PB-06 — Settlement Instruction
The instruction to exchange securities for cash and complete a trade — the final stage of the trade lifecycle, sent to a custodian or settlement agent and matched against the counterparty.
Specialises: E-05 Transaction (transaction_type = trade). Settlement is the last lifecycle stage after Allocation (PB-05): the contractual obligation to deliver or receive. It corresponds to the ISO 20022 securities-settlement (sese) family — the settlement-instruction and settlement-status messages — and to the legacy ISO 15022 MT54x messages (MT540–MT543).
Purpose
A trade is not complete when it is executed and allocated; it is complete when the securities and cash have actually changed hands. PB-06 is the record of that final obligation and its progress. It exists as a distinct entity because settlement is operationally separate from execution — it happens days later (T+1 in most major markets), it runs through a different infrastructure (custodians, central securities depositories, settlement agents), and it fails in ways execution does not. A settlement fail — securities or cash not delivered on the contractual date — carries cost, counterparty exposure and, increasingly, regulatory penalty, and the firm needs it as a first-class, monitorable record, not an attribute buried on a trade.
Attribute schema
| Column | Type | Definition |
|---|---|---|
settlement_instruction_id | varchar | Primary key. |
allocation_id | varchar (FK → PB-05) | The allocation being settled — settlement is at the per-portfolio grain. |
instrument_id | varchar (FK → E-02) | The instrument being delivered or received. |
portfolio_id | varchar (FK → E-03) | The portfolio whose position settles. |
settlement_type | varchar | dvp (delivery versus payment) / rvp (receive versus payment) / free_of_payment / fop_delivery. |
direction | varchar | deliver / receive — securities out or securities in. |
quantity | decimal | The quantity of securities to settle. |
settlement_amount | decimal | The cash leg — for a bond, the dirty amount including accrued interest. |
settlement_currency | char | The currency of the cash leg. |
contractual_settlement_date | date | The date settlement is contractually due. |
actual_settlement_date | date | The date settlement actually completed; null while pending or failing. |
custodian_entity_id | varchar (FK → E-01) | The custodian or settlement agent actioning the instruction, in the custodian role. |
counterparty_entity_id | varchar (FK → E-01) | The settlement counterparty, in the counterparty role. |
place_of_settlement | varchar | The CSD or depository where settlement occurs (BIC / identifier). |
settlement_status | varchar | instructed / matched / settled / failing / cancelled. |
fail_reason | varchar | Where failing — lack_of_securities / lack_of_cash / unmatched / counterparty_fail / on_hold. |
ssi_reference | varchar | The Standing Settlement Instruction profile applied — the pre-agreed account-and-place detail. |
Notes
- Settlement is at the allocation grain, not the execution grain — each portfolio settles its own share, against its own custodian, under its own Standing Settlement Instruction.
- A
failinginstruction is monitored, not corrected by edit — the status moves tosettledwhen the fail resolves, or the fail is closed out (a buy-in). The fail lifecycle is operational (SD-12.4) and is itself an auditable chain. - DvP eliminates principal risk by making the securities and cash legs simultaneous;
free_of_paymentsettlement (a transfer with no matching cash leg, e.g. an in-specie move) is the explicit exception and is flagged as such. - Shortening settlement cycles (T+1) compress the window between execution and settlement, which raises the operational stakes of every prior lifecycle stage — a late allocation now directly causes a fail.
Out of scope
- The allocation being settled — that is PB-05 Allocation; settlement is at the per-portfolio allocation grain, referenced through
allocation_id. - The market fill that preceded settlement — that is PB-04 Execution; settlement is operationally separate, happening days later through custodians and CSDs.
- The cash leg as a recorded movement — that is a core E-06 Cash Flow Event; PB-06 carries the
settlement_amountobligation, not the cash record. - The Standing Settlement Instruction modelled as its own reference entity — named as an open extension; the entity holds it as the inline
ssi_reference.
Owned and consumed by
- Owned by: SD-12.4 Trade Settlement.
- Consumed by: SD-12.5 Custody & Safekeeping Oversight, SD-12.10 Reconciliation, SD-11.1 Cash Management (the cash leg), SD-07.2 Credit & Counterparty Risk Management (settlement-counterparty exposure), SD-12.1 Investment Book of Record (IBOR).
Open extensions
- The settlement-fail lifecycle — fail, penalty accrual, buy-in — as an explicit event sub-model.
- The Standing Settlement Instruction (SSI) modelled as its own reference entity rather than an inline reference.
- Partial settlement, and the relationship between an instruction and its partial settlements.