Trade Settlement of Actively Managed Certificates units

Trade Settlement of Actively Managed Certificates: iMaps Capital Markets AMCs are issued in Clearstream and are available for settlement there as well as in Euroclear and SIX. At EUWAX/Stuttgart, where we list the AMCs, the transactions are automatically settled over Clearstream.

Clearstream’s Role in Trade Settlement

Clearstream's CSD (Central Securities Depository) settles trades in international securities and in domestic securities traded across borders. The CSDs settle domestic transactions in the German markets. Transactions between the three CSDs Clearstream, Euroclear and SIX are settled via an electronic communications platform, called the Bridge.

Understanding Clearing Houses

A Clearing House (like Clearstream, Euroclear, and SIX) is a financial institution formed to facilitate the exchange (i.e., clearance) of payments, securities, or derivatives transactions. The clearing house stands between two clearing firms (also known as member firms or participants). Its purpose is to reduce the risk of a member firm failing to honor its trade settlement obligations.

After the legally binding agreement (i.e., execution) of a trade between a buyer and a seller, the role of the clearing house is to centralize and standardize all of the steps leading up to the payment (i.e. settlement) of the transaction. The purpose is to Reduce the cost, settlement risk and operational risk of clearing and settling multiple transactions among multiple parties.

Role of Central Counterparty Clearing (CCP)

In addition to the above services, central counterparty clearing (CCP) takes on counterparty risk by stepping in between the original buyer and seller of a financial contract. The role of the CCP is to perform the obligations under the contract agreed between the two counterparties, thereby removing the Counterparty Risk the parties of the contract had to each other and replacing it with counterparty risk to a central counterparty that specializes in managing and mitigating counterparty risk. The clearing house mitigates risk by ensuring both parties are financially capable of entering into such a contract, and that parties will receive what they are owed, resulting in a smoother transaction and ultimately a more liquid market.

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