Settlement of transfers

Transfers of securities differ from ordinary money orders in that, in addition to the principal, the transferee must also give the same instruction (instruction). This is especially in view of the fact that the transfer of securities transfers not only the rights arising from the securities to the transferee, but also the obligation – e.g. the need to pay a fee for maintaining the securities in the account. The order of orders, i.e. whether the order is placed first by the principal or the transferee, is arbitrary. The second in line then has the option to enter the order separately or to use the “match” button to confirm the correctness of the order submitted by the counterparty.

There are two basic types of transfers. Transfer without money (also called “delivery free of payment – DFP”) and transfer with money (also called “delivery versus payment – DVP”).

A delivery free of payment transfer means that once the instructions are matched by both counterparties, the securities are transferred immediately and no cash payment is required. The second type of transfer – a transfer with money/delivery against payment – is then conditional on payment. Payment to the CSD Prague’s cash account must be initiated by the prospective purchaser of the securities, either by entering a payment order according to the cash account details or simply by scanning a QR code. Upon receipt of the funds, the CSD Prague will simultaneously transfer the securities and generate a payment order in favour of the seller. The crediting of the funds then depends on the beneficiary bank (the time of crediting then depends mainly on the support of instant payments by the destination bank, the timing of the transfer, etc.).

A delivery free of payment transfer order contains the following mandatory items:

Direction of transfer – purchase or sale
ISIN – identification of the security that is the subject of the transfer
Counterparty to the transfer – the counterparty’s asset account number. This account can be added to, or withdrawn from, already stored asset accounts
Number of securities – determines the number of securities to be transferred
Transfer for consideration “NO” – specifying that the transfer is a transfer of securities only, not conditional on the transfer of funds

In addition, a transfer delivery free of payment order may contain the following optional items:

Note – text intended for the principal’s own use
Message to counterparty – text for the purpose of identifying the transfer by the counterparty

The delivery versus payment order contains the following mandatory items:

Direction of transfer – purchase or sale
ISIN – identification of the security that is the subject of the transfer
Counterparty to the transfer – the counterparty’s asset account number. This account can be added to, or withdrawn from, already stored asset accounts
Number of CP – determines the number of securities to be transferred
Transfer for consideration “YES” – specifying that the transfer of securities is conditional on the transfer of funds
Total price – the total price for all securities transferred. This price will be required to be paid by the purchaser

In addition, delivery versus payment order may contain the following optional items:

Price per piece – defining the price per security
Note – text intended for the principal’s own use
Message to counterparty – text for the purpose of identifying the transfer by the counterparty