Settlement of international bonds entails a number of possible scenarios which are dependant on the
parties involved in the transaction. The following diagram and subsequent explanatory information
describe the processing scenarios for locked-in trades:
Internal: trade between SIX SIS member Both parties to the trade keep their inventories with SIX SIS. T
his scenario reflects the automated clearing of a CHF transaction, with the difference that the
trade is carried out in the appropriate foreign currency. The parties to the
transaction have the option, however, of opening a cash account in the relevant foreign
currency at SIX SIS or EuroSIC.
Cross-border: trade between SIX SIS member and routing member
This scenario applies when one of the two parties keeps its inventory of
international bonds with Clearstream Luxembourg or Euroclear Bank.
Routing: trade between routing member
Both parties keep their inventories of international bonds with Clearstream
Luxembourg or Euroclear Bank. In this scenario, SIX SIS is only involved as a
routing agent and not in settlement.
Settlement of Routing Trades
Depending on the settlement location of the counterparties, orders are routed to Euroclear Bank or
Clearstream Luxemburg. In general, the settlement instructions are
routed automatically to the settlement location in question.
Settlement of cross-border trades
In the case of cross-border trades, settlement instructions are issued fully automated to
Euroclear Bank and Clearstream in the early evening on the day before the value date, thus preventing
the blocking of positions at SIX SIS. On the value date, actual settlement takes place
at the relevant ICSD. In the case of trades between SIX SIS and Euroclear Bank or Clearstream Luxembourg,
the transfer of securities and cash is completely transparent.
It is not necessary to know where the counterparty's securities are located. Each market participant
can freely choose the place of settlement as well as the relevant custody account.
