International Securities Settlement and Custodial Services

Course Description This 2 day training program is designed to provide delegates with practical  knowledge about the key concepts, systems, processes and procedures in international securities settlement and custodial services as well as operational risks involved. Participants will have a chance to gain skills necessary to facilitate day-to-day transactions and communication processes between all parties involved.

What Will You Learn By attending this program you will gain: Practical understanding of international securities settlement processes and custodial services, key players and concepts A clear understanding of the operational risks involved in these two services An update on recent developments of international securities settlement and custodial services An understanding and appreciation of the communication processes between all the parties involved in a given transaction

Main Topics Covered During This Training Securities settlement - exploring key concepts and market context The relationship between exchanges and clearing houses  Derivatives and securities settlement process Understanding the role of a settlement department The role of payment system in securities settlements Settlement process including pre-settlement, settlement and reconciliation processes Timing in cash management and Forex exchange Global custody and derivatives clearing Core and value added services in global custody Identifying and managing risks in clearing, global custody and settlement  The impact of 'Corporate actions ' in custody services Exploring industry trends

Who Should Attend Professionals from Custodial and Investment Banks, Exchanges, Hedge Funds, Pension Funds and Endowments and other institutional investors from the following departments:  Custody Services Settlements Transactions & Processing Compliance Risk Management Credit Risk Operations  Reporting IT Customer Relationship

International Securities Settlement and Custodial Services - A Two Day Programme

Introduction to the clearing and settlement process

• Underlying principles of securities and derivatives settlement
• The stages in a typical trade cycle
• Clearing – what it is and how it works – basic structures for clearance
• Key Concepts – Beneficial ownership, Collateral, Counterparty credit limits, Daylight overdraft, Default, Dematerialization, Failed transaction, Free riding, Fungible, Internal settlement, Lamfalussy Standards, Loss-sharing agreement and pools, Netting, Settlement date, Standard settlement instruction, Unwind, Zero hour rule
• Capital requirements
• Chain of entitlements
• Processing book entry (electronic) and certificated (paper based) securities

 

Exchanges and clearing houses

• The role of the exchanges
• The role and function of the clearing house
• The interaction between exchanges and clearing houses

Case Study: ASEAN Economic Community (AEC) and Initiative of Interlinking Payment & Settlement Systems of ASEAN Member Countries

Exercise

Comparing and contrasting the “Initiative of Interlinking Payment & Settlement Systems of ASEAN Member Countries” (case study) with the key concepts presented at the start of the day

Settlements - The role of the settlements department

• Importance of settlement Relationships and responsibilities
• Management information
• The relationships with the counterparties dealt with in the settlement of a typical trade
• Rules and conventions for settlement
• Differing conventions for different security classes (equities, bonds, derivatives)
• CPSS-IOSCO Technical Committee Recommendations for Securities Settlement Systems
• Delivery versus Payment Interaction between payments and securities settlement systems

 

The role of payment systems in securities settlements

• Large Value Transfer systems (LVTS) including Real Time Gross Settlement (RTGS) systems
• International payments – concepts, procedures and settlements
• CLS (Continuous Linked Settlement)

Case Study

South Africa - Interbank money markets and payment systems: A Two Way Relationship

Settlement processes

• Pre-settlement (including; input of settlement instructions, input scenarios, matching, monitoring transactions, changing transaction input, shaping deliveries, splits).
• Settlement (priorities and queues, circle processing, monitoring transaction, settlement, electronic transfer of title (ETT), bad deliveries)
• The importance of securities timing
• Overcoming problem areas
• Cash management and Foreign Exchange - timing and importance
• Settlement for residual securities
• Derivatives settlement
• The reconciliation process and its importance

 

DAY TWO

Global custody and derivatives clearing

• Who are the users and the providers?
• Basic structure for custody services
• The role of the derivatives clearing broker
• Sub Custodian
• Life cycle of a trade - the linked phases of processing
• Trade settlement
• Market practice: cut-off and value dates
• Safekeeping

 

Discussion

Using own experience delegates will examine preconceptions against the previous sessions’ material

