2004年-ECB欧洲央行_Securities_Settlement_Systems_and_Financial_Stability_5页_270kb

C Securities Settlement Systems and Financial Stability Summary

Core Content

Securities settlement systems are critical components of financial market infrastructure. They ensure the legal transfer of securities ownership between parties and are essential for maintaining financial stability. Poorly designed systems can lead to market disruptions, especially during financial crises.

Main Points

1. Securities Settlement Process

• Definition: Securities settlement involves the actual transfer of ownership of securities from one party to another.
• Mechanism: Most securities are dematerialised and stored electronically in central securities depositories (CSDs).
• Account Network: Ownership is established through securities accounts, which are linked to CSDs or other intermediaries (custodian banks).
• Double-Booking Principle: The number of securities safe-kept in the CSD must match the number held in accounts, and ownership must be accurately tracked through these accounts.

2. Delivery Versus Payment (DVP) Mode

• Purpose: DVP ensures that securities are transferred only if the corresponding payment is made, reducing the risk of contagion.
• Example: In a scenario where a bank goes bankrupt, DVP prevents the loss of securities by the seller but may increase losses for other creditors.
• Benefits: DVP reduces the risk of losses for trading partners and increases market liquidity and efficiency.
• Current Status: All EU CSDs use DVP internally, while custodian banks typically do not and instead guarantee settlement.

3. Risks from Settlement System Failures

• Operational Reliability: Technical failures can disrupt settlement, leading to market instability. Systems must have high capacity and robust backup mechanisms.
• Financial Soundness: CSDs generally avoid granting credit, but some do to assist with settlement obligations. Excessive credit exposure can pose risks if participants default.
• Custodian Banks: These institutions grant more credit than CSDs due to their dual role in banking and settlement. Their default could be more likely but less disruptive due to the possibility of takeover.

4. Communication and Legal Risks

• Communication Systems: Disruptions in communication between settlement systems or participants can halt settlement processes, affecting financial markets.
• Legal Basis: A sound legal framework is essential to prevent uncertainties that could exacerbate systemic issues during crises.

Key Information

• Custodian Banks: Serve as intermediaries between banks and CSDs, often providing full banking services.
• CSDs: Act as primary depositories for securities, ensuring safekeeping and settlement.
• DVP Mode: Widely adopted in the EU, it enhances financial stability by aligning settlement with payment.
• Securities Lending: Helps manage uncovered delivery obligations, reducing the risk of contagion.
• Net Settlement: Can lead to unwinding risks if not properly managed, which may delay transactions and cause market disruption.

Tables Summary

Table C.1: Custodian Banks – Assets Under Custody (USD billions)

Table C.2: EU CSDs – Assets Under Custody (EUR billions)

Conclusion

By late 2004, the EU securities settlement industry had experienced few significant systemic incidents. The awareness of the importance of these systems has led to continuous improvements in design and operation. Key measures include the use of DVP, securities lending, and robust operational and legal frameworks. These mechanisms help limit the risk of financial instability caused by or spread through settlement systems.