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ELECTRONIC MATCHING
April 3, 2017
ELECTRONIC MATCHING
• Main principles of Electronic matching
• Process flows
• Determination of relevancy for a pairing candidate
• Options for clients
• Features and examples of reports
• Advantages and settlement discipline
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If an instruction is not matched, NSD system will search for all possible counterparty instructions (pairing candidates) that differ in one field or one group of fields.
Electronic matching is applicable only for matching of instructions with «trade date». Preliminary matching is different for instructions with «reference».
An instruction will only be considered a potential counterparty instruction (pairing candidate) if other fields match, among them:
DEAG account & sub-account
REAG account & sub-account
Settlement date
Trade date
Transaction amount
Transaction & pmnt currency
Delivery or Receipt
DVP model (1,2,3)
Place of trade
- used for DVP settlement
MAIN PRINCIPLES OF ELECTRONIC MATCHING
Initiator and Counterparty
Securities code (ISIN)
Securities Quantity
Other additional matching fields
FOP or DVP
DEAG – Delivery agent REAG – Receiving agent
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MT548 (CMIS ) Notification of missing counterparty instruction
ELECTRONIC MATCHING RESULTS
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MT548 (NMAT) Notification of potential counterparty instruction 1
As a result of electronic matching, information about potential counterparty instructions (pairing candidates) will be delivered to all NSD clients in the form of a report:
A new report is distributed to all clients via the communications channel according to their EDI applications. This report is closely linked to existing reports, such as:
MT548 (MACH) Report of matched instructions
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SETTLEMENT INSTRUCTION LIFECYCLE & ELECTRONIC MATCHING
Electronic matching Instruction matched
Pending SD
Start of execution
Lack of assets
Instruction executed or
canceled
Input & Validation
MT548 (MACH)
MT548 (NMAT)
MT548 (CMIS)
Pairing candidate exists
No pairing candidate exists in NSD system
Instruction not matched
MT548 (PACK/REJT)
10 min.
10 min.
1 2
Electronic matching is mandatory process in every instruction lifecycle. Thus, if a pairing candidate exists in NSD system, SWIFT MT548 (NMAT) will be sent to all Clients. The report includes the mismatch code describing the mismatch between the initial instruction and the potential pairing candidate.
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GS116 Instructions
matched
GS036 potential match
GS036 Missing
matching instruction
Message Reject / Receipt
acknowledged
SWIFT
LUCH
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DVP instruction №1 Trade date = 16.11.2016
MT548 (CMIS) – Counter-party instruction missing
MT578 – settlement allegement
New report MT548 (NMAT) with mismatch code
«DTRD»
MT537 with the indication of pairing candidates to all
unmatched instructions
PROCESS FLOW
Client A Client B
Matching instruction and pairing candidate are not found in the
system
DVP instruction №2 Trade date = 17.11.2016
Instructions 1 and 2 are selected as
pairing candidates
New report MT548 (NMAT) with mismatch code
«DTRD»
MT537 with the indication of pairing candidates to all
unmatched instructions
At the end of business day
GS036 REPORT EXAMPLE ON POTENTIAL MATCH FOR CLIENT «A»
1. NSD registration number 2. Client’s reference 3. Date of creation 4. Initiator and Counterparty 5. DEAG safekeeping account and sub-account 6. REAG safekeeping account and sub-account 7. DVP or FOP 8. Settlement date (Execution Start Date) 9. Place of trade 10. DVP type (1,2,3) 11. Transaction amount 12. Transaction currency 13. Type, №, date of agreement 14. Securities code (ISIN) 15. Quantity 16. Trade date 17. Mismatch code 18. Relevant instruction indicator
LUCH
From instruction №2
Information from instruction №2 17.11.2016 NMAT//DTRD. Trade date in
counterparty instruction №_ is different 7
GS036 REPORT EXAMPLE ON POTENTIAL MATCH FOR CLIENT «B»
1. NSD registration number 2. Client’s reference 3. Date of creation 4. Initiator and Counterparty 5. DEAG safekeeping account and sub-account 6. REAG safekeeping account and sub-account 7. DVP or FOP 8. Settlement date (Execution Start Date) 9. Place of trade 10. DVP type (1,2,3) 11. Transaction amount 12. Transaction currency 13. Type, №, date of agreement 14. Securities code (ISIN) 15. Quantity 16. Trade date 17. Mismatch code 18. Relevant instruction indicator
LUCH
From instruction №1
Information from instruction №1 16.11.2016 NMAT//DTRD. Trade date in
counterparty instruction №_ is different. 8
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DETERMINATION OF RELEVANCY FOR A PAIRING CANDIDATE
A relevant instruction is a pairing candidate (counterparty instruction) that suits the original instruction the most.
