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REGULATION pursuant to article 3.7.1, 9.3.1, 10.4.4 of the Clearing Rule Book BUY-IN PROCEDURE Capitalized terms used in this Regulation, and not otherwise defined, shall have the meaning as set out in the Clearing Rule Book. st This Regulation comes into force on the 1 April 2015 1 General The general purpose and principle of a buy-in for EuroCCP as the formal counterparty to all transactions, is to as much as practically possible, honour the original rights or entitlements resulting from Trades done on an Exchange and cleared by EuroCCP, when one of the parties involved fails to meet its settlement obligations. EuroCCP has chosen to follow local market practice as closely as possible, while aiming for a harmonised pan European process. The rules are set up in a standard structure to create transparency and efficiency in processing. Buy-ins will be triggered for non delivery of Securities by the Clearing Participant or in case of non-delivery of Securities by EuroCCP towards the Clearing Participant. The latter could result in a so called “Early Buy-in”. EuroCCP reserves the right to postpone the start of a buy-in procedure at its own discretion. Clearing Participants however, do not have a possibility to initiate a buy-in against EuroCCP. If the buy-in auction should be performed on a Settlement Date which is not a Trade Date (see Regulation Clearing Days), the buy-in auction will take place on the next Trade Date. 2 Buy-in notification One Clearing Day before the buy-in will be started, the failing delivering participant will receive via email a buy-in notification from EuroCCP. The notification will be sent before 09:00 AM CET and gives an overview of all relevant information. All transactions not settled at 08:45 CET will be marked for notification. 3 Early buy-in An early buy-in will be started when EuroCCP has onward deliveries which are on the buy-in date but has no receipt instructions which are on the buy-in date. An early buy-in can be started from ISD+1. The oldest pending transaction will be selected for an early buy-in. If there are multiple transactions with the same date, one will be randomly chosen. A delivering Clearing Participant selected for an early buy-in will receive an early buy-in announcement via e-mail on the buy-in date before 09:00AM CET. Due to the aberrant schedule , no early buy in’s will be executed against registered market makers. 4 Buy-in publication On buy-in date EuroCCP will publish all non delivered Securities before 9:30 AM CET on the website, all Clearing Participants now have the possibility to offer these Securities to EuroCCP until 11:00AM CET. The maximum offer price varies per market. See paragraph 16 for more details. 5 Buy-in extension The failing delivering Clearing Participant may request an extension by sending a fax or e-mail to EuroCCP before 11:00AM CET. If an extension request has been received, no offers will be accepted and the failing delivering Clearing Participant has until market close to deliver the Securities. If the Securities are not received at market close, a cash settlement will be started. ___________________________________________________________________________________________________________ Version: 34 per 20141117 1 European Central Counterparty N.V. EuroCCP Regulation Buy-in Procedure 6 Acceptance of offers EuroCCP will check for received offers if the failing transaction still did not settle at 11:00AM CET and no extension request has been received. EuroCCP will give priority to the offer with the lowest price. When multiple offers have been received against the same price, the first offer received will be chosen. The failing delivering Clearing Participant will receive a mail with the consideration difference (offered amount minus original settlement amount) which needs to be paid same day. If the offered amount minus original settlement amount is negative, no consideration difference will be paid or charged. 