Cboe Europe Equities (Cboe) operates a concept of market segments across its pan-European stock universe which typically replicate the stocks listed on the primary market of listing. As Cboe offers trading in stocks traded on multiple market segments, identifiers such as an International Securities Identifying Number (ISIN) are not always sufficient to provide a unique identifier for a security and all its associated characteristics, such as location of settlement. Cboe overcomes this by differentiating between stocks by applying the following unique combination:
ISIN / Currency / Market segment
As such, Cboe will only have one ISIN per currency per market segment.
Settlement location for dual ISINs
The market model Cboe has adopted recognises domestic settlement liquidity. Cboe considers numerous factors in selecting the appropriate settlement location. Typically this includes consultation with all Clearing Participants on the location of the current settlement liquidity. For example, although it may be possible to settle a stock at an International Central Securities Depository (ICSD) the majority of the stock may actually be held at the domestic Central Securities Depository (CSD). In order to avoid the costs of transferring stocks between CSDs Cboe will favour the dominant settlement location.
Cboe will also consult with its Central Counterparties (CCPs) to ensure there is sufficient settlement liquidity at this location to ensure all stocks are delivered. Using a CSD other that the market norm can result in settlement tightness and hence increased failure to settle, which in turn could reduce the quality of the Cboe markets.
All Cboe trades are completely fungible with trades executed on the primary market of listing, with settlement at the domestic CSD.