Central banks and securities regulators release recommendations for securities settlement systems
12 November 2001
The Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of the International Organization of Securities Commissions (IOSCO) today released a report entitled Recommendations for securities settlement systems. The report is available on the Bank for International Settlements website ( www.bis.org) and the IOSCO website ( www.iosco.org).
The report sets out 19 recommendations that define minimum standards for securities settlement systems. The recommendations are designed to cover systems for all types of securities, including securities issued in both industrialised and developing countries, and to cover domestic as well as cross-border trades.
Securities settlement systems are a critical component of the infrastructure of global financial markets. Weaknesses in securities settlement systems can be a source of systemic disturbances to securities markets and to other payment and settlement systems. Inefficiencies in such systems can result in higher costs to securities issuers and lower returns to investors, which can impede capital formation. The recommendations on the design, operation and oversight of such systems aim to promote the worldwide implementation of measures that can reduce risks, increase efficiency and provide adequate safeguards for investors.
The recommendations were developed by the Task Force on Securities Settlement Systems, established in 1999 by the CPSS and the Technical Committee of IOSCO. 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 the input of 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 consultative report for public comment. Nearly 90 comments were received from 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 were changed significantly and a new recommendation on cross-border links between settlement systems was added.
National authorities responsible for the regulation and oversight of securities settlement systems are expected to assess whether markets in their jurisdiction have implemented the recommendations and to develop action plans for implementation where necessary. 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 plan to develop an assessment methodology in 2002. The IMF and the World Bank will participate in this next stage of the work.
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 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). A list of CPSS publications as well as the full text of a number of recent reports are available on the BIS website.
2. The International Organization of Securities Commissions (IOSCO) currently comprises securities regulators from more than one hundred jurisdictions which have resolved to cooperate to promote high standards of regulation in order to maintain efficient and sound domestic and international securities markets. The Technical Committee of IOSCO 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 Task Force on Securities Settlement Systems is chaired by Patrick Parkinson, Associate Director, Board of Governors of the Federal Reserve System, United States and Shane Tregillis, Assistant Managing Director, Securities and Futures Department of the Monetary Authority of Singapore (until 30 September 2001, Executive Director, Australian Securities and Investments Commission). During a significant period of the preparation of this report Giovanni Sabatini, Head of Market Regulation Office, Commissione Nazionale per le Società e la Borsa, Italy was co-chair until his move to the private sector in May 2001. The Secretary to the Task Force is provided by the CPSS Secretariat.
4. The previous joint reports by the CPSS and the Technical Committee of IOSCO are Disclosure framework for securities settlement systems (1997) and Securities lending transactions: market development and implications (1999). Both reports are available on the BIS and IOSCO websites, and hard copies can be obtained from the BIS or IOSCO.