Clearing and Settlement
All trades executed at the Philippine Stock Exchange, Inc. (PSE) are reported, confirmed and settled through SCCP on a Clearing Member level. The transfer of equity securities is implemented via electronic book entry at the central securities depository. If the security intended for trading is not yet in book-entry form, it needs to be immobilized first to enable the securities settlement of trades via book-entry debits and credits at the depository. Cash settlement is effected through net debits and net credits to the Clearing Members’ cash settlement accounts with their respective settlement banks.
SCCP as the Central Counterparty
Upon uploading of the PSE Trades into SCCP’s clearing and settlement system, multilateral netting takes place, and novation of the original PSE Trade contracts occurs. The securities settlement instructions are netted multilaterally into a net receipt or delivery position in a given security for each Clearing Member. All cash debits and credits from these securities settlement instructions are also netted into a single net cash position for each Clearing Member. On settlement date, book-entry settlement instructions are generated for each net position to facilitate movements from the net delivering Clearing Members to the net receiving Clearing Members.
As a result of novation, SCCP becomes a Central Counterparty (CCP) to all matched trades executed at the PSE. As a CCP, SCCP assumes the role of a seller to all net buying Clearing Members and the buyer to all net selling Clearing Members. SCCP as the CCP takes the buyer’s credit risks and assumes the seller’s delivery risks, thereby addressing settlement concerns and strengthening confidence among market participants.
Key Functions of SCCP:
Delivery versus Payment
The settlement of trades of listed securities takes place two business days after the transaction date (T+2) on a Delivery-versus-Payment Multilateral Net Settlement (Model 3) basis. Cleared funds must be deposited in the Net Buying Clearing Member’s cash settlement account in the settlement bank and securities must be made available in the Net Selling Clearing Member’s securities accounts in the central depository’s system not later than 12:00 noon of settlement date. If the securities are not delivered by the Net Selling Clearing Member, SCCP will not release the corresponding cash entitlement to the Net Selling Clearing Member, and vice versa. Late deliveries are imposed a monetary fine/penalty by SCCP.
Settlement Cycle
Settlement Method
Requirement- Funds must be available in the Cash Settlement Account of the Net Buying Clearing Member
- Securities must be available in the Securities Settlement Account of the Net Selling Clearing Member
Cut-Off Time
Penalty