This system, as you know, provides a depository for debt and equity securities, the facility to transfer these securities on a real-time delivery-versus-payment
basis, the facility to make cash payments, and a platform for the automated provision of intra-day liquidity to the banking system.
To reduce risk, Thailand should also introduce a scripless (paperless) settlement system that provides for delivery-versus-payment
settlement (the simultaneous exchange of securities and the payment for them).
On the transfer side, the system delivers book-entry securities against a simultaneous payment, called delivery-versus-payment
, thus reducing the settlement risks of market participants.
As principal, it matches buyers and sellers with little, if any, gap between the two sides in delivery-versus-payment
settlement ensures that, at all times, the bank has either the security or the cash associated with buying or selling that security.
During the period, the SCA took several measures including regulations for delivery-versus-payment
, securities custodian, margin trading, short selling, stock lending and capital increase through rights issue.
Al-Mansoori highlighted that the QSE has introduced delivery-versus-payment
and direct market access schemes for foreign brokers, the latter through a sponsoring local broker, and also launched a number of new investment tools such as bonds and treasury bills, as well as various new indices.
MSCI said in December it would maintain the frontier status for the UAE and Qatar, citing investors' concern over the effectiveness of the so-called delivery-versus-payment
model, a program for completing stock transactions, and Qatar's failure to announce plans to relax its foreign ownership laws.
The UAE's market regulator last week said it will implement a so-called delivery-versus-payment
system, an MSCI requirement for emerging market status, on April 28.
The European Commission proposed, on 23 April, a directive aiming to modify Directive 98/26/EC on settlement finality in payment and securities settlement systems - particularly when a participant in the compensation chain and delivery-versus-payment
(payments and securities) does not honour the contract - and Directive 2002/47/EC on financial collateral arrangements regarding linked systems and credit claims (see Europolitics 3518)(1)).
to encourage movement towards delivery-versus-payment
arrangements in all financial markets, especially with respect to high-value transactions;
Precautionary measures that should be taken include the use of delivery-versus-payment
(DVP) procedures with third-party custody arrangements for investment transactions.