Global custody – core services

• The services a global custodian and derivative clearer offer its clients – settlement, safekeeping of securities, income collection, corporate actions management, cash management, funding, tax management, reporting - the information chain e.g. SWIFT, banking facilities
• How custody services work
• Central Securities Depositories (CSDs)
• International Central Securities Depositories (ICSDs)
• Paper trail from actual transactions to actual deposit of securities with custodians

 

Global custody – value added services

• Investment accounting
• Master custody / master recordkeeping
• Securities lending, equity repos and collaterals
• Trustee services
• Portfolio valuation
• Collateral management
• Describing how securities lending operates in simple terms.
• Country-specific depositories in Hong Kong, India, Indonesia, the Philippines and elsewhere

 

Case Study: CSD Linkage services – Korea Securities Depository

Custody services “corporate actions”

• What are “corporate actions” and why do they occur?
• Common types of corporate actions and examples
• Impact of corporate actions on derivative products
• The growing importance of proxy voting
• Importance of timing
• Industry initiatives

Identifying and managing risks

• In securities clearing, settlement & custody
• Settlement, Operational, Financial, Market, Loss of title, Insolvency, Payment
• In payment systems
• Settlement, Operating, Payment Finality, Liquidity, Systemic, Zero hour bankruptcy rule.
• Examples of what can go wrong
• Emerging markets risk

Industry trends and the future

• Changes taking place in the industry
• The financial crisis – its effects
• Industry recommendations: G30 and ISSA

Exercise

Playing the role of Risk Manager: Establishing where we are in relation to risk mitigation, the industry recommendations and how far must we go to reach them. An attempt to establish if full compliance of the recommendations is beneficial or harmful to risk management?

Richard Barr 

Richard holds a B.S. in International Business Administration from San Jose State University in California. 

His professional experience spans over 25 years. The first 5 years were spent with Wells Fargo Bank. Another 5 were spent honing his global banking skills, when Richard was involved with International Trade Finance, Real Time Gross Settlement and Cross Border Banking. 

Richard then repositioned into the private and high-tech sectors providing high-level consulting services, business analysis, project management and training to a wide range of banking clientele across the globe.   

He has spent extensive time servicing a diversity of “financial institutional” clients, in China, Singapore, Hong Kong, Philippines, Korea, Malawi, Ghana, Nigeria, Kenya, South Africa, Poland, Sweden, Ireland, Netherlands, Greece, United Kingdom, Norway, Bermuda and across North America. Clients that Richard has trained & consulted to include with such notable firms as AIB Bank, Eurobank, ABSA Bank, CitiBank, Swedbank, IBM, Montran and Fundtech, as well as many others. 

Richard has also filled the role of advisor to central banks on payment systems and technical payments issues. Furthermore, key staff members from the Bank of England, South African Reserve Bank, Central Bank of Ireland, Bank Indonesia, European Central Bank, Norgesbank, Central Bank of Kenya, Central Bank of Tanzania and Bank of Portugal have attended training sessions presented by Richard.    

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Open Public Courses

• Operational Risk Management - 24-25 Apr London & 4-5 Jun Dubai 
• Risk Management in Eelctronic Banking - 15-16 Oct Dubai
• The Repo Market - 18 Jun London
• Internaitonal Payments - 10-11 Jul 2013 London

 

In-Company Training

• International and Domestic Payments
• Managing Cross-System Risks in Payments & Settlements
• Derivatives - Applications and Settlement Process
• Reducing Risk in FX Settlements
• Risk Management in Retail Payments
• Risk in Wholesale Payments
• Managing FX Operational Risk
• Mobile and Electronic Payments
• Domestic Payments
• SWIFT
• SEPA - A Practical Guide to Implementation 
• Treasury and Cash Management and more
• Mobile and Electronic Payments
• SWIFT
• Project Management for Banks and Financial Institutions
• Auditing e-Banking
• Anti-Money Laundering and Fraud Prevention
• Business Continuity Management & Scenario Planning and more  

If you have a group of 3 or more people, we can customise any of our 100 financial or soft skills programmes and deliver it in any location worldwide. 

All our trainers have at least 20 years of practical experience from their respective sectors and understand well the day-to-day requirements and challenges your employees are tackling. They have great communication skills and bring al lot of enthusiasm to the classroom. 

E-mail us or call on +44 (0) 207 995 8597 to discuss your requirements and we will be happy to prepare the training programme best suited for your organisation. 

Check our In-Company Training page.