Clearing is a useful service for conducting settlement transactions. Clearing activity - what is it? Features of clearing operations in the non-cash payment system

Clearing is non-cash payments between countries, companies, enterprises for goods, securities and services delivered, sold to each other, carried out through mutual offset, based on the terms of the balance of payments.

Clearing is most widespread in the markets for goods, securities and banking services; it is interesting because market participants who daily enter into a lot of transactions with many counterparties, and this helps them streamline and simplify the calculation of the positions of each participant, in which otherwise it is easy to get confused (lose an idea of ​​​​the overall balance of the entire mass of their claims and obligations), reduces the risks of non-delivery, non-payment, etc.

Clearing is, in its most general form, a system of non-cash payments for goods and services, based on the offset of mutual claims and obligations and used by banks to reduce the need for working capital and simplify the exchange of payments. Payments can be settled on either a gross or net basis. In the gross case, settlements for each transaction are carried out separately, while in the net case, the banks involved in making payments allow claims and obligations to accumulate over a certain period of time. At the end of this period, settlements are made only for mutually offset obligations. Such netting of accounts payable and receivable amounts can take place between two parties (bilateral netting) and between three or more parties (multilateral netting).

When two banks have large volumes of common payments, clearing and settlement of interbank settlements is often carried out on the basis of a bilateral agreement: the banks agree to offset sent and received payment orders (net settlement) and to settle mutual settlements at certain times for the net value of payments. This process is called bilateral offset.

If three or more banks are involved in the netting process, then this process is called multilateral netting. Agents participating in the mutual settlement calculate the net position of each member of the clearing system at the end of the cycle, taking into account payments sent by them to other banks and payments received from other participants in the system. As a result, each bank transfers only its net account balance with all other participants. After the offset, the amount of obligations of all participants must be equal to zero.

The functions of accounting for the mutual obligations of the participants in the clearing system are performed by the clearing house, which is a formal or informal agreement between banks on the exchange of payment instruments at a certain place and at a certain time. Member banks of the clearing house have the right and opportunity to exchange payment instruments, both in paper and electronic form. Balances resulting from such exchange must be paid.

The settlement agent proceeds with the final clearing settlement. The role of this institution is to receive settlement payments from net debtors during the settlement process and transfer funds to the accounts of net creditors. In addition, the settlement agent may perform other banking activities, such as providing loans to finance settlements and holding collateral to secure settlement obligations. The settlement agent is appointed or elected by the members of the clearing house.

Clearing in the banking sector can be carried out both within a country and between countries (international currency clearing). Another advantage of bank clearing is that in most countries, commercial banks are allowed to use their clearing balances with the central bank to meet reserve requirements, which, of course, is beneficial to commercial banks.

The organization of interbank clearing in each country depends on the historical features of the development of the banking system, the model of its construction, the degree of concentration and centralization of banking, and the policy of the central bank in the field of monetary regulation of the economy.

Types of clearing

It should be noted that there is no single, standard system of clearing and settlements in the securities market. Therefore, it is necessary to consider the characteristic features for each type of clearing process.

1) Unit type - is the fundamental form of clearing and execution. This type of clearing is used when trading real goods. The conclusion of the transaction must be followed by delivery of the actual product.

This method is used in low volume markets, or in fairly large volume markets if they use a powerful, highly automated system.

A single execution system is essentially one huge chain of trades, and the execution conditions must be met at every link in the chain, otherwise it will fail. If one deal falls through, it can affect others.

• 2) Settlement - the growth of trade volumes in many markets has led to increased research in the field of settlement techniques that can dramatically reduce the number of execution operations if trades are not processed sequentially, one after another (one by one). As a result, by the end of the working day, one final absolute figure is determined for each party, characterizing its position and obligations. The netting system is most suitable for high volume markets, especially those in which a large number of trades are made between a relatively small number of participants.
• 3) Bilateral offset (or paired) - offset that occurs between the same parties. This method maintains the integrity of trade between parties and reduces the volume of transactions compared to a unit approach. This way you can achieve a significant increase in efficiency, but only with a large number of transactions on a relatively narrow range of securities.

With single clearing and with bilateral offset, the following problems arise:

• - a large number of deliveries are required, which can lead to a large number of disruptions;
• - the position of each party must be brought to market and this takes more time and money than in more complex systems. Marking to market means revaluing the parties' open positions to reduce risk;
• - when many positions remain open, i.e. their number is not reduced to a minority and the situation does not become more manageable - the probability increases that a buyer who does not receive delivery on time is forced to force the seller to deliver securities.

Although bilateral offset is the simplest form of offset, its introduction provides important advantages to the market. It includes market participants in the offset system, thereby reducing the overall number of executions.

• 4)Multilateral clearing (daily) - Multilateral clearing is a step towards more efficient clearing methods. The main element of this method is to count all of a party's transactions for one type of security per day to one final number. This method does not achieve the maximum possible efficiency, it significantly reduces the daily number of required deliveries and thus the number of possible failures. However, the multilateral system requires a completely different approach to emerging risks. The organization responsible for the clearing system must ensure the availability of reliable security against possible risks and the availability of this security in the event of debts arising.
• 5) Continuous offset execution (NCE) - this system uses multilateral offset and all positions open at the end of the day are offset against transactions of the next business day. In a high-volume market, the NI system, which includes the daily recalculation of all obligations on the market at current market prices, is one of the most effective clearing mechanisms and effectively reduces the risk of waiting for execution on individual transactions. One of the main features of the NCI is the wedging of the clearing house between the parties to the transaction as the opposite party for each reconciled trade.

This assumption of responsibility by the clearing house as a party to the transaction should occur as quickly as possible after the successful completion of the reconciliation. Ideally, by the end of the working day, the parties should be debtors and creditors of the clearing corporation, and not of each other.

When using NII, it becomes possible to effectively carry out daily cash payments. At the end of the day, the market participant receives or remits money to the clearing house in accordance with the positions executed and taking into account the revaluation (marking to market) of the remaining open positions.

7) Direct settlement - the simplest and oldest form of clearing is direct settlement (settlement), the bilateral satisfaction of contractual obligations between the parties to the contract.

