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")).

Advantages

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.

For all securities accounts, NSD issues notices of relevant matching instructions. A client may choose a different option, namely a notice of all potentially matching instructions. For this, the client is required to give an instruction to NSD (Form AF093, transaction code 93), with one of the following parameters for a "Notice of Potentially Matching Instructions":

  1. 'Include one Instruction' (this parameter is default option) – this option is to be used if the client wishes to receive notification of one, the most relevant, matching instruction.

    For each of the client's instructions, for which potentially matching instructions have been identified, NSD issues a notice of one (relevant) matching instruction:
    • GS036 – Notice of Potentially Matching Instructions
    • MT 548 – Settlement Status and Processing Advice

    The Notice will contain details of only one relevant matching instruction (one matching instruction with the maximum weight of the fields for which disagreement has been identified).

    The Notice of the relevant matching instruction will only be updated if NSD receives an instruction with a greater weight of the fields for which disagreement has been identified. If the relevant matching instruction has been matched or cancelled, the Notice will be updated if there is another potentially matching instruction available in the system. If the relevant matching instruction has been matched or cancelled, but there is no other potentially matching instruction available in the system, the originator of the initial instruction will be issued a Notice of Non-Availability of Potentially Matching Instructions (Form GS036 or MT 548 (NMAT//CMIS).

  2. 'Include all Instructions' – this option is to be used if the client wishes to receive notification of all potentially matching instructions.

    For each of the client's instructions, for which potentially matching instructions have been identified, NSD issues a Notice of Potentially Matching Instructions:

    • GS036 – Notice of Potentially Matching Instructions
    • MT 548 – Settlement Status and Processing Advice

    The Notice will contain details of all potentially matching instructions, with one relevant instruction (matching instruction with the maximum weight of the fields for which disagreement has been identified) being highlighted. The Notice of all potentially matching instructions will be updated each time a new potentially matching instruction is received, as well as each time when one of the instructions listed in the Notice is cancelled of matched.

    One of the above two options has to be chosen for each securities account. If a client has not given a Form AF093 instruction, the client will be issued Notices of Potentially Matching Instructions with option 1.

If no potentially matching instruction has been identified (i.e., if instructions differ in more than one permitted field or group of fields), the clients will be provided with the following statements:

  • For the originator of the initial instruction:
    • GS036 – Notice of Non-Availability of Potentially Matching Instructions
    • MT 548 – Settlement Status and Processing Advice (NMAT//CMIS)
  • For the counterparty named in the initial instruction:
    • GS036 – Notice of Potentially Matching Instructions
    • MT 578 – Settlement Allegement

As a result of the launch of the Electronic Matching project, the following services are now available to NSD's clients:

The matching and securities settlement processes are standardized for FOP transactions (transaction codes 16 and 16/1) and DVP transactions (transaction codes 19/0 and 19/1):

Method of instruction matching­
Full details of a matching instruction Electronic matching with options­ Settlement date (SD)­ Standard settlement period­­ Hold & Release Transaction MF530 Aliases
'By reference' + - + 30 days + + +
'By trade date' + + + 30 days + + +
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