Transcript 幻灯片 1 - 中国证券登记结算有限公司

Legal Task Force Session
In ACG15
November 4th, 2011
Seoul, Korea
Legal Task Force Session in the 15th ACG
Presentation by SD&C
 Presentation by Jasdec
 Discussion among the members
 Summary

Presentation by SD&C
Legal Protection of CSD/CCP in Case of
Participants’ Insolvency
 Comments on Principles for FMI
 Next Step

Legal Protection Of CSD/CCP In Case Of Participants’ Insolvency



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Contributions from SD&C
Contributions from other members
Facts and feedbacks
Conclusions and Suggestions
Contributions from SD&C
Questionare investigation
 Draft of the report
 Send the draft to members and get feedbacks
 Finalization of the report

Contributions from other members

TSD,NSDL,VSD,KSD,SICDA,CSEHKSCC,
JASDEC, JDCC, JSCC, TDCC, KACD, CDC,
CDSL.
Facts and feedbacks (1)

Would CSD/CCP be affected by participants’ insolvency?
 No affectted, 7 members
 For CCP only, 1 member
 For CSD only, 1 member
 For both CCP and CSD, 2 members

Are there any cases of participant’s insolvency?
 No cases , 4 members
 Having cases, 7 cases
Facts and feedbacks (2)

Do the rules take precedence over law of insolvency?
 Type one: Not clearly defined, 6 members
 Type two: Explicitly stipulated in laws, 7 members

Are settlement instructions still enforceable after the
participants go into bankruptcy?
 Type one: Not clearly defined, 3 members
 Type two: Explicitly stipulated in laws, 9 members
Facts and feedbacks(3)

Are the rules and contracts between CSD/CCP and its
participants still be binding to the insolvent participants?
 Type one: Not clearly defined, 1 member
 Type two: Yes, 12 members
Facts and feedbacks (4)

Would the rights of investors be affected if the participant
goes into insolvency?
 No, 8 members
 separately segregate securities account
 held separately in investor’s own name
 Not clear, 1 member
 depends on the relationships between investors and
participants
 Yes, 2 members
Facts and feedbacks(5)

Is it possible for investors to move their securities
and money from insolvent participants to other
participants?



No, 4 members
Not clear, 1 member
Yes, 6 members
Facts and feedbacks (6)
 Is

loss sharing rule applicable?
No, 11 members
 Do
you assume obligation of guarantee
settlement?
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

Yes, 9 members
No, 1 member
Not applicable, 1 member
 Which
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

DVP models apply to your market?
Model 1, 3 members
Model 2, 4 members
Model 3, 6 members
Facts and feedbacks (7)

Do you have self-disciplined rules?
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
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
What is the relationship between participants and their
clients?
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

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
Yes, 6 members
No, 4 members
Not applicable, 1 member
Commission / brokerage relationship: 9 members
Trust relationship: 3 members
Agent relationship: 6 members
Others, Contractual (deposit) Relationship: 3 members
What is the relationship between CSD/CCP and its
participants?
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


Principal and agent: 1 member
Members or Participants: 3 members
Direct contractual relationship: 6 members
According to the agreement: 2 member
Facts and feedbacks (8)
 Does
CSD/CCP has the right to refuse to deliver securities/
cash to its defaulting participants?
 And

Yes, 9 members

No, 1 member
what is the legal nature of the above right?

Lien: 1 member

Pledge: 2 members
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Other: 5 members
Comments and Suggestions

The legal framework for securities depository and clearing/settlement
varies from jurisdiction to jurisdiction and reflects different legal traditions

Key aspects of CSD/CCP’s legal framework should include:
enforceability of transactions, protection of customer assets (particularly
against loss upon the insolvency of a participant), finality of settlement,
arrangements for achieving delivery versus payment, default rules, and
liquidation of assets pledged or transferred as collateral.
Comments on CPSS/IOSCO principle

Generally speaking, ACG members support CPSS and
IOSCO to establish the new set of principles for
FMIs;

Besides, ACG members have also some suggestions to
CPSS/IOSCO.
Suggestions (1)

Clarify which principles apply to CSDs with SSSs,
and which apply to CSDS without SSSs

Due to the complexity and the difficulties for FMIs
to identify and analyze all potential conflict-of-law
issues, certain flexibility should be allowed in
adopting principle 1
Suggestions (2)

The costs and effectiveness resulting from the building
of risk management systems should be evaluated and
balanced thoroughly. (principle 3)

To contain credit risks, CCPs should take into account
the characteristic of the market, not merely the
participant with largest exposures. (principle 4)
Suggestions (3)
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


If a CSD wants to engage in CCP business, a more sound
and resourceful risk management system should be in place.
And if a CSD does have the advantages of efficiencies and
cost effectiveness the CSD should engage in CCP business
in derivative products and spot markets through its
subsidiaries or other forms of separate legal entity.(principle
11)
How much equity capital does a FMI should hold to cover
potential general business risks?
Decided by each FMI/9 months of expenses/12months of
expenses.
Suggestions (4)
 To contain operational risks some members suggest that the
following words should be noted in principle 17:
“ any single system should have the capacity of acting as back-up
for systems that FMIs set up in other locations”
 Also simultaneous disasters should be taken into account in
working out the BCP (principle 17)
Next Step (1)
I、Wrap up of the topic “Legal Protection of
CSD/CCP in case of Participants’ Insolvency ”
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Finalizing the version after the 13 th Cross Training Program

Sharing research outcomes among members
II、Continue the topic “Legal Application in cross-
border securities transactions”

This will be 2012 ‘s focus
Next Step(2)
III、Any new topics for 2013?
Theme:
The application of title transfer collateral
agreement in securities markets---suggested by SD&C
Any
IF
others?
we will start the topic suggested by SD&C, what are
the major points we should enhance our research?
Next Step (3)
III、New Research Program Outlines (to be
discussed)

Collateral Transactions
Collateral Agreement

Title Transfer Collateral Agreement

conclusions

Thanks, and a warm welcome to
Jasdec
Contact info:
[email protected]
[email protected]