Markets & Products | Resources
Buying-in | Rules and regulations
Overview of buying-in
A firm admitted to membership of the London Stock Exchange (“the Exchange”) may request the enforced purchase of securities on behalf of another Exchange member, in accordance with paragraphs 5070 to 5083 of the Rules of the London Stock Exchange, in order to facilitate the settlement of a transaction executed on Exchange.
The following pages outline the timetables that are applicable according to the type of security concerned setting out the earliest time that a buying member firm (“requesting party”) may initiate the buying-in process to enforce delivery of securities. They also sets out the charges that will be incurred by the ultimate selling member firm (“liable party”) which has failed to deliver within these time frames.
Where a transaction was not undertaken with a central counter party the requesting party is required to attempt to resolve the unsettled trade directly with its counter party. It is required to notify its counter party prior to instigating the buying-in procedure.
In certain situations the Exchange will be unable to complete the buying-in process. Examples include:
- Where the liable party is not a member of the Exchange;
- Where an attempt to buy-in by the Exchange would have a significant market impact;
- Where the Exchange is unable to source the security concerned;
- Gilt-edged securities.
Submission of a buying-in request
The buying-in process is initiated by the requesting party submitting a request directly by e-mail to the Exchange. For enquiries, please contact Post Trade Monitoring on +44 (0) 20 7797 1116.
Member Firms may find this is the most convenient for CREST settled transactions and are required to set up a dedicated e-mail address for receiving notifications of processed requests by the Exchange. The Exchange should be advised immediately if this e-mail address changes.
The form below can be downloaded and completed electronically and should be e-mailed to buying-in@londonstockexchange.com
Where the transaction was executed on SETS with the central counterparty the requesting party should record LCH01 as the liable party.
The requesting party should submit the request in accordance with the timetables set out in the “Buying-in timetables” page. The Exchange will then issue the liable party with a “Buying-in Notice” by e-mail in accordance with the applicable timetable. Prior notice to the liable party by the Exchange will not be given where buying-in is to take place immediately.
The timetable set out in the “Buying-in timetables” page indicates when the Exchange will make the first attempt to buy in. If this is unsuccessful then it shows when a second attempt will be made. It also gives details of when matching and settlement must take place. Where a security changes timetables, for example, following a transformation as a result of a corporate action, the shortest timetable will be applicable.
Where the trade was executed with a central counterparty the “Buying-in Notice” will not identify the ultimate requesting party.
It is the responsibility of the requesting party to ensure that it provides full information in connection with the buying-in request submitted to the Exchange. The Exchange is not liable for any errors or omissions in the connection with information it receives.
Buying-in timetables
a) All eligible trades dealt for guaranteed delivery
| Function | Timetable |
|---|---|
| Earliest request for buying-in | Intended Settlement Date + 1 |
| Method of request submission | According to security |
| Notice issued (NI) | Date of request if received by 16:00 London time |
| Buying-in (BI) | NI |
| 2nd attempt | BI + 1 |
| Matching of buying-in transaction | T + 1 |
| Settlement of buying-in transaction | T + 3 (T + 4 for residual transactions) |
b) SETS securities
| Function | Timetable |
|---|---|
| Earliest request for buying-in | Intended Settlement Date + 5 |
| Method of request submission | Manual form |
| Notice issued (NI) | Date of request if received by 16:00 London time |
| Buying-in (BI) | NI + 6 |
| 2nd attempt | BI + 5 |
| Matching of buying-in transaction | T + 1 |
| Settlement of buying-in transaction | T + 3 (T + 4 for residual transactions) |
c) Other eligible securities not included in a) and b) above
| Function | Timetable |
|---|---|
| Earliest request for buying-in | Intended Settlement Date + 45 |
| Method of request submission | Manual form |
| Notice issued (NI) | Date of request if received by 16:00 London time |
| Buying-in (BI) | NI + 6 |
| 2nd attempt | BI + 5 |
| Matching of buying-in transaction | T + 1 |
| Settlement of buying-in transaction | T + 3 (T + 4 for residual transactions) |
d) IOB Securities
| Function | Timetable |
|---|---|
| Earliest request for buying-in | Intended Settlement Date +30 |
| Method of request submission | Manual form |
| Notice issued (NI) | Date of request if received by 16:00 London time |
| Buying-in (BI) | NI + 6 |
| 2nd attempt | BI + 5 |
| Matching of buying-in transaction | T + 1 |
| Settlement of buying-in transaction | T + 3 (T + 4 for residual transactions) |
e) Order book for Fixed Income Securities
| Function | Timetable |
|---|---|
| Earliest request for buying-in | Intended Settlement Date + 5 |
| Method of request submission | Manual form |
| Notice issued (NI) | Date of request if received by 16:00 London time |
| Buying-in (BI) | NI + 6 |
| 2nd attempt | BI + 5 |
| Matching of buying-in transaction | T + 1 |
| Settlement of buying-in transaction | T + 3 |
Processing of buying-in request by the Exchange
Any buying-in request submitted after the time indicated in the “Buying-in timetables” page will be treated as having being received the following business day in that security.