7 Buy-in account A failing delivering Clearing Participant will be required to cancel his original transaction and reinstruct against a dedicated EuroCCP buy-in account in case EuroCCP has old failing onward deliveries. EuroCCP may send this request as early as S+1 in case of an early buy-in or on notification day in case of a regular buy-in. When Securities have been received on the buy-in account, a receiving Clearing Participant will be requested to cancel his original receipt instruction and reinstruct against the buy-in account. Both Clearing Participants are obligated to instruct within 1 hour. 8 Buy-in execution The failing delivering Clearing Participant has until 11:00AM CET on the buy-in date to deliver the Securities, this can be on the main settlement account or if requested by EuroCCP on the dedicated buy-in account. If the Securities have not been delivered and the Clearing Participant has not requested an extension the transaction will be cancelled by EuroCCP. The Clearing Participant is obligated to cancel the transaction within 15 minutes. 9 Inter CCP Transactions A CCP cannot initiate a buy in on a selling CCP, since each CCP will follow their own buy in schedule this may result in a delayed delivery. 10 Market Maker Schedule The standard buy in execution date of ISD+5 will in case of market makers be ISD+11. The aberrant period only applies to market makers and isins registered by the LSE. EuroCCP may employ a broker from ISD+12 till ISD+20 or offer the position for tender to the Clearing Participants on its own discretion. If the bought in transaction cannot be executed before ISD + 20, a cash settlement will take place in accordance with paragraph 12. Cash settlement will be against the last available closing price. 11 Instruction of chosen offers EuroCCP will inform a Clearing Participant by mail/phone before 12:30AM CET when his offer has been accepted and if the Securities need to be delivered to the main account or the dedicated buy-in account. The Securities need to be delivered as a DVP instruction (or FOP with separate payment in exceptional cases) for settlement same day unless specifically mentioned otherwise for any particular market. Participants will not be informed when their offer has not been accepted. 12 Cash settlement / Broker option If there is no valid offer for a buy-in or if there is only a valid offer for a part of the requested buy-in quantity has been received or if a buy-in is impossible for any other reason, the outstanding or remaining obligation to deliver may be settled in cash or by use of a broker selected by EuroCCP. ___________________________________________________________________________________________________________ Version: 34 per 20141117 2 European Central Counterparty N.V. EuroCCP Regulation Buy-in Procedure Cash settlement is processed by cancelling the original settlement and replacing it with a cash payment. The basis for a cash settlement will be the closing price of the most recent business day prior to the buy-in or the last trade price adjusted for a corporate event of the relevant Securities. The cash settlement percentage (see table under paragraph 15) will be applied to this price to establish the cash settlement price.In the case of cash settlement, the following actions will be taken: 13 - the receiving Clearing Participant of the original failed settlement will be credited for the difference between the original price of the failed settlement and the cash settlement price, if the cash settlement price is higher than the original price of the failed settlement. - the delivering Clearing Participant of the original failed settlement will be debited for the difference between the original price of the failed settlement and the cash settlement price, if the cash settlement price is higher than the original price of the failed settlement. - the failing delivering Clearing Participant will receive a mail with the total cash amount which needs to be paid the same day. - In case of an early buy-in, the failing receiving Clearing Participant will be requested to cancel his transaction and will receive a cash compensation instead (as described under 3). Sell out If a settlement instruction is still failing due to lack of cash or incorrect instructions by the receiving participant on S+5, EuroCCP will start the Sell-Out procedure. EuroCCP may