Settlement services - Saudi Arabia
Pre-matching service
The table below summarises CBL's pre-matching service for external settlement instructions, as well as the pre-matching method and start time in the market. For details of CBL's pre-matching services, see Pre-matching services for external settlement instructions.
Service offered | Method employed | Start (local time) |
All securities | ||
Immediate Release Flag available | Manual | SD-1 (or on receipt of instructions) |
Connectivity medium | Instruction format |
Xact Web Portal | Tick to enable the “Immediate Release” option. |
Xact via Swift and Xact File Transfer | Field :22F::STCO/CEDE/IREL |
Procedures for domestic counterparties
All securities
Field | Value |
HSBC Saudi Arabia BIC | SABBSARI |
Clearstream Investor ID | 7003896 |
Clearstream Investor ID Name | Clearstream Banking S.A. |
Clearstream Securities Account at EDAA | 06300027239 |
Five-digit account number of counterparty at Clearstream | For example, 12345 |
CBL safekeeping a/c number with HSBC Saudi Arabia | 086-014131-124 |
Allowed countervalue difference
A maximum difference in countervalue of SAR 188 (+/- USD 50 equivalent) is allowed for transactions with domestic counterparties. If there is a discrepancy, the cash amount of the delivering party will prevail. Clients should note that there is no official market tolerance level in place at the CSD and that the levels quoted above are based on CBL's service offering via its custodian.
Specific settlement rules / settlement restrictions
Domestic settlement
CBL's custodian, HSBC Saudi Arabia, maintains the Securities Account with the CSD in the name of Clearstream Banking S.A. This account is covered by CBL’s Investor ID, that is open in the name of “Clearstream Banking S.A.”.
To access and trade eligible Saudi Arabian securities via CBL domestically, clients have two options:
- Domestic settlement via a local broker
Clients must appoint their own local brokers and provide the following details for the brokers to open a trading account. The brokers may conduct their own client due diligence before opening the trading account. CBL cannot assist with this broker onboarding process.
Field | Value |
Clearstream Investor ID | 7003896 |
Clearstream Investor ID Name | Clearstream Banking S.A. |
Clearstream Securities Account at EDAA | 06300027239 |
Note: Clients who will only execute internal transactions do not need to appoint their own broker in Saudi Arabia
2. Domestic against payment settlement via OTC Settlement Service
This CSD-based service provided by EDAA enables clients of CBL to settle listed debt securities over the counter (OTC) via the local custodians in the market. The transaction will settle outside of the exchange, eliminating the need to appoint a local broker (option ‘a’ above). Settlement is conducted bilaterally between both counterparties. The Counterparties may choose a settlement cycle between T+0 to T+5 for such transactions. However, to avoid any processing issues, it is recommended not to choose a T+0 settlement cycle.
The CSD, EDAA, will charge a fee for the OTC Settlement Service: both the buyer and the seller will be charged 0.5 bps on the settlement value of the transaction. Such fees will be passed on by CBL’s custodian to CBL, and in turn from CBL to its clients.
Only against payment (RVP/DVP) settlement transactions are supported by this service. Free of Payment OTC is not allowed in the market at this stage.
For either domestic settlement method, clients should be aware that trade settlement takes place from Sunday to Thursday in Saudi Arabia, however CBL does not operate on Sundays.
With the implementation of PTTP, settlement cycles ranging from T+0 to T+5 have been introduced, which will allow clients to avoid Sundays as a settlement day. Clients who execute trades with their brokers or their OTC counterparties on Wednesdays are strongly advised to ensure that the agreed settlement date (SD) between both parties does not occur on Sundays by agreeing to a T+1 or T+3/4/5 cycle. The client’s broker or counterpart will be able to modify the settlement cycle as agreed between both parties and thereby avoiding Sundays as the settlement date (SD). Settlement of trades in Saudi Arabia is mandatory and trades failing to settle on SD will go through a fail trade (buy-in) process from SD+1 and may result in penalties being passed to the client from the client’s broker. Clients should ensure that they send proper and timely instructions to CBL to avoid any further delays in settlement.
Investor eligibility
Only legal or natural persons, that are non-Saudi and/or non-residents of Saudi Arabia and are a client or an underlying client of a client of CBL can access the Saudi link and hold Saudi Arabian securities via CBL.
Clients who are already registered under the Qualified Foreign Investor (QFI) program and are holding eligible Saudi Arabian securities will be able to transfer their holdings across to CBL and vice versa via FOP NCBO transfers. Such transfers are referred to as Cross Investor ID transfers in the market and clients are to send CBL MT540/542 NCBO instructions to transfer the securities. The format of the MT540/542 are under the Instruction specifications sections of the Market Link Guide – Saudi Arabia. Cross Investor ID transfers will typically take about two business days to complete.
Cancellations
There is no possibility to cancel or delay settlement for trades executed on the Saudi Exchange. Consequently, for such trades, settlement is mandatory on T+2.
Cash payments
The Saudi Arabian securities market settles against SAR. Clients are required to provision their SAR account through CBL’s SAR CCB, Saudi Awwal Bank. Clients are strongly recommended to provision their cash account before the deadlines set for securities instructions to avoid settlement delays and penalties.
Back-to-back processing
No back-to-back service is currently offered on the Saudi Arabian market.
Management of failed instructions
Settlement of trades executed for Saudi Arabian securities is mandatory. Trades failing to settle on settlement date (SD) will go through the fail trade process from SD+1 that is initiated by the defaulting broker. If the fail trade is not resolved by SD+4 by the defaulting broker, the Buyin process will be initiated by the CCP on SD+5. If the Buyin is still not successful by SD+8, the buying investor will receive a cash substitution on SD+9 in lieu of the securities.
Penalties
Any penalties related to fail trades will be levied on the defaulting broker who may pass on the penalties to their client depending on who caused the failed trade.
Internal settlement
Internal settlement for Saudi Arabian securities is allowed in CBL subject to the following conditions:
- Clients must include the deal price (clean price) in each internal instruction (field :90a::DEAL). Failure to include the deal price in the client’s settlement instruction may result in CBL’s rejection of the instruction. Internal free of payment and against payment settlement is accepted in all eligible settlement currencies.
Bridge settlement
Bridge transactions are not possible.
New issues settlement
CBL Investor ID details can be used for public/private placement transactions. Clients must submit their bids to the Primary Dealer (PD) directly and quote CBL’s Investor ID (7003896) and Securities Account with EDAA (06300027239) on the bid application form.
Clients who subscribe to government securities or sukuks issued by the National Debt Management Center, will be informed by their primary dealer if the settlement of the new issue will take place under the Free of Payment (FoP) or delivery versus payment (DvP) mode. Under the FoP mode, the PD will call for the payment of the subscription amount upon allotment and clients should remit the payment directly to the PD and instruct CBL with an MT540 receive free instruction.
Under the DvP mode, clients must send a MT541 receive against payment instruction to CBL and fund their CBL cash accounts with the subscription amount.
CBL’s deadline for both MT540 and MT541 new issue settlement instructions is SD -1 12:00 AST time.
Separately, clients interested in participating in IPOs must check directly with the lead manager, if the IPO is allowing ICSD investors to participate and also check the information in the prospectus. Clients must fill the IPO bid form in accordance with the instructions of the lead manager and submit directly and arrange for payments to be paid directly to the lead manager's escrow account.