Direct settlement can occur in three ways:

• 1. Delivery of goods upon expiration of the contract
• 2. Direct compensation - liquidation of contractual obligations by monetary payment. In this case, the contract is repurchased from the original buyer by the seller. The payment in this case is equal to the value of the contract at signing minus the value of the contract at the time of repurchase.
• 3. Failure to fulfill a contract is a situation when, upon expiration of the contract, one of the parties is unwilling or unable to fulfill its obligations. Settlement of the contract occurs through the court or according to the rules of the given exchange regarding arbitration.

Under a direct settlement system, parties entering into a transaction must take credit risk into account. This risk can be mitigated by depositing margin with the clearinghouse. In direct settlement, the role of a futures clearing center is similar to that of a clearing bank - it transfers funds and does not act as an intermediary of the transaction or a guarantor of the fulfillment of contractual obligations.

Clearing activity is work aimed at releasing payment obligations between business entities. In this article we will consider the essence of clearing and the scope of its application.

Clearing, clearing activities

Clearing in English means “to clear”, “to clear”, “to clear”, and in the commercial sphere it is a special practice when working in the securities market. That is, clearing activity is an exemption from the obligation to pay in cash, established on the basis of mutual settlement between counterparties.

For example, a seller and a buyer meet in a market. First, the item for sale and its value are determined. Next, a contract is concluded. As a result, an interchangeable transaction occurs, on the basis of which the buyer pays and the seller transfers the goods. This is a classic example.

In the securities market, such a meeting of counterparties occurs quite rarely. Buyer and seller are separated by both time and space. Intermediaries act as liaisons, organizing, calculating and guaranteeing the fulfillment of obligations. Thanks to the technological development of modern automation systems, it has become possible to process huge amounts of information. The necessary calculations of exchange transactions are carried out: their registration and accounting, offset of obligations between counterparties, guarantee of collateral and other operations.

Counterparties can be organizations, international companies and even entire countries. And the objects of such activity are goods, services, and securities.

In the securities market, clearing activity is a process whose main purpose is the settlement and fulfillment of mutual obligations. And the main condition of the deal is the balance of payments.

Clearing activities: Federal Law No. 7 dated 02/07/2011

The activities of clearing organizations in the Russian Federation are regulated by Federal Law No. 7-FZ dated 02/07/2011 (as amended on 12/30/2015) “On clearing and clearing activities”.

In the Russian Federation it is subject to mandatory licensing. The license is issued by the Bank of Russia; its validity period is not limited, but can be canceled for the reasons specified in Article 28 of Law No. 7-FZ.

The list of types of activities in which a company cannot engage in clearing activities is clearly stated in paragraph 3 of Article 5 of Law No. 7-FZ. It is important to note that to implement the latter, the company must provide an initial amount of equity capital of more than 100 million rubles.

Clearing operations

The operations described are compensatory transactions. They can be with full, partial or no security at all. In the first case, the risk of financial losses is minimized, since the amounts necessary for the transaction are available in the accounts of the participants.

With partial collateral in the participants’ accounts, it is enough to have some of the funds or confirm it with data from other contracts. Such operations can be carried out with a zero balance in the participants’ accounts, that is, without collateral. But such a transaction is quite risky.

Types of clearing

Depending on the participants in the activity, there are:

1. Simple clearing. This is a calculation of obligations both for each participant and for each transaction.
2. Multilateral. It involves calculating liabilities in aggregate.
3. Centralized. It is based on conducting transactions through the accounts of a clearing company. At the same time, she has all the rights of the parties to the transaction.

The named company has the right to independently determine not only which type of clearing is preferable to use, but also to combine them. If the obligations for securities or cash flows are of a homogeneous nature, then the intermediary organization can net (offset) these obligations.

Types of clearing transactions

Depending on the methods of mediation activities, there are:

1. Bank clearing. It exists in those countries where the banking sector is actively interacting and developing. Involves non-cash payments between banks. The main condition is the mutual offset of equivalent cash payments.
2. Currency clearing. Refers to the international system of obligations. In this case, settlements can be carried out not only at established prices - a special clearing currency can be developed for this purpose. This clearing method is used if participants do not have converted currency for mutual settlements. Of course, you can pay in gold, but, as a rule, such resources are limited in many countries.
3. Commodity. It is represented by a settlement system between the exchange and the commodity market.

Participants in the clearing process

Participants in mediation activities include:

• the intermediary organization draws up documents in accordance with the legislation of the Russian Federation in this type of activity, receives a license from the Bank of Russia, and then begins work;
• clearing member. A legal entity or individual enters into a clearing service agreement with an organization;
• clearing center It is an organization in which the process of clearing transactions occurs through stock exchanges and other trade organizers;
• The settlement depository is a guarantor on the securities market. Transactions take place through trade organizers;
• settlement organization. Having received the clearing results, this business entity calculates cash flows;
• organizers of auctions on the market. The classic organizer is the stock exchange, which additionally carries out settlement, clearing and depository activities.

For the productive formation and development of the securities market, the role of trading organizer can be performed by a self-regulatory organization, which is formed from a composition of professional participants. Such an association is voluntary.

Features of the clearing process

Clearing activities in the securities market operate in stages. First, a contract is concluded on the stock exchange with the help of a broker. Next, the details of the transaction are clarified, the volumes, costs, delivery times and other conditions are thoroughly spelled out.

Then the transaction is registered and intentions are confirmed. This is followed by the calculation of mutual requirements, with the help of which participants determine who will have to pay for brokerage services, commissions to the stock exchange and other professional market participants. At the final stage, mutual settlement occurs between them.

Clearing activities of banks

In the banking sector, the role of intermediary operations is carried out by clearing houses and centers. The first of them are a powerful financial instrument and have an independent status. The chamber assumes contractual obligations, which reduces risks and guarantees financial results.

If the chamber is created within the exchange, that is, it is its structural division, then the exchange controls its activities. Therefore, she is a guarantor of transactions. Having chosen an organizational and legal form in accordance with the legislation of the Russian Federation, the chamber can be organized as an independent legal entity. At the same time, its relations with the exchange are of a contractual nature. It is important to note that such a clearing house can interact with several exchanges at once.

Stages of settlement and clearing activities

As soon as a transaction is recorded by brokers on the exchange, the clearing procedure begins. Settlement and clearing activities have a certain peculiarity and undergo a step-by-step process of re-registration of the new owner of the security.

