The meeting discussed lessening the amount of time for clearing and settlement system from three working days to one (T+3 to T+1). However, this is not the most pressing issue for every depository group. The meeting agreed on lowering the costs for parties involved, lessening overlapping procedures, and increasing the efficiency of various sectors by bringing in new work systems. These include increasing the responsibility of central organizations for ownership transfers and payment of shares (known as the Central Counter Party [CCP] system). The other system under discussion was Straight Through Processing (STP), which is an automated system starting from trading system to clearing and settlement. Other systems discussed also offer users new value-added services, such as the Securities Borrowing and Lending (SBL) system.
Deputy Secretary-General of the Securities and Exchange Commission (SEC), Mr. Prasong Vinaiphaet, gave his views in a talk titled "Seamless, Scripless, and in Real Time: CSD and CCP Today." He said the clearing and settlement system is an important factor in boosting the competitiveness of stock markets. Nowadays, stock markets in Europe and the United States are moving towards using the CCP system to support the trade of shares across borders in real time and in a scripless manner. This system will lessen the costs for users, as well as enhance efficiency and lower risk in the trade of shares. However, stock markets using this system must manage their risk efficiently, draft rules and regulations to support the use of such system, and have sufficient start-up capital.
TSD Managing Director, Mrs. Nongram Wongwanich, commented that the TSD benefited greatly from the meeting. Many of the developments discussed during the meeting have already been studied and, in a number of cases, implemented by the TSD, including the CCP system. The TSD can transfer ownership or pay for shares in place of investors who failed to do so by the due date to limit risk to all parties. However, the TSD must further study effective risk management measures to guarantee safety and stability in its work and to boost confidence for all.
The TSD is interested in implementing the STP system and has studied the system for a period of time now. Further studies must be made to find out if any adaptations have to be made. Initially, however, it would be impossible to implement the whole system right away.
"The STP system is a system that lessens risk and costs while, at the same time, increasing efficiency. It would help lessen the time needed in clearing and settlement without increasing the risk of delays in these. However, implementing the STP system will depend on the readiness of those involved, but the Stock Exchange of Thailand (SET) and the TSD are close to the stage of implementing these changes," Mrs. Nongram said.
Mrs. Nongram concluded that the 6th Asia-Pacific Central Securities Depository Group (ACG) meeting had been very successful as members had been very interested in the issues discussed. Moreover, members exchanged viewpoints about the development of the capital markets that proved to be very beneficial to other members. She believed this exchange of information would prove to be invaluable in propelling the work of security depository groups in the Asia-Pacific region forward in line with the changing situation in the world capital markets.
