Assessment methodology for Recommendations for Securities Settlement Systems

The Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of the International Organization of Securities Commissions (IOSCO) today released a report entitled Assessment methodology for "Recommendations for Securities Settlement Systems".

Securities settlement systems (SSSs) are an increasingly important component of the domestic and global financial infrastructure. It is for this reason that the CPSS and the Technical Committee of IOSCO established the Task Force on Securities Settlement Systems in December 1999 to develop recommendations for the safety and efficiency of SSSs.

In November 2001 the CPSS and the Technical Committee of IOSCO published Recommendations for Securities Settlement Systems. The November 2001 report sets out and discusses 19 recommendations which identify minimum standards that securities settlement systems should meet to enhance safety and efficiency. The recommendations are designed to cover systems for all types of securities, for securities issued in both industrialised and developing countries, and for domestic as well as cross-border trades. These recommendations have been included in the Key Standards for Sound Financial Systems highlighted by the Financial Stability Forum. National authorities responsible for the regulation and oversight of SSSs are encouraged to assess whether markets in their jurisdiction have implemented the recommendations and to develop action plans for implementation where necessary.

The new report, also prepared by the Task Force on Securities Settlement Systems, aims to set out a clear and comprehensive methodology for use in these assessments. The methodology is primarily intended for use in self-assessments by national authorities or in peer reviews of such self-assessments. It is also intended to serve as guidance for the international financial institutions (IFIs, ie the International Monetary Fund and the World Bank) undertaking Financial Sector Assessment Program (FSAP) assessments and for other forms of technical assistance, possibly including financing of reform efforts by the World Bank. To this end, the IFIs took part in developing the assessment methodology. Furthermore, the methodology may also prove useful to private market participants who may be conducting their own assessments of the safety and efficiency of SSSs on the basis of the systems' observance of the recommendations.