1. Registered on the stock exchange.
2. Confirmed by counterparties.
3. Securities and money are transferred to the stock exchange through brokers.
4. The re-registration process is underway.
5. The process of returning re-registered securities to the stock exchange.
6. Transfer of money from re-registered securities through brokers to new owners.

Clearing activity is an important regulatory mechanism in the stock market. With its help, the amount of money supply between participants is minimized. The guarantee function when fulfilling obligations ensures high-quality liquidity of the market itself.

The global stock architecture consists of a network of stock exchanges and a settlement and clearing system. The quality of the clearing organization determines the amount of transaction costs and the competitiveness of the exchange. Existing settlement and clearing organizations, their classification and main elements are described, methods for conducting cross-border transactions are considered from the point of view interaction between brokers, custodians and central depositories of different countries.

The global stock architecture consists of two main elements: a network of stock exchanges and an international settlement and clearing system.

Currently, the world economy has formed a structure of capital markets, within which two types of stock exchanges are distinguished: global and regional. Each type has its own market niche and economic specialization.

The economic community is dominated by global exchanges. They are distinguished by the largest capitalization, significant trading volumes, and the highest liquidity. On such an exchange, securities and derivative financial products of the most famous corporations are traded, as well as depositary receipts and secondary placements of foreign companies. The exchange's clients are both national and foreign investors from all over the world. Examples include the New York Stock Exchange (NYSE), the London Stock Exchange (LSE) and the Tokyo Stock Exchange, Asia's largest. The American electronic exchange NASDAQ, which is currently experiencing a period of relative decline compared to the late 1990s, is seeking to achieve the same status. Global stock exchanges provide the most efficient access to capital from large institutional investors.

A regional exchange serves one region and dominates the local economic system. Unlike global, it works with limited categories of products and investors. Clients are mainly regional investors, as well as some foreign investors, who benefit from the exchange's accumulated experience and knowledge of investment opportunities in the region. Many local clients prefer to invest in securities that are well known to them and are listed on this exchange. In Europe, the largest regional exchanges are Euronext and the German Exchange, in Asia - Hong Kong and Singapore.

The number of companies registered on the world's largest exchanges is shown in Fig. 1.

According to this indicator, global exchanges are not absolute leaders, which is explained by rather strict requirements for admission to them. It should be noted that its value does not serve as the main evidence of the influence of the exchange. More significant are the volumes of capital raised through IPO (initial public offering) and SPO (subsequent public offering) to finance enterprises (Fig. 2 and Fig. 3).

In terms of the volume of capital raised during initial offerings, the leading stock exchanges are New York (NYSE), London (LSE) and Hong Kong (HSE). The NYSE is the undisputed leader in secondary offerings. As for the European exchange Euronext, the significant amount of capital raised in 2005 is largely due to privatization IPOs. For example, the largest privatization IPOs of French infrastructure companies Electricite de France (IPO size $9 billion), Gaz de France ($5.5 billion), Societe des Autoroutes ($1.2 billion), Eutelsat SA ( $1 billion), totaling more than $16 billion.

The differences between global and regional exchanges are clearly evident in the composition of the companies conducting IPOs. As an example, we can cite data on the London and Hong Kong stock exchanges (Table 1).

Telecom Egypt Egypt 5053 591Frutarom Industries Israel 460 57Evraz Group SA Russia 6711 422Pyaterochka Hldg N.V. Russia 2570 585Amtel Vredestein N.V. Netherlands 684 223Bank Muscat Oman 1942 161Sistema JSFC Russia 11 290 1354Novatek OAO Russia 7894 927Novolipetsk Iron and Steel Group Russia 9529 624Investcom LLC UAE 4610 759UTI Bank India 1979 237Kumho Tire Co. Inc. South Korea 1215 266Shanghai Electric Group Co. Ltd. China 4525 648China Shenhua Energy Co. Ltd. China 21 819 3279Bank of Communications Co. Ltd. China 24 079 2166China COS CO Holdings Co. Ltd. China 2891 12 227Guangzhou R&F Properties Co. Ltd. China 2954 294AAC Acoustic Technologies Holdings Inc. China 837 126China Yurun Food Group Ltd. China 838 224China Paradise Electronics Retail Ltd. China 846 152China Construction Bank Corporation China 85 508 9231Shenzhou International Group Holdings Ltd. China 470 117Parkson Retail Group Ltd. China 1022 241Dongfeng Motor Group Co. Ltd. China 2501 589

Company	A country	Market capitalization, $ million	IPO size, $ million
Global Exchange - London Stock Exchange (Main Market)
Regional exchange - Hong Kong Stock Exchange

In 2005, all the major IPOs on the Hong Kong exchange were conducted by Chinese companies, while in London the main issuers were Russian, Indian, Korean, Israeli, Omani, Dutch and Emirati companies. It should be noted that recently competition for investors and issuers within each type of exchange has increased significantly, and inter-exchange integration processes have also intensified.

The second important element of the global stock architecture is the settlement and clearing system. If exchanges are a visible part of such an architecture, then the settlement and clearing system serves as its infrastructure. The quality of a clearing organization largely determines the amount of transaction costs and, accordingly, the competitiveness of a particular exchange. The emerging international settlement system, which allows investors to buy shares on foreign exchanges, links national exchanges into a single global whole.

SETTLEMENT AND CLEARING SYSTEM: BUSINESS SCHEME

Clearing and Settlement are processes that immediately follow the execution of a transaction and culminate in the final and irrevocable exchange of securities and funds between the parties to the transaction.

The standard scheme of the settlement and clearing process is shown in Fig. 4.

At the bottom of the figure are the organizations responsible for implementing the process step by step (second row from the bottom) and for carrying out each step at the London Stock Exchange (first row from the bottom).

The clearing process is described in steps 3-6. It begins after the counterparties have completed the transaction and ends when the parties issue summary settlement instructions (Instructions) on behalf of the intermediary. Clearing services can be provided either by a separate organization or by a division of the exchange (clearing house), or a national or international central depository (ICD). In particular, on the LSE such services are carried out by the independent organization London Clearing House (LCH).

The clearing process has two main components:

• processing of the transaction itself (including reconciliation of instructions), netting (offset);
• management of counterparty (credit) risk - the so-called innovation of 1 transaction to the central clearing counterparty.

