SAMPLE FORMAT
STP –
PANACEA FOR SECURITIES SETTLEMENT CONUNDRUM
A report submitted for internal assessment of
LEGAL SYSTEM ( BUSINESS & COMPANY LAW )
Under the guidance of
Prof. S N Ghosh
PREPARED BY
Roll No. Name Section Group No. Signature
01 Mr. A
17 Mr. B
29 Ms. C [B Com] FH –1
38 Ms. D 07
67 Mr. E
IIPM
IIPM TOWER, SATBARI,
CHANDAN HAULA, CHATTARPUR-BHATIMINES ROAD
NEW DELHI
STP – PANACEA FOR SECURITIES SETTLEMENT CONUNDRUM
ACKNOWLEDGEMENT
We thank Mr. in particular for assigning us this topic and encouraging us to write in the
first place. We owe much to Mr. for his helpful comments.
We are indebted to all those who have been helpful throughout the process of writing this Report
– Mr. , Ms. and Mr. but as the cliché goes, we are solely responsible for ay remaining
errors of fact or judgment.
Signature of group members
(Mr. A) (Ms. B) (Mr. C) (Ms. D) (MR. E)
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STP – PANACEA FOR SECURITIES SETTLEMENT CONUNDRUM
CONTENTS
Acknowledgement
1. Abstract 4
2. Introduction 3
3. STP – Market efficiency driver 3
Signature of group members
(Mr. A) (Ms. B) (Mr. C) (Ms. D) (MR. E)
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STP – PANACEA FOR SECURITIES SETTLEMENT CONUNDRUM
ABSTRACT
STP –
PANACEA FOR SECURITIES SETTLEMENT CONUNDRUM
Gloablisation of securities market has reinforced the necessity of doing business in a more
streamlined and fine-tuned risk management system. Straight Through Processing (STP) is the
industry’s lingua franca for Securities Settlement Systems integration. The article brings out
emergence of uniform international standards to promote improvements in the safety and
efficiency of the systems. Implications of STP in Indian Capital Market through the prism of
global developments have also been analysed.
Signature of group members
(Mr. A) (Ms. B) (Mr. C) (Ms. D) (MR. E)
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STP – PANACEA FOR SECURITIES SETTLEMENT CONUNDRUM
STP –
PANACEA FOR SECURITIES SETTLEMENT CONUNDRUM
INTRODUCTION
Liquidity is an important feature of any financial market. It is the lubricating agent of any
financial market that facilitates a frictionless smooth functioning of the financial markets.
Liquidity of an asset is very precisely defined by Keynes that `an asset is more liquid than
another, if it is more certainly realizable at short notice without loss. Efficiency is, thus, an
integral part of a stock market as much as the liquidity is. Efficiency means the speed with
which securities transaction is captured at the time of investment decision and to process order
creation and ensure requisite compliance, trading confirmation, settlement and reconciliation of
account of the related parties, concluding with channelising the payment to the seller in the most
cost effective, flexible and accurate manner. Manifestly, one of the core operational processes
that underlie a securities market is the process of Clearance and Settlement. The clearance and
settlement process determines, to a large extent, the efficiency and effectiveness of a securities
market. Weaknesses in clearing and settlement arrangements can be a source of systemic
disturbances to securities markets and to other systems, creating negative externalities that need
to be internalised by effective regulation. An efficient Securities Settlement System (SSS) is thus
critical for establishing a robust and vibrant securities market.
Globalisation, Liberalization and Corporatisation of the securities market have considerably
1
increased trading volumes. No more the barriers and the competition that used to prevail in the
traditional days are applicable. …….
Signature of group members
(Mr. A) (Ms. B) (Mr. C) (Ms. D) (MR. E)
FOOT NOTE
1
The total number of transactions in the universe grows at a rate of around 4 million per annum across more than 50 countries.
(GSCS Information Services – Issue 5; July-Sept 2005)
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STP – PANACEA FOR SECURITIES SETTLEMENT CONUNDRUM
DISCUSSIONS ON THE TOPIC
STP – MARKET EFFICIENCY DRIVER
Straight Through Processing (STP) is the industry’s lingua franca for system integration and the
basis on top of which a compressed settlement will be delivered
INTERNATIONAL STANDARDS
The international standards have been instrumental in improving safety and efficiency of the
SSS. There are two major streams of standards – one initiated in the private sector and the other
in the public sector-which culminated in the ISSA Recommendations 2000 and the BIS-IOSCO
Recommendations 2001 respectively. ……..
INDIAN LEGISLATIVE INITIATIVE AND PROACTIVE SEBI
As a precursor to uniform fully automated integrated Clearance and Settlement System for the
securities market around the globe, the IOSCO adopted Objectives and Principles of Securities
Regulation and…….
ARGUING THE TOPIC/POINTS RAISED
MEASURING INDIAN SECURITIES MARKET THROUGH GLOBAL PRISM
In this section we will discuss the results obtained from the econometric analysis of the data
obtained from the securities market- India and important stock exchange of the world.
Table 1 and Table 2 are the Annual Settlement Statistics of CM Segment and F &O Segment of
NSE from the year 2001-2002 to 2005-2006 (Annualised). Trading of shares in demat mode
during the year 2002-2003 improved to 100% against 99.89% in the previous year.
CONCLUDING OBSERVATIONS
STP is a phantom concept. To realize the true STP, there is plethora of changes that needs to
occur and successfully absorbed by all the Actors of the securities market. The
SIGNATURE OF GROUP MEMBERS
(Mr. A) (Ms. B) (Mr. C) (Ms. D) (MR. E)
References END NOTE
1. www.sebi.gov.in
2. www.iosco.org
3. www.gscsbenchmarks.com
4. Handbook on statistics on the Indian securities market – 2004 (SEBI)
