In calculating the amount of rights and obligations of ORI trading carried out through ETP, KPEI uses trade-for-trade clearing method. Such method is used to adjust the first stage of ETP development with the trade-for-trade (TFT) nature of over the counter (OTC) market condition.
The calculation of rights and obligations carried out by KPEI follows this formula:
- Clean Price: the ORI transaction value that does not include accrued interest calculation, as agreed by ETP Participants through the IDX ETP system.
- Volume: the amount of ORI transacted by ETP Participants.
- Accrued Interest: the fund that is the seller’s right on the accrued coupon based on the bond coupon payment date.
- Tax Value: the tax value calculated manually by ETP Participants outside the ETP e-BOCS system, which reduces the value of the right to receive or obligation to deliver, so as to facilitate the fund settlement process. Such tax value is not mandatory to be filled as this is only to accommodate ETP Participants in determining the final tax object.
In carrying out the clearing process, KPEI uses a web-based Electronic Platform System – Electronic Bond Clearing System (ETP e-BOCS). The system provides clearing result information in the form of pre - Clearing Result List (pre-CRL) and Clearing Result List (CRL) If CM-ETP carries out direct settlement in BI-SSSS, then CM-ETP only receives pre-CRL from ETP e-BOCS. For CM-ETP who carries out transaction settlement in KSEI C-BEST, the clearing process shall be followed with the confirmation and/or affirmation process to receive the Settlement Instruction and CRL.
KPEI Regulations governing Clearing of ORI trading through ETP can be accessed here.