Clearing, Settlement and Custody

Clearing, Settlement and Custody

2nd Edition - September 1, 2013

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  • Author: David Loader
  • eBook ISBN: 9780080983455

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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

    Proxy voting

    Asset and cash management

    Single-currency accounts

    Multi-currency accounts

    Interest-bearing accounts

    Sweeping

    Banking services

    Withholding tax

    Double-taxation agreements

    Investment accounting

    Pricing and valuation reporting

    Investment analysis

    Summary

    Chapter 7. Securities lending

    Abstract

    Introduction

    The characteristics of securities lending

    Uses of securities lending

    Securities lending precautions and controls

    The role of the prime brokers/global custodians

    Non-discretionary programme

    Discretionary (or managed) programme

    Benefits and entitlements

    Lenders’ rights

    Role of the custodian or intermediary

    Actions required

    Implications for collateral

    Repurchase agreement

    Summary

    Chapter 8. Settlement of portfolio transactions and subscription/redemption of shares and units in investment funds

    Abstract

    Introduction

    Investment fund administration and support

    Portfolio administration and fund records

    Assets of the fund

    Administration workflow

    Margin and collateral

    Other activities affecting the portfolio administration

    Capturing data

    Subscription and redemption of shares and units in investment funds

    Summary

    Chapter 9. Risk and regulation

    Abstract

    Contents

    Risk

    Clearing and settlement risk

    Regulation

    Glossary

    Index

Product details

  • No. of pages: 240
  • Language: English
  • Copyright: © Butterworth-Heinemann 2013
  • Published: September 1, 2013
  • Imprint: Butterworth-Heinemann
  • eBook ISBN: 9780080983455

About the Author

David Loader

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.

Affiliations and Expertise

Director, DSC Portfolio Ltd. and Loader Associates Ltd.

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