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Clearing and settlement ISD gateways

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Clearing and settlement ISD gateways Powered By Docstoc
					Insert 3               Clearing and settlement (A): existing ISD access rights
Country A:                                               Country B:                                                            Country C:



             Participant A                                  Participant B                                      Participant C
                                     1                                                         2


               Market A                                      Market B

                                         Direct CM


             Central clearing                               Central clearing
             Counterparty A                                 Counterparty B                     Local CM
                                                                                                                2
                                           1

                                                Account holder                 Local
                                                                               settlement bk



             Securities settlement                       Securities settlement                            Securities settlement
                system/CSD A                                system/CSD B                                     system/CSD C
Insert 4                        Clearing and settlement (B): new ISD links
Country A:                                        Country B:                                                     Country C:


                                                                          4
             Participant A                          Participant B                                Participant C




                                         3                                                   4
               Market A                              Market B
                                             5                            Direct CM



             Central clearing                       Central clearing
             Counterparty A                         Counterparty B         Local CM

                                             3
                                                                                      4
                                                                    B       C

                                                                                4
             Securities settlement           3    Securities settlement                   Securities settlement
                system/CSD A                         system/CSD B                            system/CSD C
Insert 5
                                     Clearing and settlement: key to inserts 3 & 4

           Transaction 1 :   Participant A executes transaction on market B (counterparty = participant B). Accepts « default »
                             arrangement of exchange (use of CCP B and settlement system B). Participant A can directly clear and settle
                             transaction by virtue of membership of CCP B and account holder in settlement system B. Existing ISD right.

           Transaction 2.  Participant C performs transaction on market B. Wishes to make use of « default » clearing and settlement
                           arrangements of market B. Does not wish to become a clearing member of CCP B or SSS B. May have positions
                           cleared and settled through offices of established clearing member and local settlement bank. Existing ISD
                           right.
           Transaction 3.  Participant A executes transaction on market B. Instead of accepting « default » clearing and settlement
                           arrangements of market operator, participant A requests that the transaction be settled in securities
                           settlement A. This request can be granted if the necessary links are in place between the CSD where the
                           security is issued (B) and CSD A. The CCP may also need to be a member of CSD A. In the ecent that the
                           counterparty to the transaction requests settlement in SSS B, a durther condition is that Inter SSS link be
                           operational to allow settlement between the 2 systems. Right not foreseen in current ISD.
           Transaction 4. Participants B and C agree OTC trade. Wish to have these positions netted and novated in CCP B (along with
                           other posiitons). Can route position for processing by CCP subject to direct/indirect participation in system.
                           Right not foreseen under existing ISD where ability to route positions for novation/netting is restricted to
                           transactions executed on the upstream market.
           Arrangement 5 : Market operator of market A wishes to make use of facilities of CCP B for novating and netting positions. Can
                           route confirmed trades to CCP B for processing (under law of country B) subject to :
                            existence of appropriate technical links ;
                            approval of competent authority (for market oversight) of country A ;
                            approval of competent authority for CCP B.
                           Right currently not foreseen under ISD.

				
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posted:7/22/2012
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