In the event of a settlement fail under settlement instructions directed to KDPW by KDPW_CCP, on the fifth business day after the expected settlement date (i.e., on the business day following the expiry of the extension period), KDPW_CCP initiates the securities buy-in procedure.
In the buy-in procedure, KDPW_CCP:
- monitors settlement processes and notifies transaction counterparties of the commencement of the buy-in procedure;
- ensures that the settlement of instructions subject to the buy-in procedure is stopped and the instructions are subsequently cancelled;
- executes and monitors the securities buy-in in accordance with the guidance of the Regulation;
- respects the time limits for the delivery of securities (in particular, the buy-in procedure takes no longer than four days for liquid shares or seven days for other securities);
- ensures the settlement of a partial or full securities buy-in;
- ensures notification of the settlement of bought securities to the transaction counterparties;
- ensures the handling of cash compensation payments in the event that partial or full securities buy-in is not possible;
- charges fees for the execution of the buy-in procedure.
Securities auctions:
- KDPW_CCP notifies the participant of the identified default and the initiation of an auction via the GUI. The auction covers the positions of the defaulting participant which are the subject of sale transactions and repo transactions;
- a proposal to open a position is distributed via the GUI to all participants taking part in the auction;
- a participant who has received a proposal to open a position may submit an offer to KDPW_CCP via the GUI in accordance with the rules of the system. The offer price is the maximum price;
- KDPW_CCP executes a formal check of the offer and then, on the day of receipt of the offer, between 2:00 p.m. and 3:00 p.m., accepts the offer in whole or in part or rejects the offer and announces the closing of the auction.