The Electronic Matching service simplifies securities settlements at NSD. NSD informs a client whether there are potentially matching instructions, namely unmatched instructions different from the client's instruction in a single data field or single group of data fields. The search for potentially matching instructions (electronic matching) is made for FOP transactions (transaction code 16 or 16/1) and DVP transactions (transaction code 19/0 or 19/1), for instructions to be matched by 'trade date'.
Electronic matching is a mandatory process in the lifecycle of each instruction to be matched by 'trade date'. If a potentially matching instruction is identified in NSD's system, the client is sent a Notice of Potentially Matching Instructions (Form GS036 or SWIFT MT 548, depending on the communication channel chosen in the client's Details Form for EDI Purposes or designated in an instruction for a transaction with code 97 ("Instruction for changing the method of delivery of reports, statements, or any other documents")).
Thanks to electronic matching of instructions at NSD, clients may:
- Avoid matching by telephone and simplify their internal processes.
- Use electronic matching for most instructions.
- Automatically process instructions and statements.
Detailed description of the service
When NSD's system searches for potentially matching instructions, the following rules apply: certain fields in clients' instructions must match, while others may differ. The following fields must match in instructions:
- counterparty and initial instruction's originator;
- security code / ISIN;
- quantity of securities;
- quantity of securities issues, as specified in the instruction (for LUCH only); and
- clients' customers, if named by both counterparties (for FOP instructions).
Instructions will be considered potentially matching, if all of the above fields in the instructions match, and provided that the instructions are only different in no more than one field or one group of fields, as listed below. The following fields or groups of fields may be different in clients' matching instructions:
|Field / Group of fields||Disagreement code||Weight||Transaction type|
|Settlement basis (FOP or DVP)||FRAP||950||FOP, DVP|
|Settlement date||DDAT||900||FOP, DVP|
|Trade amount (subject to tolerance)||DMON||850||DVP|
|Trade date||DTRD||800||FOP, DVP|
|Group of fields: Details of the securities account and sub-account to be credited||SAFE||700||FOP, DVP|
|Group of fields: Details of the securities account and sub-account to be debited||SAFE||700||FOP, DVP|
|DVP type (1, 2, 3)||NARR||650||DVP|
|Transaction code (direction of the trade)||DELN||600||FOP, DVP|
|Group of fields: trade currency and payment currency||NCRR||550||DVP|
|Place of trade||PLCE||500||DVP|
Depending on the weight of the fields for which disagreement has been identified, NSD settles the most matching instructions. Instructions with the maximum weight of the fields for which disagreement has been identified are considered relevant. If there are two or more instructions with equal weights of the fields for which disagreement has been identified, the earliest instruction received by NSD is considered most relevant.
For the purposes of comparison of groups of fields with disagreement codes SAFE or NCRR, the relevant block of information from one instruction is compared to the block of similar information in the matching instruction. If there is disagreement between any or all of the fields in that block, the client is provided with a statement detailing one disagreement and indicating the relevant disagreement code.
Matching instructions may differ in the cash settlement basis, if one of the counterparties intends to settle the deal on a DVP basis, while the intention of the second counterparty is to settle it on a FOP basis. In this case, a Notice of Potentially Matching Instructions with disagreement code FRAP is issued. Instructions are matched as follows: instructions 16 are matched against instructions 19/1, or instructions 16/1 are matched against instructions 19/0, provided that the 'Trade Date' field is completed in such instructions, while the 'Reference' field (for transactions 16) or 'Trade No.' field (for transactions 19) is omitted. In this case, the numbers of securities accounts and sub-accounts, securities and their quantity, trade date, and settlement date in the matching instructions must match, while all other fields may differ.