Assessment methodology for 'Recommendations for Securities Settlement Systems'

November 2002

Foreword

Securities settlement systems (SSSs) are an increasingly important component of the domestic and global financial infrastructure. It is for this reason that the Committee on Payment and Settlement Systems (CPSS) of the central banks of the Group of Ten countries and the Technical Committee of the International Organisation of Securities Commissions (IOSCO) established the Task Force on Securities Settlement Systems in December 1999 to develop recommendations for the safety and soundness of SSSs.

In November 2001 the CPSS-IOSCO Recommendations for Securities Settlement Systems were published. The November 2001 report sets out and discusses 19 recommendations for SSSs that identify minimum standards that 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. These recommendations have been included in the Key Standards for Sound Financial Systems highlighted by the Financial Stability Forum. The CPSS and the Technical Committee of IOSCO encourage national authorities responsible for the regulation and oversight of SSSs to assess whether markets in their jurisdiction have implemented the recommendations and to develop action plans for implementation where necessary.

This report aims to set out a clear and comprehensive methodology for use in these assessments. The methodology is primarily intended for use in self-assessments by national authorities or in peer reviews of such self-assessments. It is also intended to serve as guidance for the international financial institutions (IFIs, ie the International Monetary Fund and the World Bank) undertaking their Financial Sector Assessment Program (FSAP) assessments and for other forms of technical assistance, possibly including financing of reform efforts by the World Bank. In this regard, IFIs took part in developing this assessment methodology. Further, we hope that the methodology may also prove useful to private market participants who may be conducting their own assessments of the safety and efficiency of SSSs on the basis of the SSSs' observance of the recommendations. 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 and Shane Tregillis of the Monetary Authority of Singapore, for their work in completing this report in a timely manner.

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