Securities Clearing and Settlement

Securities Net Clearing and Settlement,
Securities Gross Settlement

The Clearing and Securities Settlement programs form an industry-standard securities settlement system (SSS) that facilitates the holding or transfer of securities, in accordance with ECB requirements, either free of charge or on a DVP (Delivery Versus Payment) basis.

The settlement of securities transactions with multilateral netting, the processing of securities transactions, and the securities lending system, create all the conditions for the settlement of securities market trading, and thereby constitute the pillars of the market's operation.

The main features and benefits of the modules in the system are as follows:

• Securities clearing in HUF and euro
• Net (multinet) and gross settlement
• Securities account management and record-keeping
• Support for DVP settlement
• STP (straight through processing)
• RTGS operation
• Flexible and configurable modules to meet a wide range of user requirements
• System modules are suitable for integration with other internal and external applications
• Connection to international clearing houses

The modules are as follows:

• Securities Net Clearing and Settlement
• Securities Gross Settlement

The Securities Clearing and Settlement applications suite provides a comprehensive solution for the settlement of transactions concluded in the securities market, from securities account transactions through gross settlement, with the following key features and functions.

• Securities settlement with multilateral netting (clearing)
• DVP (delivery versus payment) transaction processing
• RTGS processing – real-time processing of transactions (OTC prompt repo, auction, fixed-price) on a gross-settlement basis
• Transaction-based straight through processing (STP)
• Real-time client connection

Modules and business functions

The Securities Clearing and Settlement applications suite performs securities settlement and account management through the following modules:

• Securities Net Clearing and Settlement
• Securities Gross Settlement

The modules can be implemented in a stand-alone manner or in combination with each other.

The Securities Net Clearing and Settlement module is a settlement system which, supported by securities account management, performs securities account operations, fulfils the clearing function, and ensures the settlement of securities trades.

The functions performed by the module are as follows:

• Management of securities accounts
• Processing of securities account operations (transfers, blocking)
• Receipt and validation of stock-exchange transactions received from the BSE (prompt, auction, fixed-price)
• Deposit requirement and coverage calculations
• Open-position calculations
• Real-time multinet settlement of stock-exchange trades
• Implementation of enforcement measures necessary for fulfilment of the exchange trades
• Stock-exchange settlement fund management
• Booking of stock-exchange transactions on securities accounts
• Real-time client connection
• Reporting, statistics

The Securities Gross Settlement module performs the real-time gross settlement of trades, in compliance with the requirements for RTGS systems (settlement of OTC transactions, auction and fixed-price transactions).

Services of the Securities Gross Settlement module:

• Processing of DVP transactions in gross settlement mode
• Receipt and settlement of OTC and primary market transactions, fixed-price and stock-exchange auction transactions, as well as transactions related to the physical delivery of derivatives transactions.
• HUF and FCY-based settlement
• Real-time processing using real-time queue management
• Matching of sellers’ and buyers’ orders, using tolerance level management
• Multi-day transaction processing
• Repo expiry monitoring
• Real-time client connection
• Reporting, statistics

Internal system connections

The Securities Clearing and Settlement suite connects to other internal and external systems via a standardised interface.

The Securities Clearing and Settlement applications connect in real time to the OPEN-RTGS system, which performs the itemised processing of business transactions in real time, using the queue-management system that forms the basis for the RTGS model.

Compatibility with Hungarian and international payment systems

The Securities Clearing and Settlement program package supports connection to the clearing houses of other countries.

The system is also capable of transmitting information over the SWIFT network.

The Securities Clearing and Settlement suite is a modular system with a client-server architecture and a user-friendly graphical interface, and can be flexibly developed to suit a wide range of user requirements.

The protection of the systems in terms of access and authorisation is ensured on multiple levels, partly by leveraging the opportunities offered by the applied technologies and partly by utilising the supplied application-level protection devices.

KELER (Central Clearing House and Depository Budapest) Ltd.