Recommendations for Securities Settlement Systems - consultative report

18 January 2001

Jan 2001

Report of the CPSS-IOSCO Joint Task Force on Securities Settlement Systems
(Consultative report. Please refer to CPSS Publication No.46, November 2001, for the final report)


A number of international initiatives are under way which aim to maintain 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 just produced the final version of the Core Principles for Systemically Important Payment Systems (BIS, 2001). Building on the previous work, the CPSS and IOSCO are now aiming to contribute further to this process by jointly developing recommendations for securities settlement systems, to improve the safety and efficiency of these systems.

In order to move this initiative forward, the CPSS and IOSCO created the Task Force on Securities Settlement Systems in December 1999. The Task Force comprises 28 central bankers and securities regulators from 18 countries and regions and from the European Union. In addition, at an early stage of its work 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. 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.

The present consultative report on the design, operation and oversight of securities settlement systems identifies, in 18 headline recommendations and accompanying explanatory texts, the minimum requirements that such systems should meet and the best practices that they should strive for. 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. The report also includes key questions pertaining to each of the recommendations as an important first step towards establishing a methodology for assessing the extent to which they have been implemented. The answers to these questions are intended to provide a basis for a narrative evaluation of whether the recommendations for securities settlement systems have been implemented.

The CPSS and IOSCO are now releasing the recommendations in this report for consultation, and are seeking public comments from all interested parties by 9 April 2001. We believe that wide participation in the planned public consultation process should make the report most fruitful and we therefore encourage any interested parties to submit their comments to the Task Force. The Task Force will review the comments and develop the final recommendations in due course.

The CPSS and IOSCO are grateful to the members of the Task Force and its Co-Chairmen, Mr Patrick Parkinson of the Board of Governors of the Federal Reserve System and Mr Giovanni Sabatini of the Commissione Nazionale per le Società e la Borsa, for their excellent work in preparing this consultative report in a timely manner. We are looking to them to take the lead in completing this important initiative.

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

Note to readers

The consultation period will last until 9 April 2001 (inclusive). Interested parties are invited to comment on any aspect of the report. However, views and suggestions on the topics set out below are particularly welcome:

  1. Do the Recommendations adequately cover all the relevant topics? Please describe any issues which you feel have been missed and should be addressed in the report.

  2. Does the explanatory text for each Recommendation provide an adequate rationale for the Recommendation and elaborate its implications sufficiently clearly? Please indicate any areas which you think deserve further clarification.

  3. Do the key questions concerning each Recommendation in Section 5 of the report address the relevant issues in such a way as to enable an accurate assessment of whether the recommendations have been implemented?

Comments in English are invited by 9 April 2001 (inclusive) from all interested parties.