HANetf Adopts New Settlement Model for 6 ETFs
We would like to inform you that HANetf has switched its
ETFs to the ICSD (International Central Securities Depositary) settlement
model. This change came into effect on August 3, 2020 and enables investors to
benefit from a more efficient post-trade infrastructure, reducing the
likelihood of settlement delays or failures and enhancing the secondary market
tradability of the ETFs.
As a result, the DE ISINs of each ETF have been discontinued
and the tickers and positions transferred to IE ISINs, which you can see listed
in the table below. The ETFs remain unchanged and continue to trade on Xetra as
usual. Please now use the IE ISIN and tickers to search for the ETF you
wish to trade. The change will be implemented by the investors’ custodian
Clearstream has already sent out official announcements in
recent weeks. You can find the relevant information under the following link: Clear stream announcement HANetf ICSD conversion
See our ICSD Conversion FAQs
Why this change?
Due to the United Kingdom's departure from the
European Union, ETFs will no longer be able to use the CREST system as the
issuer’s central securities depositary (CSD) after 29 March 2021. ETFs will be
required to change to a CSD authorised within the European Union before that
date. As a result, HANetf ICAV has decided, along with the other ETF issuers,
to change its issuing process, moving securities from the CREST system to the International
Central Depository (ICSD) settlement system.
In a nutshell, what is the ICSD settlement model?
The key feature of the ICSD Settlement Model is
that it provides centralised settlement in Euroclear Bank S.A./N.V. and
Clearstream Banking S.A., Luxembourg (each an ICSD) for transactions executed
on multiple stock exchanges. Migrating from an issue in CREST to the ICSD
requires a technical change in the structure of the ETF shareholding.
are the benefits of this change of settlement system for shareholders and more generally
for the ETF market?
are multiple benefits of the ICSD model to ETF issuers
and investors. In particular:
- All securities will have a single ISIN;
- Because it simplifies settlement process, failures are
expected to decrease;
- Settlement windows across Asian, European and US time
zones will be longer and global access will improve with the Euroclear Bank
- Euroclear provides automatic FX conversions on dividend
- Inventory requirements and capital charges are likely to
decrease, allowing market makers and broker dealers to reduce their trading
- Adopting a single settlement standard will facilitate
their liquidity and use in the; Securities Lending market, and as Collateral at the European Central Bank.
Can I opt out?
No. The conversion is a mandatory corporate
Can I keep my securities in CREST?
Yes. You may continue to hold securities
as CDIs in the CREST System following the conversion. You may also choose to
migrate the holding of your shares to Euroclear Bank.
Holdings in the CREST system in the
Converting ETFs will be replaced by CREST Depository Interests (CDIs). CDIs
operate under the terms of the CREST International Settlement Links Service.
The CDIs will carry the same ISIN as the shares held in ICSD.
Will the ISIN code change?
No. However, “DE” ISIN will be decommissioned
and replaced by an “IE” ISIN.
Do I need to take specific steps?
No. The conversion does not require any
action from shareholders in the Converting ETFs. The securities will be
disabled from settlement after 18:00 BST on Friday, 31 July 2020 and re-enabled
in CDI format as soon as practically possible on Monday, 03 Aug 2020, after the
transfer to Euroclear Bank has been completed.
What does it change to the settlement of the shares?
Under the domestic settlement model, only
shareholders with an account in CREST, or their nominees (usually their
custodian), are registered holders of the ETF. With the ICSD model, all
shareholders will move to a beneficial entitlement through the Common Depository
Specifically, under the domestic model, a number of
nominees of Authorised Participants and other account holders in the CREST
system as well as CSDs or their nominees are registered as shareholders on the
ETF register. Under the ICSD settlement model, all investors will be
represented through the Common Depository and the sole registered holder of all
shares in each ETF will be the Common Depository nominee. The Common Depository
has been appointed by the International Central Securities Depositaries and its
holding will represent the holding of the investors through the ICSD.
Will it impact the payment of dividends and redemption proceeds?
You should not experience any difference in the way
the dividends and redemptions are processed. In the background, the Common
Depository and the ICSD are contractually bound to pass any distributions
received in respect of the ETF to the investors or their nominees. If a paying
agent receives any redemption proceeds or dividends from the ETF or its authorised
agent, it will arrange for such payments to be passed on to the ICSD via the
Common Depository, and the ICSD, will in turn pay any redemption proceeds and
dividends received to the relevant underlying investor or their nominee.
ICSD Model – Payment of dividends and redemption proceeds