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Title: Central securities depositories and securities clearing and settlement: Business practice and public policy concerns
Authors: Milne, Alistair
Keywords: Brokerage
Financial networks
Liquidity risk
Multi-lateral netting
Principal risk
Securities lending
Securities transaction services
Systemic financial risk
Straight through processing
Tiered account ownership
Target-2 securities
Issue Date: 2016
Publisher: © IGI Global
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.
Abstract: © 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.
Description: This book chapter is made available with kind permission of IGI Global.
Version: Accepted for publication
DOI: 10.4018/978-1-4666-8745-5.ch017
URI: https://dspace.lboro.ac.uk/2134/20548
Publisher Link: http://dx.doi.org/10.4018/978-1-4666-8745-5.ch017
ISBN: 1466687452
Appears in Collections:Book Chapters (Business School)

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