For different securities instruments, CSDC may mainly provide threetypes of settlement services: guaranteed net settlement, non-guaranteed gross settlement, and collection and payment service.
(1) Guaranteed net settlement
Guaranteed net settlement means that CSDC gets involved in the securities post-trade process as the settlement counterparty for all buyers and sellers, whichoffsets securities and funds receivable and payable from and toeach clearing participant to calculate net funds and securities receivable and payable, and to complete guaranteed settlement with clearing participants on the settlementday based on the net clearing results.Guaranteed net settlement helps to simplifythe settlement procedures and improvesettlement efficiency. Meanwhile, CSDC manages counterparty credit risks in a centralized manner in accordance withthe applicable clearing rules,contributing to the control and mitigation of the overall risks in the market. At present, CSDC provides guaranteed net settlement services for the trading of A-shares, Treasury bonds, a portion of corporate bonds (enterprise bonds), closed-end funds, pledged bonds repos, ETFs and other trading instruments.
(2) Non-guaranteed gross settlement
Non-guaranteed gross settlement means that CSDC only provides separate clearing for each securities transaction without acting as a central counterpartyor undertaking the responsibility of guaranteed settlement and offset the funds and securities receivable and payable from and to each clearing participant. The settlementfails if any clearing participant is unable to provide a sufficient amount of funds or securities at the time of settlement. The settlement period of non-guaranteed gross settlement includes real-time gross settlement (RTGS), T+0 and T+1, which is pre-determined by the categories of trading instrument.
Currently, non-guaranteed gross settlement applies to transfer of SME private placement bonds, quotation repos, purchase and redemption of some ETFs and cash in-lieu transactions, transfer of corporate bonds and specific asset management programs not qualified for netting, transfer of non-publicly offered preferred stocks, other offering activities, agreed repurchase securities trading and exchange of exchangeable corporate bonds for stocks.
(3) Collection and payment service
Collection and payment service is a value-added serviceprovided by CSDC to clearing participantsfor funds transfer. Clearing participants and other entities may complete the clearing procedures on their own and submit clearing data to CSDC.CSDC then completes the transfer of funds based on data confirmed by the payer in accordance with relevant rules. Insufficiency of funds from the payer will result in failure of such transfer.
At present, CSDC can provide collection and payment service for purchase and redemption of some ETFs, refinancing activities and fund purchase and redemption, etc. It can also meetthe demandsfor settlement of other OTC funds.