1. Bond Connect Market Practice
SWIFT Asia Pacific July 2017

2. Bond Connect Description
Bond connect, in SMPG operational post-trade market practice terms, is a CSD-CSD settlement. It means that settlement takes place through a link established between an investor CSD (CMU) and an issuer CSD (CCDC or SHCH).
It results that for flows between foreign investors (eg, Asset Managers) and their (global and/or local) custodians, there will be a need to identify both CSDs to ensure proper routing of settlement, ie, via the bond connect rather than through domestic set-up.
This will be done in ISO through the use of :94F::SAFE and :95P::PSET. PSET is always where the counterparty is located. PSAFE where the instructing party is located. Both fields have no legal or regulatory meanings, only operational usage.
The following slides will illustrate how these fields need to be used.
Note that in ISO 20022, it is easier. Delivering and receiving depositories are to be used (not place of safekeeping).

3. Receiving Delivering Depository and Place of Safekeeping
Bond Connect Settlement: BUYING Example (CCDC)
BUYRGB22 provides the below settlement info to CUSTHKHH, which will be input in the instruction from CUSTHKHH to HKMAHKHC
Delivering agent is DEAGCN22
Seller is SELLCN33
Place of settlement (Delivering agent’s CSD)
Today the CMU guidance is to use NDCCCNB1. This will be change to NDCCCNBJ for the live BIC cutover of CCDC in the future.
Place of safekeeping (Receiving agent’s CSD) is HKMAHKHC
CFETS trade reference number
Buyer
BUYRGB22
Seller
SELLCN33
Proprietary Msg
MT 541
Custodian
CUSTHKHH
Clearing Agent
DEAGCN22
Proprietary Msg
MT 541
HKMA CMU HKMAHKHC
CCDC / SHCH NDCCCNB1*
MT 541/sese.023 or proprietary

4. ISO 15022 Illustrations From the buyer to custodian (global or sub)
Sender: BUYRGB22
Receiver: CUSTHKHH
:94F::SAFE//NCSD/HKMAHKHC and :95P::PSET// NDCCCNB1 allows the custodian to identify the settlement as a bond connect settlement.
CBTnnnnnnnnnnnnnn is the CFETS Trade Reference Number
NOTE: NDCCCNB1 is used as an example but will be replaced by NDCCCNBJ

5. ISO Illustrations
From the receiving sub-custodian to HKMA for the settlement at CCDC
MT 541
Sender: CUSTHKHH
Receiver: HKMAHKHC
94F::SAFE//NCSD/HKMAHKHC and :95P::PSET// NDCCCNB1 allows the custodian to identify the settlement as a bond connect settlement.
CBTnnnnnnnnnnnnnn is the CFETS Trade Reference Number
NOTE: NDCCCNB1 is used as an example but will be replaced by NDCCCNBJ