The transaction is completed by an intermediary (broker or online broker) on behalf of the investor (steps 1 and 2) and can occur either on or off the exchange. Exchange transactions are carried out using an electronic order book. Reconciliation of instructions (step 3) can be carried out by an exchange, clearing house or central depository (CD). For exchange transactions, the process of matching orders occurs automatically. If there is a central clearing counterparty (Central Counterparty - CCP), information is automatically sent to it for innovation and settlement.

The clearing organization serves as such a counterparty if it acts as a buyer for each seller and a seller for each buyer, taking on all risks associated with the possible default of the parties (step 4). Most European markets have a central clearing counterparty. Exceptions are the exchanges of Finland, Luxembourg, Spain, Greece and Denmark, which use bilateral clearing. It should be noted that in Russia, only bilateral clearing is still used.

This is followed by the netting procedure (step 5) - offsetting the total obligations of the parties to the transaction to the central counterparty. For example, if company A carried out transactions in shares of company X with seven different counterparties during the day, then by the end of the day the total obligations of this company to the central counterparty for these shares are calculated. This procedure is called Risk Netting, and it differs from the Settlement Netting procedure carried out by the central depository, during which transactions of various counterparties are summed up and offset against each other. On the London Exchange, risk netting is carried out by the central counterparty (London Clearing House), and settlement netting is carried out by the CREST system (depository). In the US, the National Clearing Corporation performs both types of netting. In some European markets (eg Italy), the central clearing counterparty carries out risk netting and the central depositary carries out settlement netting. In other countries that follow the American model (Germany), both procedures are carried out by a clearing organization.

As a rule, in order to insure the risk of default, the central clearing counterparty has a guarantee fund, which is formed from collaterals contributed by trading participants. The amount of collateral is determined by a special algorithm and depends on historical volatilities and correlations between the prices of the securities for which the transaction is made. The clearing process ends when summary (post-netting) settlement instructions are issued on behalf of the intermediary (step 6).

Transaction settlements consist of the transfer (transfer) of securities and funds by the parties to the transaction (step 7). After they are completed, the transaction is considered completed. Settlements are usually carried out within the central depository, and payments are carried out through the payment system. Usually settlements take no more than three business days. Most transactions are settled using the Delivery versus Payment method, where securities and cash are exchanged simultaneously.

In some jurisdictions, upon settlement, the securities must be registered as belonging to the buyer. In this case, the Central Depository may provide additional services for registering shares. If the intermediary is not a member (participant) of the central depository, then a custodian is used as an agent to carry out the transaction. The custodian receives securities into Ring-Fenced Accounts (step 8) and can provide additional services for paying taxes, receiving dividends and interest payments. In almost all modern markets in Europe and Asia, settlements for domestic securities pass through a central depository. In many cases, the owner of the depository is the exchange. The purpose of the depository is to settle market transactions electronically. The main functions of a traditional depository include:

• custodial storage of securities if they are in the form of certificates;
• provision of basic types of services related to the storage of securities, including payment of dividends and interest payments;
• providing participants with the opportunity to keep accounts in the depository in electronic form;
• carrying out settlements for transactions between members of the depository on the principle of “deliveries versus payments”.

In addition to national CSDs, there are two international central depositories: Euroclear Bank and Clearstream Corporation. Their specialized function is the storage of international bonds, which are still circulated in the form of physical certificates. In turn, MDCs are members of national CDs and perform functions similar to those of custodians.

A standard transaction scheme in the domestic market is shown in Fig. 5.

CLASSIFICATION OF SETTLEMENT AND CLEARING ORGANIZATIONS

There are several types of organizational structure of clearing and settlement enterprises in the world.

1. Full vertical integration of trading and post-trading operations within commercial companies. This structure is typical for exchanges in Italy, Germany, and Spain. The exchange controls all stages of the business process (clearing, settlements and storage), owning a controlling stake in commercial organizations. In 2000, the Deutsche Bourse acquired the international central depository Cedel and merged it with the German central depository (in which it already owned a majority stake) into the international central depository Clearstream. It also owns the clearing organization Eurex Clearing. The German Exchange itself is a company with a broad shareholder base. In Italy and Spain, the national exchange is managed by a syndicate of national banks.

2. Horizontal integration of commercial companies. The most prominent example is the clearing organization CREST, which is the central depository for the English and Irish markets and is controlled by user participants. In 2001-2002 Euroclear Bank has teamed up with Sicovam (France), Negicef (Netherlands), CREST (UK) and CIK (Belgium). A holding company, Euroclear ED, was formed, which includes national and international CDs as subsidiaries. In 2003, the English LCH merged with the French Clearnet and the Dutch clearing organization into a single company LCH.Clearnet. The Euro-clear Group now includes a number of companies providing settlement and custody services in the UK, France, the Netherlands and Belgium. The merger of LCH and Clearnet is seen as an important step towards creating a pan-European clearing organisation. Currently, a lot of work is underway to create a unified system platform. Experts foresee that the main difficulty on this path will be the involvement of the German Eurex Clearing system, owned by the German Exchange. The settlement systems of Belgium, France, the Netherlands, Great Britain and Ireland are also currently being consolidated. If the project is successful, it will stimulate the merger of central depositories on a large scale, which will significantly reduce the costs of international transactions. The developed standards could become the basis for a larger pan-European project. Work to create a common central depository platform for exchanges in all Euroclear countries is planned to be completed by 2011.

3. Vertical integration of post-trading services within a non-profit organization. It is typical for the USA, where DTCC (Depository Trust and Clearing Corporation, formed in 1999) simultaneously controls the central clearing counterparty (NSCC) and the central depository (CSD) for all trading systems (stocks) of the country. These three legal entities have one management team and a single board of directors, as well as combined corporate services (legal, finance, audit). The existence of one clearing organization was challenged in court on the basis of US antitrust laws. However, the court decided that competition was of secondary importance compared to the efficiency and stability of the settlement and clearing infrastructure. Today, the structure of equity markets in the United States is characterized by competition among exchanges and trading platforms with a single central clearing counterparty and a national central depository.

There is a significant gap in transaction costs between the American and European markets. Today, the American system is more efficient: clearing and settlement costs for a single stock transaction average $0.10. In European markets, similar costs are estimated in the range of $0.35-0.80. The American system is much larger than its European counterparts (Table 2):

The main parameters of the settlement and clearing infrastructure of the world's largest financial markets are shown in Fig. 6.

