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Settlement transaction types

SECB: Securities Borrowing

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SECB marks a settlement instruction that belongs to a securities borrowing, sent from the borrower’s side. The borrower receives the securities at the start and delivers them back on return, both under SECB.

Code
SECB

What SECB means

Borrowers are typically broker-dealers and banks that need securities to cover a short sale, avoid a settlement fail or support market making. They receive the lent securities from a lender or agent lender and give them back when the loan is returned or recalled. Both movements carry SECB on the borrower’s instructions.

The lender’s side of the same loan is SECL. Collateral the borrower posts goes as COLO (the borrower is the collateral giver). A move of a borrowed holding between two of the borrower’s own safekeeping accounts is SBRE. Borrowing securities through a repo, where the borrower lends cash, is RVPO rather than SECB.

Some custodians never apply automatic partial settlement to this type: BNY lists SECL, SECB, SLRE, SBRE, OWNI, TURN and the repo codes among the transactions it always instructs with NPAR.

When you see it

  • Loan start: an MT540 or MT541 receipt by the borrower with :22F::SETR//SECB.
  • Return: an MT542 or MT543 delivery back to the lender with SECB.
  • In the KDPW and Singapore market rules published by Clearstream and LuxCSD, which list SECB among the codes they accept or require for lending and borrowing.

What to do next

  • Use SECB on every borrower-side movement of the loan. Borrowing to cover a fail is still SECB, not TRAD. Under EU CSDR, CSDs report settlement fails per type of transaction (purchase or sale, collateral management, securities lending and borrowing, repo, other), and custodians such as BNY pass the instructed SETR code to the CSD for that reporting. A financing or collateral movement sent as TRAD lands in the wrong bucket.
  • In T2S markets the transaction type is not one of the matching fields, so the code on your instruction does not stop it matching. Some markets do match on it: Clearstream states that for KDPW (Poland) the SETR indicator is a mandatory matching criterion. There, agree the code with your counterparty, or both instructions stay unmatched with reason SETR (see unmatched settlement instructions).
  • Watch returns closely: if the lender has recalled the securities to deliver a sale, a late return passes the fail on to the lender.

Where it appears in MT and ISO 20022

MT (ISO 15022)

  • MT540, MT541, MT542 and MT543: sequence E (SETDET), field 22F, :22F::SETR//SECB. The SETR qualifier is mandatory, so every instruction carries one code (format :4!c/[8c]/4!c; with a data source scheme a proprietary code may be sent instead).
  • Repeated in the confirmations MT544, MT545, MT546 and MT547 (sequence E, :22F::SETR//SECB) and in the MT548 status advice (sequence B, where SETR is mandatory when the sequence is present).
  • Optional in the statements: MT536 subsequence B1a2 and MT537 subsequences B2b and C2.

MX (ISO 20022)

  • sese.023: SttlmParams/SctiesTxTp/Cd = SECB (code list SecuritiesTransactionType23Code, unchanged in sese.023.001.09 to .013). SttlmParams/SctiesTxTp/Prtry carries a proprietary code instead.
  • Echoed in sese.024 at TxDtls/SttlmParams/SctiesTxTp/Cd and in sese.025 at SttlmParams/SctiesTxTp/Cd.
  • A loan with its return leg can also be sent as one sese.033 with TxTpAndAddtlParams/SctiesFincgTxTp = SECB.

Questions

Which side of a securities loan uses SECB?
The borrower. It receives the securities under SECB when the loan starts and delivers them back under SECB when the loan ends. The lender uses SECL.
Should a borrowing to cover a short sale be sent as TRAD?
No. The short sale itself settles as TRAD, but the borrowing that covers it is a separate SECB movement. Under EU CSDR, lending and borrowing is its own category in CSD fails reporting.