employ a broker for the sell out process or offer the position for tender (as reverse of the buy-in) to the Clearing Participants on its own discretion. The failing participant will on the processing date be informed about the Sell-out and will receive an overview after the execution detailing all additional costs. The participant is obliged to pay these costs within 2 business days. 14 Corporate actions If the position that is bought in is entitled to a corporate action, EuroCCP will handle the corporate action in the buy-in procedure as well. This means that the delivering participant will still have to compensate EuroCCP for the proceeds if a trade has been bought in. In case of an optional event, the delivering participant is obliged to deliver the choice of the failing receiving participant. 15 Rights EuroCCP will in general not start the buy in process on S+4 for rights but will have the possibility to do so at its own discretion. 16 Closing Whenever the last available closing price is at least 20% lower then the original settlement price, EuroCCP will in case of a cash settlement cancel both instructions involved in the buy in process. No cash compensations or penalties will be transferred. 17 Norway As the last settlement batch ends at 11:30 AM CET, there will not be sufficient time to accept offers in case of a buy-in process and settle these offers the same day. EuroCCP will therefore use the existing offering period until 11:00 AM CET, however settlement will take place on S+6. ___________________________________________________________________________________________________________ Version: 34 per 20141117 3 European Central Counterparty N.V. EuroCCP Regulation Buy-in Procedure 18 Spain Spanish recycled transactions that fail to settle or match by the Title V timeframes will be subject to a buy-In process taking place or immediate settlement OTC. The below table details the Buy In procedures in Spain: will immediately be bought in. For buy-in announcements and transactions in Spain, the following table will apply: Please note that a buy-in notification will only be sent once on the Clearing Day following the day a transaction was recycled, regardless of the reason for recycling (unmatched or unsettled). EuroCCP will initiate buy-in transactions in Spain to be executed by a local broker. If the buy-in transaction price is higher than the original trade price, the failing Clearing Participant will pay for the difference and any transaction and settlement costs directly related to the buy-in transaction. If a buyin is unsuccessful, a cash compensation will take place in accordance with paragraph 12. Buy-in announcement or notification Buy-in trans-action procedure before COB Settlement buy-in transaction T+3 (ISD) If a transactio n is recycled on T+2 because it was still unmatche d T+4 (ISD+1) If a transacti on is recycled on T+3 because it was unsettle d If recycled transacti on from T+2 is again rejected due to unmatch T+5 (ISD+2) Recycled trade fails to match on T+2 at 15:00 CET T+6 (ISD+3) Recycled trade fails to settle after the last cycle at 15:00 CET If recycled transaction from T+2 is again rejected due to nonsettlement Or: If recycled transaction from T+3 is again rejected due to unmatch If recycled transactio n from T+3 is again rejected due to nonsettlemen t OTC settlemen t can take place by prior agreeme nt with EuroCCP . T+7 (ISD+4) T+8 (ISD+5 T+9 (ISD+6) Settlem ent buyin transacti on of T+4 Settlem ent buyin transacti on of T+5 Settlem ent buyin transacti on of T+6 OTC Settlement can take place prior to a buy-in broker executing a trade by prior agreement with EuroCCP’s Client Services team. The CP must deliver immediately in the registration of EuroCCP’s name. If a buy-in transaction can not be executed within the limit of the maximum buy-in offer percentage as specified in table under paragraph 15, a cash settlement will take place in accordance with paragraph 12. ___________________________________________________________________________________________________________ Version: 34 per 20141117 4 European Central Counterparty N.V. EuroCCP Regulation Buy-in Procedure 19 Buy-in specifics per market