Exchange (Cash Equities Trading) New York Stock Exchange NASDAQ Electronic Exchange London Stock Exchange, LSE German Exchange Deutsche BorseClearing House Eurex Clearing (owned by the German Exchange)Settlement System Clears tream Banking Frankfurt (owned by the German Exchange)

	USA	Great Britain	France	Netherlands	Germany
Euronext
NSCC (100% subsidiary of DTCC, control of DTCC is owned by users and exchanges) CSD (100% subsidiary of DTCC, control of DTCC is owned by users and exchanges)	LCH.Clearnet (45% owned by users, 10% owned by Euroclear, 45% owned by exchanges)
Euroclear Euroclear France Nederland (owned by Euroclear)

METHODS OF CROSS-BORDER TRANSACTIONS

For investors who are located in one country but want to buy or sell securities from issuers in another country, there are several options for conducting international settlements in the modern financial system. As a rule, they are not mutually exclusive, and combinations of them are used.

• Direct access: An investor from one country gains direct access to the settlement system in another country.
• Local Agent: The investor uses a local custodian.
• Global Custodian: The investor appoints a global custodian for settlements in all foreign markets.
• International central depository: the investor makes settlements through one of the existing ICDs.
• Links between national central depositories.
• Multinational central depository.

Direct access

With this approach, a foreign investor receives direct access to the depository where settlements on securities are carried out. As a rule, it is provided only to financial institutions. Some depositories (CREST in London, Central Clearing System in Hong Kong) allow individual and corporate foreign investors to open direct accounts with them, but in no depository can foreign investors directly issue settlement instructions. Direct access is limited only to those financial institutions with whose countries regulators have signed a Memorandum of Understanding. The only market where foreign investors have direct access to the depository and can directly issue instructions is the market in Hong Kong (Central Money Market Unit).

Local agent

Historically, local agents (brokers/custodians) in the issuer's country have most often been used for cross-border settlements. However, many financial institutions are not satisfied with this situation: local brokers have low capitalization and do not invest in technological infrastructure. They are often used only for trading. The broker clears the local market and then deposits the securities with a custodian appointed by the financial institution. Custodians typically obtain securities from brokers on a delivery versus payment basis. If a bank acts as a custodian, this facilitates the transfer of payments. However, the services of local custodians are associated with an inconvenience for the investor: he must appoint custodians in each country where the investment will be directed, and a legal agreement must be concluded with each of them according to the laws of the custodian's country. The investor receives investment reports in various formats, at different time periods. In addition, he conducts due diligence for each custodian separately.

Global Custodian

In recent years, institutional investors have increasingly used global custodians (GCs) to provide them with settlement services in various markets. In this case, investors contact only them. The responsibility of the Civil Code is to organize the settlement process in each market. They can open a direct account with a foreign central depository through their subsidiary or appoint a local custodian. The use of a Civil Code simplifies risk management on the part of the investor, and also allows the latter to receive a single report on all markets simultaneously in one format. The main global custodians are large international banks: Bank of New York, J.P. Morgan, Citibank, BNP Paribas, ABN-AMRO, Mellon, HSBC, etc.

International Central Depository

There are two international central depositories: Eurocelar and Clearstream (formerly Cede!). These ICDs were originally created to carry out settlements on Eurobonds. The Eurobond market emerged in the 1960s, and Morgan Stanley and Citibank formed international depositories for the settlement and storage of Eurobonds in the primary and secondary markets. Both organizations were created as non-profits, but Euroclear (controlled by Morgan Stanley) required its participants to hold accounts with J.P. Morgan, and Clearstream (controlled by a consortium of banks, including Citibank) allowed participants to choose the bank for settlements. The MDCs established a communication line between themselves, the so-called “bridge.” Initially, calculations on the “bridge” were carried out once a day, now it works almost in real time, and such calculations are almost no different in cost from internal MDCs. - one exchange. They make settlements on securities that are traded on 30-40 markets, as well as outside exchanges. Securities are usually issued in the form of global certificates and are placed by the issuer in custody in the country of incorporation of the issuer with a custodial agent appointed by the ICD. Once the certificates are deposited with the agent, MCD deposits them into the accounts of its clients in accordance with the instructions of the issuer (and its agent). Settlements for transactions between clients of the depository are carried out by changing the book of entries on accounts in the depository upon receipt of reconciled instructions from the participants in the transaction. One of the differences between MCDs and national CDs is that MCDs do not have access to central bank funds and are therefore exposed to credit risk. In this regard, the conditions for membership of organizations in the ICD are much stricter in relation to the volume of authorized capital, and only large banks use their services. There are also communication lines between the IDC and national DCs through which settlements are made.

The role of MCD and the nature of securities are gradually changing. The creation of the ICD contributed to the development of the international bond market. Many companies have taken advantage of this infrastructure to issue securities denominated in various currencies. Later, MCDs began to provide settlement for equity transactions by developing two-way lines of communication with equity depositories around the world. Settlement connections with local depositories can be direct or indirect. With direct connections, the local depository opens an account in the MCD or the MCD opens an account in the local depository. In case of indirect relations, the local depositary appoints any member of the MCD as its agent and vice versa.

Links between national central depositories

In response to the globalization of markets, both national CDs and IDCs have begun to establish lines of communication with each other2. Initially, the connections were one-way. They were created so that investment banks could hold securities in one place and not have agents in numerous local depositories. There are three types of connections:

• indirect connection through a local participant (custodial bank);
• direct connection between depositories (depository A has a current account directly with the issuer’s depository);
• direct connection established by a communication agreement (depository A and the issuer’s depositary enter into an agreement on interaction when moving securities).

Figure 7 shows a simplified diagram of direct communication between two central depositories.
As a result of the establishment of links between central depositories, the investor will be able to hold foreign securities in his account with the national depository. All market participants will have the opportunity to offer clients international investment instruments, including small organizations that do not currently use the services of global custodians and cannot establish local agents in all foreign markets in which their clients are interested.

As the number of depositories that hold foreign securities increases, the number of connections between them increases, and these connections begin to form a network (Figure 8).

