Securities Settlement Services

Iberclear manages the ARCO Settlement System. Its purpose is to execute transactions involving securities and cash transfer orders for securities held in the Iberclear register, regardless of the trading venue where the oders were agreed upon or whether a clearing house was involved.

Iberclear settles via the corresponding securities credits and debits in the accounts held in the Central Register. Participants must also make  corresponding entries in their detailed registers simultaneously.

According to the instructions received, transactions may be settled either free of payment or against payment. When a transaction is settled against payment, Iberclear will  execute the cash transfer order using the corresponding credits and debits in the dedicated cash accounts (DCAs) designated by participants for cash settlement.

Iberclear performs this service using T2S technical support. The settlement procedures include providing, optimizing, and recycling already validated and matched transactions, which are then sent to the settlement process on the intended settlement date.      

Depending on the communication, acceptance and execution of settlement instructions, Iberclear offers the following settlement services:

- Settlement of instructions form CCPs

- Settlement of instructions from trading venues without CCP intervention

- Settlement of instructions sent by Iberclear participants

Iberclear offers the following settlement services:

The Iberclear validation process applies to Settlement Instructions (SIs), Settlement Restrictions or intra-position movements (SRs), and Maintenance Instructions (MIs),  such as Amendment, Hold/Release and Cancelation instructions. The aim is to verify that the information contained in them is correct, both at a logical level — in terms of - format validation and instruction syntax - and in terms of content. This ensures that the transaction for which they were sent can be performed either settlement (for SIs and SRs) or execution (for MIs).  

Iberclear implemented instructions prioritization, linkage, amendment, cancelation and hold and release functionalities, which allow participants to incorporate their preferred rules into the settlement process of their Settlement Instructions (SIs) or Settlement Restrictions (SRs). The settlement algorithm will then process these rules.

Instructions that are pending in the system can also be recycled for a set number of days. After this period, instructions will be canceled at the end of the given settlement date.

In addition to cancellations requested by participants, instructions in the system may be automatically canceled, by either Iberclear or T2S under certain circumstances.  

Iberclear offers a cross-checking service available for bilateral instructions sent to Iberclear by participants requesting the intervention of a CCP offering this service under contractual agreement with Iberclear.

Iberclear promotes the auto-collateralization functionality available in T2S to optimize transaction settlement with or against payment. This is done by automatically providing intraday credit or liquidity in a T2S Dedicated Cash Account (DCA), even when there are not funds in the account to settle the affected transaction. The DCA is linked to a securities account in the Central Register of Iberclear that was specifically opened for supplying collateral. The liquidity obtained through this process will be used immediately to settle the transaction.

This service may enables participants to delegate the processes of selecting eligible securities and managing the collateral securities portfolio in Iberclear. Participants must provide this collateral for a given risk exposure agreed upon by both counterparties subscribing to this service. 

Iberclear provides access and connectivity services to BME-PC, its web application that allows participants and issuers to perform various activities. It offers the necessary technical support for internet connectivity, as well as the management and control of permissions and access for administrators and users og the tool.

Participants indirectly connected to T2S (ICPs) will use ISO 15022 standards to send instructions to Iberclear, which will then transform the participants’ messages into ISO 20022 format, instruct T2S, and resend the reply to participants received in ISO 20022 format, after mappeding the information received into ISO 15022 format.

Iberclear also provides its participants with information about their settlement activity via settlement and settlement status messages sent daily through BME-PC, as well as reconciliation messages at the close of business.