Notifications

Notification ACK/NACK

Status: Under Review, Last Updated: 28/01/2022

Introduction
Many market participants observe ‘notify' or 'call-in' procedures to advise their counterpart of a new, close, or amending transaction. The process is often manual and may duplicate systemic processes.

Where possible, it is recommended that automated notifications and ACK/NACK responses are utilised. (IBP-133)

New or Close

Status: Under Review, Last Updated: 06/10/2020

Response
On receipt of a notification, the receiving party should provide an acknowledgement (ACK) within an hour in support of the one-hour timestamp SFTR validation rule.

See SFTR 'Execution Timestamp' (IBP-135)

New or Close

Status: For Review, Last Updated: 28/01/2022

Vendors
The use of vendor platforms or other automated processes are recommended where possible for trade notifications between parties. In either case, it is strongly recommended that counterparts notify each other of the preferred platform, and any related functionality that may be associated with it (e.g. timings, formats, etc.).

Functional features may include loan and/or collateral reconciliation, trade notification(s) and regulatory reporting obligations.

Counterparties should adopt a procedure to both notify of any change and reconcile these preferred functions/limitation on a regular basis to avoid any disruptions to communication. (IBP-136)

Returns

Status: Under Review, Last Updated: 06/10/2020

Notification Template
If use of a vendor platform is not available, counterparties should use the standard template detailed on Chapter 4, page 11 of the CSDR: Settlement Discipline Impact to Securities Lending (Sep 2019). (IBP-138)

Returns

Status: Under Review, Last Updated: 06/10/2020

Partial Close & Claims
Partial settlement can be requested within market deadlines following receipt of shares or notification that the recall recipient is insufficient to deliver. Where this is the case, it is recommended that both parties partially settle wherever possible to reduce exposure to potential claims or fines.
(IBP-316)

Loan Recall to buy-in/close out - flow

Status: Under Review, Last Updated: 28/01/2022

Loan Recall
The following process provides the steps and flow for a recall that ends in buy-in/close-out.

Lender issues recall notification to borrower stating ISIN, Quantity and Settlement Date.

Notification should be received by the borrower at the latest one hour prior to the close of relevant market/exchange minus two business days or, if greater, the standard settlement cycle of the relevant market/exchange to allow satisfactory settlement.

The lender should include any further relevant information that might influence the criticality of settlement or sensitivity of timing.

Borrower to respond with ACK/NACK, confirming settlement date(s) and quantity.

In line with standard practice, automated solutions are preferred to ensure timely notification and acknowledgement(s)

Return instruction(s) should be agreed and booked in good time for the relevant settlement cycle.

It is noted that many securities lending parties can instruct within the standard settlement cycle, that being less than or equal to the standard market settlement cycle. If this is the intended arrangement, it should be bilaterally agreed.

Should the instruction fail to settle, or borrower fail to respond to the recall notification, lender should calculate and communicate related costs to borrower (see GMSLA 9.3 Failure by either Party to deliver)

Communication of cost should include SSI

Costs should be paid within one business day of the claim/notification (GMSLA 9.3.b)

On receipt of costs, the outstanding loan should be closed, and any collateral related to that loan returned to the borrower. (IBP-328)

Sale Notifications

Status: Under Review, Last Updated: 28/01/2022

Sale Notifications
Although best practice may recommend guide cut-off times, it is recognised that counterparts to a loan will want to retain a flexible approach. However, should notifications, instructions and settlement occur outside the recommended guide-times, parties should acknowledge that settlement will be on a best-efforts basis.

It should also be noted that to avoid any backdating of activity, instructions should be processed/instructed on the date they are negotiated.

The recommended cut-off times are therefore:

New Loans - Should be instructed on trade date, no later than 1 hour prior to the relevant market cut-off. Collateralisation of new loans will occur at different times relative to the trade and settlement. See the section "Processes for Collateral" in the ISLA handbook for best practice timing.

Returns - Notification of a loan return should be processed electronically and where possible via an electronic platform, no later than 1 hour prior to the relevant market cut-off. (IBP-339)