Delivery of shares within one depository is considered home delivery. Deliveries of shares between participants in depository B and depository A (issuer depository) are also quite simple. However, if Depository Participant D wants to deliver shares to Depository Participant C, it must contact Depository A to adjust the balances of Depositories D and C at Depository A accordingly. The mechanism for such adjustment depends on the agreements between the depositories. If they have mutual accounts with each other, then the shares must be posted to these accounts. If both depositories D and C have accounts in depository A, then the securities of the issuer - a member of depository A, owned by members of depositories C and D, are held in the accounts of depositories C and D in depository A. If a member of depository D wants to transfer securities to a member of depository C , he must instruct Depository D, which in turn will instruct Depository A to transfer the shares to Depository C, which will transfer them to its member.

There are several more complex connections of central depositories:

• network distributed connection model proposed by the Data Center Association;
• the “hub and spokes” model (Hub and Spikes Model - literally a model of a central hub and diverging beams, widely used in the organization of air transport communications: a central airfield system with transfers to local airfields);
• model of a single central depository providing settlement services for several markets at once.

The unification of central depositories according to the “hub and spoke” model (Fig. 9) is considered the most promising.

Multinational central depository

Now in Europe, lines of communication between national CDs and IDCs are being replaced by the creation of multinational settlement and clearing organizations through the merger and friendly takeover of several national CDs. All members of central depositories have access to the services of a multinational depository. All settlements for cross-border transactions are carried out in the same way as settlements for domestic transactions and are no different from them. With such a system, the use of a local or global custodian is not required. Multinational depositories will be able to establish lines of communication with other multinational depositories. There will be fewer such lines than directly with all national central depositories.

COMPETITION BETWEEN GLOBAL CUSTODIANS AND CENTRAL DEPOSITORIES

A characteristic feature of cross-border transactions is the intensifying competition between various organizations for conducting settlement transactions. In Fig. Figure 10 shows alternative settlement schemes for cross-border transactions.

Let's say an investor in country A buys securities registered with the issuer's depository in country B and uses his bank as a broker. The broker can become a member of the issuer's depository and conduct settlement through it (ultimately the securities will remain in custodial custody at the issuer's depository). It can also use a local custodian. Typically, this is a resident bank in the issuer's country that is a member of the issuer's depository. Finally, the broker can use the services of a global custodian: although the formal process is similar to settlements through a local custodian, the broker does not have to interact with numerous local custodians in different countries and in different markets where its clients want to trade. A global custodian deposits securities either directly with the issuer's central depository or uses a local custodian. In any case, in order to provide services to its clients, the GC must be included (directly or indirectly) in the infrastructure of the issuer's depository. However, emerging global custodians are beginning to compete with central depositories and undermine their business. As the company's client base expands, transactions appear in which both the seller and the buyer are their clients. There is a significant increase in the number of transactions that can be settled using the custodian's internal books, without using the central depository infrastructure. This is why in many countries, national central depositories prefer brokers to use local rather than global custodians.

COMPETITION BETWEEN NATIONAL AND FOREIGN CENTRAL DEPOSITORIES

As already mentioned, connections between two central depositories can be of two types: direct and indirect. With direct connections, two DCs directly interact with each other. In case of indirect connections, a cooperation agreement between the CDs is not necessary. In reality, the issuer's CSD may not even be aware that a foreign CSD is using its infrastructure through a local or global custodian's omnibus account. Let's say a broker wants to settle a trade through a direct CSD-to-CD link, without using a local or global custodian. The foreign CD in this situation may hold the securities in its omnibus account with the issuer's depository on behalf of its client. The role of the foreign depository will be identical to the role of the global custodian: it needs access to the infrastructure of the issuer's depository in order to provide settlement services to the client (broker).

However, a foreign depository, like a global custodian, may compete with and disrupt the issuer's domestic depository as its business grows. Indeed, as a foreign depositary acquires a sufficient number of clients trading in the foreign issuer's shares, it begins to settle them on its own books without having to resort to the issuer's depository infrastructure.

LONDON CREST SYSTEM AND SETTLEMENT OPERATIONS WITH FOREIGN COMPANIES CONDUCTING IPO ON THE LONDON EXCHANGE

As an example, consider the settlement and depository system of the London Stock Exchange. International settlement services on this exchange are provided by CRESTCO (Crest Depository Limited). Relations between CREST and its participants (members) are governed by English law. At the same time, a subsidiary of CREST holds foreign securities in its account in a foreign CSD (either directly or through a custodian), and these relations are regulated based on the legislation of the country of location of the foreign depository. CREST Depositary holds securities in trust for the depositary's members. It issues a security in the form of a “dematerialized” depositary receipt (CREST Depositary Interest - CDI), which replaces the foreign security. The CDI treatment is subject to English trust law, on the basis of which the relationship between the investor and the depositary is regulated. According to the law, all dividends and interest payments are transferred directly to the investor. This trust structure does not affect the valuation of the security or the manner in which it is traded. From an economic point of view, the existence of a CDI does not matter, but it does facilitate the settlement process. To conduct a cross-border IPO, an English corporate broker must obtain securities via cross-border delivery via one of the lines of communication between CREST and the foreign CSD. Once the securities are credited to the broker's current account, the further procedure is no different from the IPO of an English company. To conduct an IPO of a foreign company, the corresponding security must be obtained from a central depository in the country of registration (incorporation) of the issuer, which has agreements with CREST. This is one of the following countries: Austria, Belgium, Bermuda, British Virgin Islands, Canada, Cayman Islands, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, USA. In the case of an IPO, the company must carry out all the necessary procedures in its home central depository.

If the placement is carried out simultaneously on the London and national markets, the company will require the services of corporate brokers in both markets. In this case, the home broker is responsible for:

• conducting an IPO on the corporation’s home market;
• cross-border delivery from the national central depository to the CREST account of an English corporate securities broker in quantities intended for distribution among CREST members.

The delivery of securities to the CREST account from a local CSD must be made from another account in the same CSD according to the procedure specified in the agreement. Physical delivery of certificates is not permitted. It is not possible to use standard international settlement services unless the security is held in a CSD or in a CSD with which CREST has direct or indirect links.

In this situation, the issuer can issue its own depositary receipt (DI) with the help of an English registrar. In this case, DI is different from the CDI of the depository itself. The registrar holds the original securities on behalf of the depository members, and also performs several additional functions:

• maintains the English part of the share register (or the entire register);
• acts as a depositary and holds the issuer's shares on behalf of CREST members;
• issues DI in non-certified form to CREST for company shareholders.