A special weight is assigned to each field being matched (mismatch code) to determine the relevancy of instructions. A relevant instruction will have the maximum weight of the mismatch code. MT548 (NMAT) is updated for each potentially matching instruction (pairing candidate), with two options available (see next slides).
Weights for FOP instructions Weights for DVP instructions
Mismatch code (field being matched)
1 DVP or FOP (FRAP) 950
2 Settlement date 900
3 Transaction amount 850
4 Trade date 800
5 REAG account & sub-account 700
6 DEAG account & sub-account 700
7 DVP type (1,2,3) 650
8 Delivery or receipt 600
9 Transaction & pmnt currency 550
10 Place of trade 500
Mismatch code (field being matched)
1 DVP or FOP (FRAP) 950
2 Settlement date 900
3 Trade date 800
4 REAG account & sub-account 700
5 DEAG account & sub-account 700
6 Delivery or receipt 600
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Electronic matching is done between instructions: DF (deliver free) against RVP (receipt vs payment), or RF (receipt free) against DVP (deliver vs payment)
It is possible that ‘payment type’ does not match in settlement instructions: one party instructs to settle free of payment, while the other instructs to settle against payment or vice versa. In this case, NSD will notify the clients of the differences in payment type – FRAP.
Mismatch code “FRAP” will be reported, provided that the following fields match in counterparties’ instructions:
safekeeping accounts and sub-accounts; securities code and quantity; trade date; settlement date.
ELECTRONIC MATCHING BETWEEN FOP & DVP
Mismatch code
FRAP
About relevant counterparty instruction
All potential counterparty instructions
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The report includes information about one most relevant counterparty instruction (pairing candidate)
Report GS036 «Notification of potential counterparty instruction»
МТ548
NSD sends a single message MT548 (:24B::NMAT//…) with the code describing
the mismatch to the relevant counterparty instruction (pairing candidate)
OPTIONS (I)
Options for Electronic Matching reports
LUCH
SWIFT
Default option for all clients and new safekeeping accounts
In this option, an electronic matching report (depending on the communications channel described below) will be updated only if a new pairing candidate is more relevant meaning that its mismatch weight is higher than for the previous one.
About relevant counterparty instruction
All potential counterparty instructions
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One report includes information about all possible counterparty instructions (pairing candidates). The relevant instruction is highlighted among the others.
Report GS036 «Notification of potential counterparty instruction»
МТ548
NSD sends a separate message MT548 (:24B::NMAT//…) with the code
describing mismatch to each potential counterparty instruction (pairing candidate).
OPTIONS (II)
Options for Electronic Matching reports
LUCH
SWIFT
Default option for all clients and new safekeeping accounts
In this option, an electronic matching report (depending on the communications channel described below) will be updated each time a new pairing candidate enters the system regardless of its mismatch weight.
MT548
13
MT548
Instruction №1
Instruction №4 with difference in «Settlement date» (mismatch weight = 900)
Electronic matching report for Instruction №1.
Client A Option - «ALL»
Electronic matching report for Instruction №2.
Instruction №2 with difference in REAG account and sub-account (mismatch weight = 700)
Instruction №3 with difference in «Trade date» (mismatch weight = 800)
Electronic matching report for Instruction №3.
Electronic matching report for Instruction №4.
Electronic matching report for Instruction №1.
Relevant instruction updated!
Instruction №1 and №2 are
pairing candidates
Instruction №1 and №3 are
pairing candidates
PROCESS FLOW FOR DIFFERENT OPTIONS
Client B Option - «RELEVANT»
Instruction №1 and №3 are
pairing candidates
Electronic matching report for Instruction №1.
Relevant instruction updated!
MT548
14
MT548
Instruction №5
Electronic matching report for Instruction №5.
Client A Option - «RELEVANT»
Electronic matching report for Instruction №6.
