Central banks and securities regulators propose Recommendations for Securities Settlement Systems
15 January 2001
The Committee on Payment and Settlement Systems (CPSS) and the International Organization of Securities Commissions (IOSCO) have jointly drawn up recommendations for the design, operation and oversight of securities settlement systems. The CPSS-IOSCO Joint Task Force invites public comment on its consultative report, Recommendations for Securities Settlement Systems. All interested parties are asked to comment by 9 April 2001.
A press conference for this report, and for another CPSS report, Core Principles for Systemically Important Payment Systems, will be held at 10 am GMT on Monday 15 January at the Bank of England, London.
The report identifies minimum requirements that securities settlement systems should meet and the best practices that systems should strive for. These encompass the legal framework for securities settlements, risk management, access, governance, efficiency, transparency, and regulation and oversight. The report is available on the websites of the BIS (www.bis.org) and IOSCO (www.iosco.org).
The proposed recommendations are designed to cover systems for all securities, including equities, corporate and government bonds and money market instruments, and securities issued in both industrialised and developing countries. They also aim to cover settlement of both domestic and cross-border trades. According to Tommaso Padoa-Schioppa, CPSS Chairman, "these recommendations will promote worldwide implementation of measures that can reduce risks, increase efficiency and provide adequate safeguards for investors".
A securities settlement system is defined broadly to include the full set of institutional arrangements for confirmation, clearance and settlement of securities trades and for the safekeeping of securities. Because of the diversity of institutional arrangements internationally, the recommendations must focus on the functions to be performed, not on the institutions that may perform them. While some of the recommendations are relevant primarily to central securities depositories (CSDs), others are relevant to stock exchanges, trade associations and other operators of trade confirmation systems, central counterparties, settlement banks, or custodians and other interested parties. Patrick Parkinson, Co-Chairman of the Task Force, explained that "securities regulators, central banks, and, in some cases, banking supervisors will need to work together and with relevant private sector entities to determine the appropriate scope of application in an individual jurisdiction, and to develop an action plan for implementation".
The CPSS-IOSCO Joint Task Force on Securities Settlement Systems was created in December 1999 with the intention of making such arrangements safer and more efficient. David Brown, Chairman of the IOSCO Technical Committee, noted that "the work of the Task Force is also in line with efforts of the Financial Stability Forum to address vulnerabilities in the international financial system".
The Task Force comprises 28 central bankers and securities regulators from 18 countries and regions and the European Union. Co-Chairman Giovanni Sabatini noted that "the consultative report also benefited from valuable inputs from participants in a consultative meeting held at the Bank for International Settlements in January 2000, which was attended by representatives from more than 50 public institutions, the International Monetary Fund and the World Bank. The Task Force has also reviewed private sector efforts in this area, notably the Group of Thirty's 1989 Standards, and has discussed the Task Force's work with private sector operators of and participants in securities settlement systems".
Procedure for public comment
Comments in English are invited by post, fax or e-mail, addressed as follows:
Secretariat to the CPSS-IOSCO Joint Task Force on Securities Settlement Systems
Bank for International Settlements
CH-4002 Basel, Switzerland
Fax: +41 61 280 9100
E-mail: email@example.com (please mention "Joint Task Force Recommendations" in the subject line of the message)
It is strongly recommended that comments be sent by fax or e-mail first, to avoid delays in postal delivery. Comments will be acknowledged immediately upon receipt.
Press conference for the report
As mentioned above, a press conference for this report, and for another CPSS report, Core Principles for Systemically Important Payment Systems, will be held at 10 am GMT on Monday 15 January at the Bank of England, London. At least the following persons will attend:
- Tommaso Padoa-Schioppa, Member of the Executive Board of the European Central Bank, Chairman of the CPSS
- John Trundle, Head of the Market Infrastructure Division of the Bank of England, Chairman of the CPSS Task Force on Payment System Principles and Practices - for the report on payment systems
- Patrick Parkinson, Associate Director, Division of Research and Statistics of the Board of Governors of the Federal Reserve System, Co-Chairman of the CPSS-IOSCO Joint Task Force on Securities Settlement Systems
- Giovanni Sabatini, Head of the Market Regulation Office of the Commissione Nazionale per le Società e la Borsa (Italy), Chairman of IOSCO Technical Committee Working Party 2, Co-Chairman of the CPSS-IOSCO Joint Task Force on Securities Settlement Systems
Gregor Heinrich, Head of the CPSS Secretariat, will also be present.
Specific questions regarding these reports and the press conference may be sent to the CPSS by e-mail (firstname.lastname@example.org) or fax (+41 61 280 9100); alternatively, for further information please phone the press enquiries number given above. Additionally, logistical information concerning the press conference may be obtained from the Bank of England at +44 20 7601 5630/4394.
Notes to editors
1. The Committee on Payment and Settlement Systems (CPSS) serves as a forum for the central banks of the G10 countries to monitor and analyse developments in payment and settlement arrangements and to consider related policy issues. Non-G10 central banks are increasingly involved in the Committee's work. The Chairman of the CPSS is Tommaso Padoa-Schioppa, member of the Executive Board of the European Central Bank. The CPSS Secretariat, headed by Gregor Heinrich, is hosted by the BIS. Previous CPSS publications include: Delivery versus payment in securities settlement systems (1992), Cross-border securities settlements (1995) and Core Principles for systemically important payment systems (2001), which is also being published today. A list of CPSS publications as well as the full text of a number of recent reports in English are available on the BIS website (www.bis.org).
2. The International Organization of Securities Commissions (IOSCO), based in Montreal, currently comprises 164 securities market regulators which have resolved to cooperate to promote high standards of regulation in order to maintain efficient and sound domestic and international securities markets. The Secretary General of IOSCO is Peter Clark, and its Technical Committee is chaired by David Brown, Chairman of the Ontario Securities Commission, Canada. IOSCO has published a number of reports concerning securities settlements, including Clearing and settlement in emerging markets - a blueprint (1992) and Cooperation between market authorities and default procedures (1996). Other IOSCO reports are listed on its website (www.iosco.org).
3. The current Task Force is the third joint initiative by the CPSS and IOSCO. The previous joint projects produced the following reports: Disclosure framework for securities settlement systems (1997) and Securities lending transactions: market development and implications (1999), both of which are available on the BIS and IOSCO websites, and copies of which can be obtained from the BIS or IOSCO.
The Task Force is chaired by Patrick Parkinson, Associate Director, Division of Research and Statistics, Board of Governors of the Federal Reserve System in the United States, and Giovanni Sabatini, Head of Market Regulation Office, Commissione Nazionale per le Società e la Borsa in Italy. The Secretary of the Task Force is provided by the CPSS Secretariat.
4. Information on the Financial Stability Forum is available on the Forum's website (www.fsforum.org).