Recommendations for securities settlement systems

November 2001


Several international initiatives completed in the past few years have the goal of maintaining financial stability by strengthening the financial infrastructure. The International Organization of Securities Commissions (IOSCO) has developed the Objectives and Principles of Securities Regulation (IOSCO, 1998) and the Committee on Payment and Settlement Systems (CPSS) of the central banks of the Group of Ten countries has produced the Core Principles for Systemically Important Payment Systems (BIS, 2001). Building on the previous work, the CPSS and the Technical Committee of IOSCO aim to contribute further to this process by jointly issuing these Recommendations for Securities Settlement Systems.

The recommendations were developed by the Task Force on Securities Settlement Systems that the CPSS and the Technical Committee of IOSCO created in December 1999. The Task Force comprises 28 central bankers and securities regulators from 18 countries and regions and from the European Union. The Task Force's work has benefited greatly from input from other central bankers and securities regulators and from operators of, and participants in, securities settlement systems. In January 2000 the Task Force received input from central bankers and securities regulators who together represented about 30 countries, as well as from representatives of the International Monetary Fund and the World Bank. In January 2001 the CPSS and the Technical Committee of IOSCO released a version of this report for public comment. Nearly 90 comments were received, and the commenters included a wide variety of interested parties, mostly from Europe, but also from Asia, Africa and the Americas. As a result of these comments, several recommendations have been changed significantly and a new recommendation on cross-border links between settlement systems has been added.

The 19 recommendations and accompanying explanatory texts identify minimum standards that securities settlement systems (SSSs) should meet. The recommendations are designed to cover systems for all types of securities, for securities issued in both industrialised and developing countries, and for domestic as well as cross-border trades.

National authorities responsible for the regulation and oversight of SSSs are expected to assess whether markets in their jurisdiction have implemented the recommendations and to develop action plans for implementation where necessary. As an important first step towards establishing a comprehensive methodology for assessing implementation, the report includes key questions pertaining to each of the recommendations, answers to which would form the basis for assessments. The CPSS and the Technical Committee of IOSCO have directed the Task Force to complete development of the assessment methodology in 2002.

The CPSS and the Technical Committee of IOSCO are grateful to the members of the Task Force and its Co-Chairmen, Patrick Parkinson of the Board of Governors of the Federal Reserve System, Giovanni Sabatini of the Commissione Nazionale per le Società e la Borsa Italy (until May 2001) and Shane Tregillis of the Australian Securities and Investments Commission (from June 2001), for their excellent work in completing this report in a timely manner.

Tommaso Padoa-Schioppa, Chairman David Brown, Chairman
Committee on Payment and Settlement Systems Technical Committee, IOSCO