The liable party will incur a charge as soon as the buying-in Notice is issued. The actual amount is set in accordance with the scale of charges detailed on the “Buying-in Charges” page.
Withdrawal of a buying-in request
Where the requesting party wishes to withdraw or amend its buying-in request, as a result of settling an outstanding transaction or reaching agreement with the liable party not to proceed to buying-in, it should do so by sending an instruction to the Exchange.
The requesting party cannot withdraw a buying-in request in respect of a CCP transaction, although in this instance only, it will not be required to accept delivery where settlement of the transaction in respect of which it had previously issued the buying-in request has already occurred.
An instruction from the requesting party to withdraw a buying-in request will be accepted by the Exchange at any time in the period between the actual submission of the relevant buying-in request and the timetabled day for buying-in.
Renounceable documents
Transactions in renounceable documents are not subject to buying-in. However, where, because of non-delivery by the liable party, settlement of a transaction in a renounceable document is to be effected in registered form, a buying-in request may be submitted in respect of the registered security following the later of the normal timetable date as per the “Buying-in timetables” page or the date of transformation.
Passing on of buying-in Notices (read-on requests)
Where buying-in is not done on an immediate basis, the liable party may contact the Exchange before 17:30 London time on the business day prior to the buying-in date and request a read-on of the Notice. The notice should be read-on in respect of the transaction(s) for which settlement has been outstanding for the longest period of time.
If a buying-in notice is read-on, an instruction must be sent to the Exchange by the initial liable party together with a new buying-in request identifying the relevant member firm or transaction(s) in respect of which the notice is being read-on. In the event that the relevant transaction is a central counterparty transaction, the requesting party should indicate the trade code and the Exchange will then identify the ultimate liable party.
For notices submitted manually, the serial number from the original buying-in notice must be written in the Special Instructions box on the new buying-in request.
Once a read-on buying-in request has been submitted, it may only be withdrawn once the original transaction is settled or at the instigation of the original requesting party.
Buying-in transaction
On the day of buying-in, the Exchange will seek to obtain stock that is available for settlement as per the timetable in the “Buying-in timetables” page. At the Exchange’s discretion, where necessary, other settlement periods may apply. The Exchange executes trades throughout normal trading hours for the security concerned.
Once a buying-in transaction has been executed, the Exchange will notify both the liable and requesting parties. The liable party will be required to enter a matching delivery instruction in the appropriate settlement system on a T + 1 basis. For CREST settled stocks this will be a “DEL”.
The liable party will be notified of the cost incurred and must ensure that the consideration and dealing charges match with the Exchange or its settlement agent. For CREST the relevant participant code is 850. The liable party must ensure that the transaction settles and that the securities delivered are used to settle the original outstanding transaction against which a buying-in notice was issued.
Failure to buy-in
If the Exchange fails to buy-in the outstanding stock on the buying-in day, the requesting party will be notified.
Where the second attempt also fails, both the requesting and liable parties will be notified and the Exchange will take no further action. The requesting party may choose to submit a further buying-in request.
CREST residual mechanism
In the case of a buying-in transaction in a security that is eligible for settlement through the CREST residual mechanism, the liable party must enter a residual delivery instruction “RES” into CREST for matching with the Exchange (CREST participant code 850).
The consideration and dealing charges settle through CREST and the delivery of the physical stock takes place through the CCSS counter (CREST Courier and Sorting Service).
Buying-in charges
- A member firm against which a buying-in notice has been issued will incur a £25 charge.
- If the Exchange buys-in against a transaction as a result of a buying-in notice, a dealing charge is levied. This is based on a percentage of the transaction consideration with a minimum fixed charge as detailed in the table below.
Dealing Charges and Minimum Fees Applicable to Buying‑in Transactions by Trading Currency Trading currency Dealing charge on consideration Minimum charge GB Sterling 0.75% 50 GBP US Dollar 0.75% 75 USD Japanese Yen 0.75% 10,000 JPY Hong Kong Dollar 0.75% 2,000 HKD Euro 1.25% 75 Euro - Other Charges:
- In addition to the £25 charge on the issue of a buying-in notice, the liable party will also incur a daily charge of £50 where it fails to match the resultant bought-in trade with the Exchange in accordance with the buying-in timetable.
- Where the liable party does not settle a buying-in transaction on its settlement due date, the liable party shall pay an additional pro rata daily charge of 4% per annum above the UK clearing bank lending rate on the total transaction consideration or £50, whichever is greater. This charge covers the cost to the Exchange of funding the market purchase transaction.
- Invoices will be issued to member firms on a monthly basis. Included in these invoices will be charges for buying-in notices, fines for late matching and late settlement set out in sections a and c above. These invoices must be settled directly with the Exchange.
- The transaction consideration (including dealing charges in b above) due to the Exchange in respect of the bought-in securities will be payable through the relevant settlement organisation in the usual way.