Market Austria Belgium Czech Republic Denmark The Netherlands Finland France OeKB Euroclear BE SCP VP Euroclear NL Euroclear Finland Euroclear FR Trade Date+2 Trade Date+2 Trade Date+2 Trade Date+2 Trade Date+2 Trade Date+2 Trade Date+2 ISD+3 ISD+4 ISD+4 ISD+4 ISD+4 ISD+4 ISD+4 ISD+4 ISD+5 ISD+5 ISD+5 ISD+5 ISD+5 ISD+5 Max. buy-in Offer Percentage/ 1 fixed fee. 120% 120% 120% 150% 120% 150% 120% Germany Trade Date+2 ISD+4 ISD+5 200% 120% Hungary Clearstream BK Frankfurt KELER Trade Date+2 ISD+2 ISD+3 120% 120% IDRs Euroclear Bank Trade Date+2 ISD+4 ISD+5 120% 120% Ireland Euroclear UK&I Trade Date+2 ISD+4 ISD+5 120% 120% Italy Monte Titoli Trade Date+2 ISD+4 ISD+5 120% 120% Luxembourg Euroclear Bank Trade Date+2 ISD+4 ISD+5 120% 120% Norway VPS Trade Date+2 ISD+4 ISD+5 150% 120% Portugal Interbolsa Trade Date+2 ISD+4 ISD+5 120% 120% 120% 120% Spain CSD Settlement cycle Notification of buy-in Buy-in execution 4 120% 120% 120% 120% 120% 120% 120% Iberclear Trade Date +3 Sweden Euroclear Sweden Trade Date+2 150% 120% Switzerland United Kingdom SegaInterSettle (SIS) Euroclear UK&I Trade Date+2 Trade Date+2 ISD+4 ISD+4 ISD+5 ISD+5 120% 120% 120% 120% US Euroclear Bank Trade Date+3 ISD+4 ISD+5 120% 120% 1 2 3 4 ISD, ISD+1, +2 or +3 3 ISD+1 ISD+2 ISD+2 or ISD+3 or r ISD+3 ISD+4 ISD+5 Cash settlement 2 percentage The percentage is calculated over the most recent closing price, adjusted for corporate events if appropriate Id. see table under 14 A buy-in can be initiated as of ISD + 6 ___________________________________________________________________________________________________________ Version: 34 per 20141117 5 European Central Counterparty N.V. EuroCCP Regulation Buy-in Procedure 20 EuroCCP CSD instructions for Buy–ins: Austrian Stocks Belgium Stocks Czech Republic Stocks Danish Stocks Dutch Stocks Finnish Stocks French Stocks German Stocks Hungarian Stocks International Depository Receipts Italian Stocks Agent BIC Account Buyer/Seller Account number Agent EGSP Buyer/Seller Account number Agent BIC Buyer/Seller Account Agent BIC Buyer/Seller Account Agent EGSP Buyer/Seller Account number CSD BIC Account Attention Agent EGSP Buyer/Seller Account number Agent KV Buyer/Seller Account Agent BIC Buyer/seller Account Agent BIC Buyer/Seller Account number Agent Bic Segregated account Buyer/Seller (95P) BIC Beneficiary account Abn Amro Bank N.V. OEKOATWW 211500 ABNCNL2A 24.60.59.494 Abn Amro Bank N.V. 29108 EMCFNL2A 24.60.59.494 Deutsche Bank AG, filiale Prag DEUTCZPX EMCFNL2A 5013400001 SEB Copenhagen ESSEDKKK ABNCNL2A 0529 502 1766 Abn Amro Bank N.V. 29108 EMCFNL2A 24.60.59.494 Euroclear Finland APKEFIHH 31 0003 00000 3003 0273 EuroCCP Buy-in account Abn Amro Bank N.V. 29108 EMCFNL2A 24.60.59.494 CitiGroup Global Markets AG 7372 EMCFNL2A 21682401 Deutsche Bank ZRt, Budapest DEUTHU2B EMCFNL2A 1213002086 Deutsche Bank DEUTNL2A EMCFNL2A 265150140 Citi Bank Milan CITIITMX 60440 XTRM code 2989 EMCFNL2A 1258319 (In order to facilitate pre matching we recommend our participants to quote our account number 1258319 at Citi Milan in field 97A::SAFE// of the Subsequence E1 Settlement Parties) Luxembourg Depository Receipts Norwegian Stocks Agent BIC Buyer/seller Account Agent BIC Buyer/seller Account Deutsche Bank DEUTNL2A EMCFNL2A 265150140 SEB Oslo ESSENOKX EMCFNL2A 09750 0034356 ___________________________________________________________________________________________________________ Version: 34 per 20141117 6 European Central Counterparty N.V. EuroCCP Regulation Buy-in Procedure Portuguese Stocks Agent BIC Buyer/seller Account BNP Paribas Securities Services S.A. PARBFRPPXX EMCFNL2A 62768Q Swedish Stocks CSD BIC Buyer/Seller Account BIC CSD SCOM Buyer/Seller Account Agent BIC Crest participant id: Account Euroclear Sweden VPCSSESS EMCFNL2A 0001 5069 5594 EMCFNL2A Sega interSettle NL100386 EMCFNL2A 20 326’639 HSBC PLC MIDLGB22 BH01 942436 Agent Bic Buyer/Seller Account Deutsche Bank DEUTNL2A EMCFNL2A 265150140 Swiss Stocks UK Stocks US Stocks ___________________________________________________________________________________________________________ Version: 34 per 20141117 7 European Central Counterparty N.V. EuroCCP Regulation Buy-in Procedure