ACSDA International Seminar Johannesburg, South Africa November 19-21,2003 Centralized X Decentralized Systems Amarílis Prado Sardenberg Amarílis Prado.

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Presentation transcript:

ACSDA International Seminar Johannesburg, South Africa November 19-21,2003 Centralized X Decentralized Systems Amarílis Prado Sardenberg Amarílis Prado Sardenberg November 21, 2003 November 21, 2003

MAIN CHARACTERISTICS BRAZILIAN INFRASTRUCTURE Three depositories/securities settlement systems (SSS) Two central counterparties Hybrid model combining integrated depositories and/or clearinghouses for several instruments and specialized institutions.

BRAZILIAN INFRASTRUCTURE CENTRAL COUNTERPARTIES CBLC  Equities (cash and derivatives)  Fixed income instruments (cash markets) BM&F  Derivatives  Forex DEPOSITORIES/SSS CBLC  Equities (single depository)  Fixed income instruments CETIP  Fixed income instruments SELIC  Government bonds

The Brazilian clearance, settlement and depository infrastructure is decentralized However, the Brazilian financial institutions, the clearinghouses and the depositories are amalgamated by the National Brazilian Financial Net called RSFN and the Central Bank Money Transfer System named STR. Core components of the New Brazilian Payment System (SPB) implemented in April, BRAZILIAN INFRASTRUCTURE

THE NEW BRAZILIAN PAYMENT SYSTEM MAIN FEATURES (I) MAIN FEATURES (I) Gross settlement systems that works in a RTGS fashion (SELIC, the Central Bank depository and settlement system for government bonds and STR, the Central Bank Money Transfer System) Depositories and Clearinghouses Direct access to Central Bank Money Transfer System (STR)

THE CENTRAL BANK MONEY TRANSFER SYSTEM (STR) CBLC Funds transfer Instructions Zero-balance accounts Regular accounts CBLC account BM&F account Bank A account Bank B account STR CETIP account BM&FSELIC Market Participants Banks SELIC account CETIP

Standardized messaging system connecting in real-time all financial institutions, depositories and clearinghouses in the National Financial System Net (RSFN) Two different communication lines XML protocol THE NEW BRAZILIAN PAYMENT SYSTEM MAIN FEATURES (II) MAIN FEATURES (II)

THE NATIONAL FINANCIAL SYSTEM NET (RSFN) RSFN BM&F CBLC SELIC Brazilian Central Bank CETIP OTHERS STR BANKS

SINGLE CLEARANCE, RISK MANAGEMENT, SETTLEMENT AND DEPOSITORY SYSTEM CBLC – A CENTRALIZED MODEL CBLC IS A CENTRALIZED SYSTEM IN A DESCENTRALIZED ENVIRONMENT

DEPOSITORY SERVICES Equities (single depository) Fixed income instruments  Corporate bonds  Mortgage-backed securities  Real state investment trusts  Others INTEGRATED DEPOSITORY SYSTEM CBLC PROVIDES DEPOSITORY SERVICE FOR:

CBLC DEPOSITORY SYSTEM DEPOSITORY SERVICES STATEMENTS FOR BENEFICIAL OWNERS Post office - monthly statement Fax - access to daily aggregate position and securities movements Internet – access 24 hour a day. A SINGLE STATEMENT FOR THE WHOLE SECURITIES PORTFOLIO DEPOSITED AT CBLC A SINGLE STATEMENT FOR THE WHOLE SECURITIES PORTFOLIO DEPOSITED AT CBLC

TRADING SYSTEMS STOCK EXCHANGEOVER-THE-COUNTER Fixed income instr OptionsEquitiesForward EquitiesForwardFuturesOptions Fixed income instr MegaBolsaBovespaFix SomatradeSomaFix CBLC STP

CBLC CLEARANCE AND SETTLEMENT SYSTEM Equities:  Cash (T+3)  Forward (T+n)  Futures (T+3 of the expiry date)  Options premiums (T+1)  Futures variation margin (T+1) SINGLE NET POSITION FOR A WIDE RANGE OF MARKETS, INSTRUMENTS AND DIFFERENT TRADING SYSTEMS ONE SINGLE NETTING FOR: Fixed income instruments Guarantees accepted as collateral for open positions in derivatives markets and regular settlement cycle; Other obligations related to the settlement process, like delivery failures penalties. T+0 T+1

CBLC RISK MANAGEMENT MODEL CCP: SINGLE RISK MANAGEMENT POSITION COLLATERAL OPTIMIZATION Regular settlement cycle  Equities  Fixed income instruments  Equities derivatives (options, forwards, futures) Open positions in derivatives  Equities derivatives (options, forwards, futures) Securities lending

SECURITIES LENDING PROGRAM CBLC acts as a CCP in this service Service whereby investors can make their securities available for lending or whereby investors, who temporarily need securities, may borrow them. BTC is automatic, mandatory and fully integrated with CBLC settlement system. REDUCTION OF DELIVERY FAILURES

CONCLUSIONS Multilateral netting across several markets and instruments REDUCTION OF LIQUIDITY REQUIREMENTS Unified clearance and settlement systems Risk management COLLATERAL OPTIMIZATION CBLC: AN INTEGRATED SYSTEM