Instruction №6 with difference in «DEAG account and sub-account» (mismatch weight = 700)
Instruction №7 with difference in «Trade date» (mismatch weight = 800)
Electronic matching report for Instruction №7.
Notification of a missing matching instruction for
Instruction №6. Relevant instruction cancelled!
Electronic matching report for Instruction №5.
Relevant instruction updated!
Instruction №1 and №2 are
pairing candidates
Instruction №1 and №3 are
pairing candidates
RENEWAL & CANCELLATION OF THE RELEVANT PAIRING CANDIDATE
Client B Option - «RELEVANT»
Execution of cancellation
Report about cancellation of Instruction №1
Request №8 to cancel Instruction №1
Notification of a missing matching instruction for
Instruction №7. Relevant instruction cancelled!
15
REPORTS AT THE END OF BUSINESS DAY
The report includes information about: all matched instructions of the Client (MACH) unmatched instructions of the Client without pairing candidates (CMIS) unmatched instructions of the Client with potential pairing candidates (NMAT//Mismatch code).
The report includes information about all unmatched instructions of the Counterparty submitted to the Client's safekeeping account.
Information about the relevant counterparty instruction (pairing candidate) is included into an end-of-day report MT537.
MT537:
MT586:
Electronic matching
* report generation can be set-up through 97 operation
The statement of settlement allegements contains information on alleged
“transactions” from your counterparties.
Intraday optional report is generated 3
times during the day Availability and timing
REPORT STATEMENT OF SETTLEMENT ALLEGEMENTS
MT586
Report is generated several times during the day at
11:10, 14:10 and 17:10 (MSK)
Delivery time-frames
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Elimination of matching by phone
Simplification of preliminary matching of settlement instructions
STP processing of instructions and reports
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CUSTOMER BENEFITS
Increased efficiency of matching at NSD 3
Reduced risks of settlement failures and delays 5
Contacts regarding the Project development
T: +7 (495) 234-48-27
Client Relations Development Department:
T: +7 (495) 956-27-90
T: +7 (495) 956-27-91
Web-sites:
https://www.nsd.ru/en/
https://www.nsd.ru/en/services/matching/
Address:
12 Spartakovskaya str.,
Moscow, 105066, Russia
CONTACTS
THANK YOU!
DISCLAIMER • This presentation has been prepared and issued by NSD (the “Company”). Unless otherwise stated, the Company is the source for all data
contained in this document. Such data is provided as at the date of this document and is subject to change without notice • This document does not constitute or form part of, and should not be construed as, an offer or invitation for the sale or subscription of, or a
solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any offer, contract, commitment or investment decision relating thereto, nor does it constitute a recommendation regarding the securities of the Company
• The information in this document has not been independently verified. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information or opinions contained herein. None of the Company, or any of its subsidiaries or affiliates or any of such person's directors, officers or employees, advisers or other representatives, accepts any liability whatsoever (whether in negligence or otherwise) arising, directly or indirectly, from the use of this document or otherwise arising in connection therewith
• This presentation includes forward-looking statements. All statements other than statements of historical fact included in this presentation, including, without limitation, those regarding our financial position, business strategy, management plans and objectives for future operations are forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance, achievements or industry results to be materially different from those expressed or implied by these forward-looking statements. These forward-looking statements are based on numerous assumptions regarding our present and future business strategies and the environment in which we expect to operate in the future. Important factors that could cause our actual results, performance, achievements or industry results to differ materially from those in the forward-looking statements include, among other factors:
– Perception of market services offered by the Company and its subsidiaries – Volatility (a) of the Russian economy and the securities market and (b) sectors with a high level of competition that the Company and
its subsidiaries operate – Changes in (a) domestic and international legislation and tax regulation and (b) state policies related to financial markets and securities
markets – Competition increase from new players on the Russian market – The ability to keep pace with rapid changes in science and technology environment, including the ability to use advanced features that
are popular with the Company's and its subsidiaries' customers – The ability to maintain continuity of the process of introduction of new competitive products and services, while keeping the
competitiveness – The ability to attract new customers on the domestic market and in foreign jurisdictions – The ability to increase the offer of products in foreign jurisdictions
• Forward-looking statements speak only as of the date of this presentation and we expressly disclaim any obligation or undertaking to release any update of, or revisions to, any forward-looking statements in this presentation as a result of any change in our expectations or any change in events, conditions or circumstances on which these forward-looking statements are based
