1 / 8

ACSDA 15 TH General Assembly

ACSDA 15 TH General Assembly. CSD Settlement Liquidity Management ECCSD Settlement Model Trevor Blake ECCSD. ECCSD Settlement Model. ECCSD settles on a T+1 cycle Market rules require buying broker to receive cleared funds prior to placing buy order

johnnyw
Download Presentation

ACSDA 15 TH General Assembly

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. ACSDA 15TH General Assembly CSD Settlement Liquidity Management ECCSD Settlement Model Trevor Blake ECCSD

  2. ECCSD Settlement Model • ECCSD settles on a T+1 cycle • Market rules require • buying broker to receive cleared funds prior to placing buy order • selling broker to take possession of securities and move them to segregated account at ECCSD before placing sell order

  3. ECCSD Settlement Model • Settlement – DVP Model 2 • Securities settled gross • Cash settled Net in Central Bank money • All brokers-dealers linked to a clearing bank, which must • be a Participant in Central Bank payment system • sign tripartite Agreement with ECCSD & Central Bank

  4. ECCSD Settlement Model • Tripartite agreement provides mandate to ECCSD to issue instructions to debit Clearing bank account at Central Bank • Binding on Clearing bank • On T, Clearing bank must confirm sufficient funds available for settlement on T+1 • Once confirmation received, ECCSD debit instructions cannot be countermanded

  5. ECCSD Settlement Model • On T+1, ECCSD simultaneously • moves securities from Selling Broker segregated account to Buying Broker segregated account • debits and credits Brokers’ Clearing Banks accounts at Central Bank with net funds

  6. ECCSD Settlement Model • Pros • virtually eliminates risk of broker default • no need for CSD liquidity support • no need for collateral • Cons • pre-funding ties up investor funds • securities immobilized • could impact on activity • risk of Clearing Bank default remains!

  7. ECCSD Asset Servicing • Corporate actions • separate and distinct from settlement activities; no co-mingling • payments made in commercial bank money • ECCSD holds accounts at beneficial owner level • payment made direct to investor, not to broker

  8. ECCSD Asset Servicing • Exceptions: • payment made to broker on instructions from investor • typically for reinvestment of debt redemption proceeds in new debt auctions • provides liquidity to primary market by eliminating need for investor to put up new monies for auction

More Related