All companies that plan to issue DI must make certain amendments to their Articles of Association, the purpose of which is that CREST members can use standard procedures to deposit securities in the CREST system.

RUSSIAN SETTLEMENT AND CLEARING SYSTEM AND ITS REFORM

In Russia, registration of rights to securities is carried out by registrars and depositories. Registrars maintain registers of shareholders, working under an agreement with the issuer of shares, and the clients of depositories are the owners of securities who transfer them for storage or make transactions on them. If a shareholder transfers shares from the register to the depository, then in the register, instead of the shareholder's account, a nominee account belonging to the depository appears in the register. In this case, there can be many depositories, and all of them have the right to open nominal holding accounts both in registers and with each other. Thus, it is possible to build a long chain of so-called investments, when a nominal holding account is opened in a depository that is a nominal holder in another depository. Through this chain, it is easy to take shares offshore, and it will be difficult even for the issuer to obtain information about the ultimate owner of the shares. According to the Federal Financial Markets Service, in 2004 there were 79 registrars and 737 depositories in Russia. Currently, there are five settlement depositories operating in the country (NDC, DCC, RDK, VEB and RDC SPb.). A settlement depository, unlike a custodial depository, is not engaged in storing client securities, but in servicing transactions with them, mainly participants in organized trading systems. RDC, VEB and RDC are depositories focused primarily on servicing certain types of securities, and this niche is assigned to them by regulatory documents. For RDC, such securities are shares of Gazprom, for VEB - OGVZ 1999 and partly other OVGVZ, and for RDC St. Petersburg. - MKO (St. Petersburg “municipal” bonds). Two other settlement depositories, NDC and DCC, compete with each other to one degree or another, although they do not occupy exactly the same niches.

Non-profit partnership National Depository Center (NDC) is the settlement depository of the MICEX group and the authorized depository for most issues of state, corporate, municipal and subfederal bonds. NDC services 100% of transactions on the OFZ market and more than 90% of the exchange turnover of shares and bonds of corporate issuers.

The Depository Clearing Company (DCC) is the settlement depository of the RTS, its client network includes more than 390 companies - professional participants in the stock market. As for shares, in this sector the rights of NDC and DCC are equal. Both of them are not yet the main custodians of shares on the Russian market due to the disorder of the accounting system and the significant role of registrars and subsidiaries of global custodians. Traditionally, DCC has greater capabilities for working with registrars and a larger volume of shares for service. Both organizations:

• have the same technological level;
• in exchanges with clients they use mainly electronic document management;
• can use SWIFT or the Internet;
• serve exchange trading;
• own over-the-counter PPP technology.

They provide many similar services, although there are differences. NDC is more focused on government securities, servicing exchange trading, organizing placements, while DCC is more reliable in working with registrars, executing payments and other corporate actions, and processing corporate information. As a settlement depository, NDC serves the MICEX and theoretically the St. Petersburg Exchange, and DCC serves the RTS, St. Petersburg Exchange, and the St. Petersburg Stock Exchange. In addition, DCC clients can trade on the MICEX through a holder account opened by DCC with NDC. DCC thus offers its clients a wider service, allowing them to work on all significant stock trading platforms, however, access to the platform that dominates in terms of turnover is provided not directly, but through its competitor. NDC serves only the MICEX, but provides direct access to it. There is a “bridge” between the depositories, which is generally sufficient to provide the necessary services.

In 2006, NDC offered a service for accounting for securities of Kazakhstani issuers. It is also planned to open interdepository accounts of NDC in Uzbekistan and Belarus. NDC has an account with Clearstream Banking, which allows it to service Eurobonds. It is expected that he will open an account with Euroclear. In 2006, NDC began implementing a project to create a new technology platform together with the consulting company Accenture and the Indian system integrator Tata Consultancy Services. The new platform complies with international standards for a settlement depository performing the functions of a central depository.

The existing Russian scheme of settlement depositories is shown in Fig. eleven.

Currently, the law “On the Central Depository” is being discussed. It is expected that it will be approved by the State Duma in 2007. The draft law was prepared with the assistance of the international consulting firm PricewaterhouseCoopers. The Federal Financial Markets Service proposes to build a three-level nominal holding system. Not any depository, as at present, will be able to open nominal holding accounts in shareholder registers, but only the central one. The second and third levels will be occupied by settlement and custodial depositories. Since the nominee holder's account in the register is opened only in the CD, you must apply for confirmation of ownership rights to this single center. The CD will take on the role of nominee in the registers, being a non-profit organization with government-regulated tariffs. The investor is not serviced directly by the CD; his account is held at a second or third level depository. The depository where the investor has an account can contact the CSD, but the chain will be short, understandable and consisting of only two requests: to the CSD and to the register of shareholders. With the proposed system, it will not be possible to disguise the fact of ownership of shares, and information on all companies will become transparent. You can contact the central depository for information on any transaction on any security in Russia. The functions of the central depository will include not only the implementation of depository activities, but also the accounting of securities and control over their movement. The CD will undertake cash settlements and clearing of securities transactions. It is also possible to transfer part of the registers to it.

According to the FFMS plan, the CD will conduct settlements and clearing for transactions with securities and cash settlements for exchange transactions. The number of central depositories is not limited by the draft law, but the proposed CD must have an authorized capital of at least 1 billion rubles. Only those depositories that have at least five years of experience as a settlement depository and a rating from the international specialized agency Thomas Murray will be able to apply for the role of a CD. Only the CD has the right to act as a nominal holder of shares of Russian companies, to service the settlements of foreign colleagues, and also to be a settlement depository for exchanges.

It should be noted that the idea of ​​a CD is closely related to the idea of ​​a central registrar, a state or semi-state structure to which the registers of the largest Russian joint-stock companies are transferred. The central registrar will be able to ensure full transparency of the share capital and all beneficial owners. According to experts, Western participants take an ambiguous position. For foreign portfolio and strategic investors, it is desirable to create both a central settlement depository and a central registrar. The activities of a central depository will lead to a reduction in transaction costs, and the organization of a central registrar will increase guarantees of the safety of shareholdings. At the same time, subsidiaries of investment banks, which act as custodians for Western investors - custodians of blocks of Russian shares, see the emergence of a central registrar as a competitive threat to their own business.

