An efficient securities settlement system is a principal component of the infrastructure necessary for developing government securities markets. The settlement system affects the degree of confidence investors have in the market infrastructure, determines whether trading in the primary and secondary markets flows smoothly and influences the capacity of markets to expand. Settlement procedures depend on country circumstances and the degree of automation. But irrespective of the approach, policy makers should try to minimise the various risks in the system and, where necessary, improve settlement procedures.
This policy area reviews the major policy issues involved in developing a government settlement and describes its main components, including the types of securities accounts, central depository systems, the different settlement arrangements and the role of central counterparties. Issues related to cross-border mergers and acquisitions among different national and international central depositories in the EU will be addressed.
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