Description

Four new chapters and updates throughout help this 2e of Clearing, Settlement and Custody summarize worldwide changes in the process of concluding a financial transaction. Noted consultant David Loader provides a highly detailed analysis of the central clearing counterparty concept, the drivers behind it, and its effects on operations teams. He also clearly illustrates the life cycle of a series of transactions to broaden the comparison process.

Emphasizing changes in the regulatory environment stemming from the 2008 market crash and liquidity crisis, this edition uses new case studies and end-of-chapter quizzes to explore the transaction value chain of trading, clearing, settlement, and custody. Students and professionals in the financial field will benefit from the book's description of the industry and the details of financial innovation and regulatory response, with their many implications.

Key Features

  • Supplements theoretical insights about risk with empirical data from current cases
  • Provides the first algorithmic risk management technique that spans multiple asset classes
  • End-of-chapter questions reinforce primary and secondary points

Readership

Finance and business school upper-division undergraduates and graduate students preparing for careers in the financial industry.  Finance industry professionals working in financial market operations.  

Table of Contents

Preface

Chapter 1. The structure of clearing and settlement

Abstract

The clearing house

Changes in clearing

Development of the clearing structures

Objectives of clearing houses

Summary

Chapter 2. The role of the clearing house, trade repositories and central securities depositories

Abstract

The role of the CCP

The role of securities depositories

The role of trade repositories

Summary

Chapter 3. Bond settlement

Abstract

Introduction

International bonds

Domestic bonds

Fixed-rate bonds

Floating-rate notes

Zero coupon bonds

Maturity

Lead manager

Co-lead manager

Market-maker

Trade confirmation

Settlement instruction

International bonds, global bonds and convertible bonds

Government bonds and domestic bonds

Summary

Chapter 4. Equity clearing and settlement

Abstract

Introduction

Issuing and trading equities

Settlement

Corporate actions

Record date

Pay date

Ex-date

Repayment of capital

Stock benefits

Capitalization

Scrip dividends

Stock situations

Summary

Chapter 5. Clearing and settlement of derivatives

Abstract

Introduction

Exchange traded futures and options

OTC derivatives

Further reading

Summary: Useful reference websites

Chapter 6. Custody services

Abstract

Instruction from client to global custodian

Reporting requirements

Pooled nominee system (omnibus)

Corporate actions

Stock situations

Take-overs, mergers and de-mergers

Conversions

Warrant exercise

Pari passu lines of a security

Redemptions and maturity

Share suspension and liquidations

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Details

No. of pages:
240
Language:
English
Copyright:
© 2014
Published:
Imprint:
Butterworth-Heinemann
Electronic ISBN:
9780080983455
Print ISBN:
9780080983332

Reviews

"This primer for those in finance and business explains the processes involved in the conclusion of financial transactions, also known as clearing and settlement processes…This second edition contains four new chapters reflecting global conditions in the world of finance, as well as changes in the regulatory environment that began in response to the 2008 financial market crash. There are also new case studies."--ProtoView.com, January 2014
"David Loader introduces us to the glamour of the back-office. Using clear examples and useful case studies he takes us through the process of clearing and settlement. After reading the book, the reader will have a good understanding of how things actually work, why back-office matters a great deal, and why the recent changes in the regulatory landscape will affect some financial markets in important ways. This is a must-read for beginners and a useful reference."--Cyril Monnet, University of Bern
"David Loader details what happens after a trade has been matched:  Post-trading is getting increasingly complex and important for the functioning of global financial markets.  It is therefore tremendously helpful to get an all-embracing overview of functions, processes, institutions, and regulation."--Torsten Schaper, Deutsche Börse AG