.

The book-entry register is a double-rung register. The keeping of the General Register (the first rung) corresponds to Iberclear, while keeping the Second-tier Register, the second rung, corresponds to its settlement participants.

Securities balances are recorded, and the nominal amount or number of securitiesis entered in the corresponding accounts according security type. Generally, book entries for equity securities are recorded based on the number of securities, while entries for fixed-income securities are recorded based on the face value.

The General Register is structured as follows for each participant entity and ISIN code:

• Proprietary accounts of entities: Iberclear holds one or more accounts that reflect the entity’s balance.

 Settlement participants may also have specific proprietary accounts in the General Register:

• Pledged proprietary accounts
• Pledge of collateral propietary accounts      
• Central bank creceiving proprietary account, Client c bank client collateralization receiving proprietary account
• Blocked proprietary accounts

• Generalcthird party accounts: Iberclear maintains one or more accounts that reflect the global balance of securities authorized  entities on behalf of their third parties.

• Individual accounts: Accounts opened on behalf of an owner, whether a natural or legal person.

 The keeping of the account may be performed directly (hereinafter, "directly kept individual accounts") or indirectly (hereinafter, "individual accounts").

Owners of individual accounts may also keep specific individual accounts in the General Register. These accounts may be kept directly or indirectly:

• Pledged individual accounts,
• Pledge of collateral individual accounts,      
• Central bank collateralization receiving individual account, Client collateralization receiving individual account and Central bank client collateralization receiving individual account,
• Blocked proprietary accounts

• Omnibus accounts opened by a CSD in Iberclear: For each CSD with which it signs an agreement and with reference to each security code, Iberclear will hold one or more accounts that reflect the global balance of securities registered by the CSDs on behalf of their settlement participants.

Settlement participants will be identified by one or more of their 11-character BIC codes.

The BIC11 codes must be registered and operational. In accordance with the provisions of the “Settlement Procedure” and some technical measures, proprietary or external, each BIC11 code that is registered must be associated with at least one cash account.

In accordance with Article 38 of Regulation 909/2014 on Central Securities Depositories, Iberclear publishes the corresponding costs and protection levels for each level of account segregation.

The details regarding  the protection levels and costs corresponding to the segregation options are described below. Additionally, the main legal implications of registrering securities in ARCO System accounts are described, as well as information about the applicable regulations in the event of default.

Segregable accounts are those accounts that the entities can break down into sub-positions.

The segregable accounts are as follows:

• Proprietary accounts of entities
• General third-party accounts
• Individual accounts
• Omnibus accounts opened by a CSD in Iberclear

Segregable accounts opened in the General Register will be broken down into sub-positions of securities that entities can identify in their settlement instructions (SIs) or settlement restrictions (SRs).

The types of sub-positions into which the accounts can be broken down can be classified into two large groups, depending on who manages the movements between sub-positions:

• Types of sub-positions managed by the settlement participant: available, earmarking, earmarking for auto-collateralization.
• Types of sub-positions not managed by the settlement participant:

In addition to the above types of sub-positions, segregable accounts can be broken down into CoSD (COSP), blocked (BLO1) and earmark (IB01, ECI1 and ECI2) sub-positions. These types of sub-positions may only be managed by the system.

Participants authorized to keep the detailed register will be the parties entrusted with the accounting in the accounts of each security holder, which will always show the total balance of securities owned by them, broken down by security class.

Those accounts will be identified by a 20-character Securities Account Code (CCV),  which is structured to provide a unique, universal identifier for each detailed register account.

Entities must keep the detailed register updated at all times by entering every  trade performed by them with third parties or on the orders of the latter that affects the ownership or availability of securities. This includes freezes on securities affected by rights in rem or other liens.