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Central securities depositories and securities clearing and settlement: Business practice and public policy concerns

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posted on 11.03.2016, 11:18 by Alistair Milne
© 2016 by IGI Global. All rights reserved. This chapter describes the emergence of national and international central securities depositories (CSDs) and the systems of tiered account-based security ownership they support. It examines clearing and settlement risks, including principal risk now largely removed by DVP, and liquidity risk reduced but far from fully removed by multilateral netting. Liquidity demand and the complexity of some underlying transactions results in a surprisingly high volume of postponed settlements (trade fails). Systems of clearing and settlement were resilient during the crisis of 2008, but the remarkable complexity of these networks suggests two policy concerns that need further examination. Problems in clearing and settlement could still magnify or transmit systemic financial risk in a future crisis, if firms do not again obtain public sector support; and the sheer complexity of clearing and settlement arrangements may both create operational risks and heighten barriers to entry, hence reducing competition and raising costs to investors. © 2016, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

History

School

  • Business and Economics

Department

  • Business

Published in

Analyzing the Economics of Financial Market Infrastructures

Pages

334 - 358

Citation

MILNE, A., 2016. Central securities depositories and securities clearing and settlement: Business practice and public policy concerns. IN: Diehl, M. ...et al. (eds.) Analyzing the Economics of Financial Market Infrastructures, Hershey, PA: IGI Global, pp. 334-358.

Publisher

© IGI Global

Version

AM (Accepted Manuscript)

Publisher statement

This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/

Publication date

2016

Notes

This book chapter is made available with kind permission of IGI Global.

ISBN

1466687452;9781466687455

Language

en

Exports