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Settlement by Physical Delivery

Settlement by Physical Delivery

Procedure whereby performance of the Contract on the Settlement Date takes place by delivery of the Underlying Asset by the party who is obliged to sell, to the party who is obliged to buy, in exchange for the Delivery Price.

The obligations and responsibilities held by BME CLEARING, Members and Clients in respect of settlements of the cash or securities deliveries are stipulated in the corresponding General Conditions of each Contract entered into by the CCP, as well as in specific Circulars, and shall be in line with the system applicable to the market or settlement system corresponding to the Trades that must be executed on the Underlying Asset.

 Settlement of physical deliveries completed in IBERCLEAR entail exchanging securities for cash (“Delivery versus Payment”).

 As the CCP is the intermediary it does not have to provide securities or cash if all settlements are carried out satisfactorily.

 As the CCP is the intermediary it does not have to provide securities or cash if all settlements are carried out satisfactorily.

Any operations pending settlement at 5 pm shall be considered to be failed deliveries.

As explained in the corresponding Rule Book and the Circulars entitled Settlement Procedures for Future contracts on 10Y notional bonds and BME CLEARING Procedures in the event that public debt securities are unavailable to be delivered due to a Default, if a trade is pending settlement at 5 pm on the allotted date and is unable to be settled by the IBERCLEAR mechanisms, it shall be cancelled by IBERCLEAR. BME CLEARING shall register this with IBERCLEAR the following business day.

Where the Default has been caused by insufficient cash being pledged, this must be resolved no later than the following business day. If insufficient securities have been pledged, the Defaulting Member has 4 days in which to deliver the securities. If, at the start of the fifth session after maturity, delivery has not occurred, BME Clearing shall acquire the securities on the market or on loan for delivery to the Clearing Member (buyer).

 BME CLEARING shall fine the party responsible for the delay €1,000 plus a penalty equal to the REPO interest rate plus 0.1% p.a. for each day’s delay to compensate the Non-Defaulting Member.

 For Equity Futures and Options, BME CLEARING simply informs Sociedad de Bolsas, as Manager of the electronic trading platform, of the trading operations on the Underlying Assets, which must be carried out on maturity and due their exercising respectively. Once Sociedad de Bolsas has been notified, the transaction becomes a stock market operation, with all the repercussions this entails, pursuant to applicable legislation and procedures.  

 All intraday margins received by the CCP, either individual or extraordinary, made via a payment transfer or a direct debit, are also paid into the CCP’s account in the TARGET-2 Banco de España platform.  The settlement procedure is regulated by Chapter 7 of the CCP’s Rule Book and implemented by the Circulars entitled Clearing and Settlement.Times and Procedures and Payment Agent.







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