1 ACSDA, X GENERAL ASSEMBLY Panama City, Panama; February 21-22, 2008 Lessons from International Standards Assessments Mario Guadamillas, The World Bank

2 Content A.The World Bank Role B.The Importance of International Standards C.Main Factors Identified D.Results from FSAP Assessments and Regional Initiatives E.2007 World Bank Global Survey Findings

3 The World Bank Role Participation/lead standard setter groups Diagnostic stage: oOverall assessments through Regional Initiatives (e.g., LAC, AFR, ECA, MENA, ASIA) managed by the Payments System Development Group oFormal assessments through IMF-WB FSAPs oSurveys (e.g., 2007 Global Survey) Implementation stage oLending projects to support comprehensive reforms oTechnical assistance projects to support comprehensive or ad-hoc reforms Knowledge dissemination: oThrough publications/research, conferences, etc.

4 The Importance of International Standards The “Goal” oMinimum standards: e.g., Core Principles for SIPSs, Recommendations for SSSs and CCPs oBest Practices: e.g., G30 Recommendations, regional standards (e.g., business continuity and operational reliability) The “How” oE.g., General Guidance for the National Payment System Development The “Concepts” oE.g., Reports on DvP, oversight, etc.

5 LEGAL&CUSTODY C&S PROCESSES SETTLEMENT RISK CCP OPERATIONAL REG.&OVERSIGHT ORG. ARRANGEMENTS CROSS-BORDER COST-EFFICIENCY G30IOSCOG30/ISSAIOSCO FIBVISSACPSS IOSCO NEWG Main Factors Identified in the Standards

6 Results from FSAPs and Regional Initiatives Legal framework (more complex in a global environment) Protection of custody arrangements Risks policies and procedures (beyond DvP model) Operational issues (STP, Resilience and BCPs) Governance (more complex in a global environment) Lack of Transparency (procedures/risks) Access (sometimes to the payment system) Regulation and oversight (lack of effective cooperation)

7 Findings from the Global Survey A specific public sector agency regulates securities markets Securities market law applies to all securities traded in the country Securities market law applies to securities issued by private firms only Countries#%#%#% Worldwide totals (137 countries) 10577%7051%4634% LAC (29 countries)2690%1241%1448% Legal and Regulatory Framework Dematerialization or immobilization of securities in depositories largely accomplished There is a single securities depository for all types of securities Two or more depositories, each handling specific types of securities Two or more depositories, each handling all types of securities Countries#%#%#%#% Worldwide totals (137 countries) 9066%4936%5439%97% LAC (29 countries)1034%1448%724%13% Securities Depositories Source: 2007 World Bank Global Survey on Payment and Securities Settlement Systems

8 Findings from the Global Survey Main Settlement Features Rolling settlement cycle of T+3 or shorter is used for all securities trades CSD has a real-time interface with the RTGS Model 1 DVP is used Model 2 DVP is used Model 3 DVP is used Guarantee fund or other mechanism ensures settlement in case of default Central Bank-operated systems #%#%#%#%#%#% Worldwide totals (58 systems)3459%3662%3560%59%712%814% Latin America & Caribbean (10 systems) 660%770%660%110%1 1 Private Sector operated systems Worldwide totals (83 systems)7489%4149%4757%2733%2631%3947% Latin America & Caribbean (12 systems) 1192%433%650%325%433%325% Source: 2007 World Bank Global Survey on Payment and Securities Settlement Systems

9 Findings from the Global Survey Participants and Custody Arrangements Only commercial banks are direct participants in the CSD (for central bank operated)/Only broker-dealers are direct participants in the CSD (for privately operated) Beneficial owners are identified at the individual level in the CSD Beneficial owners not identified at the individual level in CSD, but direct participants must segregate Central Bank-operated systems#%#%#% Worldwide totals (58 systems)2340%2136%2950% Latin America & Caribbean (10 systems) 220%550%330% Private Sector operated systems Worldwide totals (83 systems)2024%4959%3036% Latin America & Caribbean (12 systems) 542%867%325% Source: 2007 World Bank Global Survey on Payment and Securities Settlement Systems

10 Findings from the Global Survey Resilience and Business Continuity Source: 2007 World Bank Global Survey on Payment and Securities Settlement Systems Routine procedures are in place for periodical data back- ups Data storage media kept in sites other than main processing site Back-up servers have been deployed at the main processing site A fully equipped alternate processing site exists Operator has documente d a formal BCP - Business Continuity Plan BCP includes procedures for information disseminatio n and for crisis management Business continuity arrangem ents are regularly tested Central Bank-operated systems #%#%#%#%#%#%#% Worldwide totals (58 systems) 5391%4883%4069%3560%4171%4069%3967% Latin America & Caribbean (10 systems) 880%770%550%330%660%440%660% Private Sector operated systems Worldwide totals (83 systems) 7391%6480%5468%5569%6075%5265%5265% Latin America & Caribbean (10 systems) 1083%975%867%650%6 433%4