Global clearing: all talk, no action

Global clearing: all talk, no action

Representatives of national clearing agencies have agreed to seek common standards for cross-border trading - but the promise of a single global counterparty remains a long way off.

The compact between clearing practitioners emerged from a three-day meeting in London last week which attracted 150 participants from 70 securities industry infrastructure organisations worldwide to discuss the creation of a global central counterparty (CCP) for cross-border securities transactions. The compact calls for further industry dialogue, the adoption of best practices and the pursuit of strategies to support local and regional market initiatives on CCP in the context of a global framework.

"There are no simple solutions to forming a global cross border clearing infrastructure, says Patrice Renault, chief executive officer, Clearnet, "but it is significant in itself that we have begun a dialogue."

Jill Considine, chairman & CEO of the DTCC points out that almost every market is planning major infrastructure investments in the next few years. "We need to avoid conflicting solutions or a patchwork of processes that are costly and inefficient. During the conference it was clear that there are areas where cooperation and coordination could enhance clearing capabilities globally."

She says the conference co-sponsors will meet in the coming weeks to review the event and develop a series of initiatives and actions for future progress. In addition, the CCPs agreed to follow-up conference sessions to monitor progress of existing efforts and to foster continuing opportunities for dialogue.

Concrete commitments which emerged from the conference include drafting a definition of minimum standards for CCP interconnection across borders, and an investigation of the benefits of netting, cross-margining and cross-membership.

"The success of capital markets is tied to the continuity, reliability and the certainty of trade processing," says Amarilis Sardenberg, operations director, the Brazilian Clearing and Depository Corporation (CBLC). "We respect that each market has unique characteristics, cultural differences and technology capabilities. At the same time, we must ensure the steps taken within markets and across markets do not disrupt or impair safety and soundness."

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