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The Americas Central Securities Depositories Association provides members with a forum to discuss standards and best practices related to their services and to maintain communication with complementary organizations worldwide
Every local market has its own Central Securities Depository (CSD) to cater to its unique needs. But changes in investment patterns such as trading across markets, sectors, borders and over the Internet are posing a challenge for these organizations. CSDs are part of a global network, and they have to stay up-todate in a dynamic environment.
This trend has led to the creation in Latin America of the Americas Central Securities Depositories Association
(ACSDA), a nonprofit organization incorporated in 1999 by the Central Securities Depositories and Clearing
Houses of America, based in Lima, Peru. ACSDA provides a forum for its 23 members to discuss standards and best practices related to settlement, clearing and depository services. Members, which also include Strate from South Africa, also collaborate with regulators and maintain a dialogue with complementary organizations worldwide.
ALMOST ALL OF ACSDA’s members are specialized custody, asset servicing and settlement providers. “Most of our services comply with international recommendations,” says Fernando Yáñez, President of the ACSDA and CEO of the CSD in Chile. “As a result, there are few differences between the CSDs. Market practices and infrastructure solutions are more harmonized than before.”
But there are some differences, nevertheless, he says. Some CSDs only offer custodial services for fixed income securities because there is no equity market in the country. The degree to which depositories are integrated to other entities in their respective markets also varies. There are CSDs whose sole activity is to provide the infrastructure for custody and settlement of the securities traded on their markets.
Fernando Yáñes, President of the ACSDA
and CEO of the CSD in Chile. | Other CSDs have created clearing and settlement subsidiaries, and they function either as a participating owner or as an operator.
Regardless of their business model, ACSDA members continue to focus on improving the operations and services they provide to market constituents.
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"Ultimately, a successful CSD is one that satisfies its customers by keeping close tabs on the market."
“ACSDA members want to expand their services to create the best possible infrastructure and foster the development of the securities markets,” says Yáñez.
“Our goal is to become more integrated and interconnected, so we can provide an infrastructure for cross border securities transactions. Yet diversity enriches our discussions on these matters.”
Like CSDs in other parts of the world, ACSDA members are trying to improve the transparency and accuracy
of corporate actions information flows. A working group has been set up to establish best practices for corporate actions from announcement to payment; to provide national and regional information for markets that do not have a national securities market practice group; and to ensure ACSDA representation in relevant global initiatives.
An essential ingredient for success is maintaining close cooperation with stock exchanges, brokers, banks and clearinghouses while remaining autonomous. “Ultimately, a successful CSD is one that satisfies its customers by keeping close tabs on the market,” says Yáñez. “CSDs should implement service level agreements, survey market participants and do benchmarking studies to ensure they are meeting their objectives.”
Technology is key Technology will continue to play an important role in CSD operations. OMX believes that CSDs need to upgrade their systems to keep up with the changes in the market. They can modify their existing systems but many choose not to do so because of the cost, time to market, limited availability of development resources and project risk. Instead, many are migrating toward standard CSD systems based on proven technologies that allow them to interoperate
with an array of market participants.
“The advantage is that clearing and settlement can occur in a cross border, multicurrency environment that is adaptable to existing rules and functions and new standard interfaces,” says Jens Bache, Senior Advisor at OMX. “In addition, a standard CSD system can be interfaced with central counterparty and straight through processing solutions.”
By Sherree Decovny Illustration Måns Adolfsson MarketView 2006:2
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