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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.
- 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
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.
Chapter 1. The structure of clearing and settlement
The clearing house
Changes in clearing
Development of the clearing structures
Objectives of clearing houses
Chapter 2. The role of the clearing house, trade repositories and central securities depositories
The role of the CCP
The role of securities depositories
The role of trade repositories
Chapter 3. Bond settlement
Zero coupon bonds
International bonds, global bonds and convertible bonds
Government bonds and domestic bonds
Chapter 4. Equity clearing and settlement
Issuing and trading equities
Repayment of capital
Chapter 5. Clearing and settlement of derivatives
Exchange traded futures and options
Summary: Useful reference websites
Chapter 6. Custody services
Instruction from client to global custodian
Pooled nominee system (omnibus)
Take-overs, mergers and de-mergers
Pari passu lines of a security
Redemptions and maturity
Share suspension and liquidations
Asset and cash management
Pricing and valuation reporting
Chapter 7. Securities lending
The characteristics of securities lending
Uses of securities lending
Securities lending precautions and controls
The role of the prime brokers/global custodians
Discretionary (or managed) programme
Benefits and entitlements
Role of the custodian or intermediary
Implications for collateral
Chapter 8. Settlement of portfolio transactions and subscription/redemption of shares and units in investment funds
Investment fund administration and support
Portfolio administration and fund records
Assets of the fund
Margin and collateral
Other activities affecting the portfolio administration
Subscription and redemption of shares and units in investment funds
Chapter 9. Risk and regulation
Clearing and settlement risk
- No. of pages:
- © Butterworth-Heinemann 2014
- 1st September 2013
- eBook ISBN:
- Paperback ISBN:
David Loader is the cofounder of DSC Portfolios Ltd., which specializes in global training and consultancy services for the financial industry. He has worked in the debt, equity, and derivatives markets, and his expertise in back-office dynamics is unparalleled. He has written widely on operations management, derivatives, fund administration, and operational risk.
Director, DSC Portfolio Ltd. and Loader Associates Ltd.
"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
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