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. 01 17 29 38 67 Name Mr. A Mr. B Ms. C [B Com] Section Group No. Signature

FH 1
07

Ms. D 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 for his helpful comments. first place. We owe much to Mr.

We are indebted to all those who have been helpful throughout the process of writing this Report
Mr.

, Ms.

and Mr.

but as the clich 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)

STP PANACEA FOR SECURITIES SETTLEMENT CONUNDRUM

CONTENTS

Acknowledgement 1. 2. 3. Abstract Introduction STP Market efficiency driver 4 3 3

Signature of group members (Mr. A) (Ms. B) (Mr. C) (Ms. D) (MR. E)

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 industrys 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)

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 increased trading volumes.
1

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)

STP PANACEA FOR SECURITIES SETTLEMENT CONUNDRUM

DISCUSSIONS ON THE TOPIC STP MARKET EFFICIENCY DRIVER Straight Through Processing (STP) is the industrys 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) References

1. 2. 3. 4.

(Ms. B) END NOTE

(Mr. C)

(Ms. D)

(MR. E)

www.sebi.gov.in www.iosco.org www.gscsbenchmarks.com Handbook on statistics on the Indian securities market 2004 (SEBI)