Variants of the proposed models of the central (settlement) depository are shown in Fig. 12 and fig. 13.

Work is also underway on the “Law on Clearing Activities”. Currently, Russia does not have a central clearing organization or a central clearing counterparty. Existing clearing is the verification and confirmation of mutual obligations. To make final settlements, the clearing organization reconciles the parties' obligations and transfers securities or money. It pairs the parties’ instructions and determines the obligations. The Russian clearing scheme lacks netting, novation and central clearing counterparty mechanisms. The creation of the latter is necessary to reduce transaction costs and increase the competitiveness of Russian stock markets.

Other proposed changes include the introduction of an issuing nominee account in the register, which is opened by the settlement depository for conducting a classic IPO. In this case, the shares proposed for placement will be credited from the account in the register to the specified issue account from which the placement is carried out. With this procedure, the time for transactions with shares in the register will be reduced. It is also proposed to introduce incentive tariffs for the emission account. Currently, the impossibility of opening such an account for shares in the depository leads to the fact that the placement must take place from the issuing account with the registrar. This significantly increases the execution time of transactions: from real time to one to three days, and also does not allow the use of depositary transfers on PPP terms. The opening of a new type of issuing accounts will reduce the time for crediting placed shares to one day, and will also help to design more flexible placement schemes. In Fig. Figure 14 shows a diagram of an IPO on the MICEX.
During this action, the issuer enters into an agreement and cooperates with the National Depository Center, which is the MICEX settlement depository. When conducting an IPO on the London Stock Exchange, the issuer interacts with the LCH clearing organization and the CREST depository system.

CONCLUSION

Cross-border transactions and integration of national stock markets into the global stock system can be carried out through two main channels: through direct links between central depositories of different countries and through large transnational banks and their custodians (global and local). The difference lies in whose control this process is under: the national regulator or transnational banks.

The Russian stock market is largely integrated into the global financial system. According to experts, just a few years ago, up to 80% of all transactions in shares of Russian companies were carried out on foreign exchanges (London, Frankfurt, New York). Recently, thanks to vigorous efforts by the Federal Financial Markets Service, this figure has dropped to less than 50%. The share of “foreign” money in Russian stock markets remains within 70-75%. Since there is no central depository in Russia, and the existing settlement depositories NDC and DCC do not have direct connections with the central depositories of developed countries, the de facto integration of the Russian stock market into this system has so far been carried out through and under the control of transnational banks and global custodians. As the settlement and clearing system is reformed, as well as the creation of a central clearing organization and a central depository, the competitiveness of Russian stock markets will increase. With the development of the central depository and the expansion of ties with the central depository of other countries, an additional channel will appear for cross-border transactions and integration into the global system of stock markets, which will undoubtedly have a positive impact on the development of both the financial and real sectors of the Russian economy.

Participants in many, primarily financial, markets often make opposite payments to each other. If payments of this kind are more or less systematic, then it is advisable not to transfer payments of this kind each time, but to offset them, i.e., transfer only the net balance of payments for a day or another period of time.

Clearing is a settlement system based on the offset of mutually opposite monetary payments between market participants.

Clearing can be bilateral, if it is carried out between two market participants, or multilateral, if it is carried out between a large number of participants.

The most developed clearing systems are organized by banks or specialized organizations - clearing centers, which receive the status of non-bank credit organizations. However, the founders of such centers are usually large banks.

Non-cash payments between market participants using clearing sharply reduce document flow, speed up and reduce the cost of settlements, and most importantly, do not become a brake on the functioning of financial markets, where a large number of transactions are concluded per unit of time. In modern conditions, clearing can actually be characterized as a rather complex special system for organizing settlements or making payments using a mathematical apparatus for optimizing settlements and corresponding software. To carry out clearing, the position of the transaction is determined, that is, the ratio of the requirements and obligations of the transaction participant. If the requirements and obligations are equal, then the position is called closed; if they are not equal, it is called open. An open position is considered long if the requirements of a given participant exceed his obligations (he has more funds in his account than he needs to fulfill his obligations on transactions). Otherwise, the open position is called short. If closed (zero) positions are obtained, then the settlement process can be considered completed. If the position remains open, then it is necessary to calculate the net (unaccounted or outstanding) balance of the account, and in this amount transfer funds to the account of the participant whose claim remained unfulfilled (payment settlement). As a result of clearing, the amount of obligations of all participants should be equal to zero. The process of netting the obligations of the parties - participants in the clearing system is called clearing session. It can be carried out several times during the day at a predetermined time and serves to calculate the intermediate or final balance of each participant in the system.

The functions of ensuring settlements and accounting for mutual obligations of participants in the clearing system are performed by the clearing house.

An important feature of clearing is the possibility of offsetting in a chain of claims arising from many different enterprises, interconnected to varying degrees by supplies and services.

Clearing is a very effective mechanism for making settlements in the event of counterclaims and obligations. The economic basis of clearing is the high level of specialization and cooperation of economic entities and the resulting wide mutual supplies.

Word " clearing" English, means "to cleanse" or "to be freed." By using clearing operation liberation actually occurs - liberation from the need to pay. This is done through netting, which financiers call clearing. For example, two parties supply goods to each other. One participant in the transaction sells cotton for $500 per ton. The second party imports production machines worth 5 thousand conventional units each. In order not to pay each other real money, the parties to the transaction balance supplies in such a way as to reach zero. So, 100 tons of cotton cost the same as 10 looms. Thus,

Clearing is a non-cash payment system for delivered or sold products. Goods include securities and services. Countries, banks and any enterprises can act as parties to the transaction. The contracts are based on the principle of balance of payments, or so-called offset.

Clearing deliveries are also called compensation transactions. They do not necessarily involve only two parties; multilateral clearing is possible. Contracts are usually supported by trade agreements. They indicate the quantity of products and their type. Signing the papers guarantees equalization of the cost of trade turnover. How exactly payments will be made is specified in payment agreements.

Clearing operations differ in the netting system, as well as in the method of fulfillment of obligations. Simple clearing implies control of accounts, the availability of the necessary funds and assets on them after each transaction.

Multilateral clearing tracks a number of already completed and financially secured transactions. A collection of transactions is called a pool. He has a deadline for fulfilling his obligations.

Centralized netting carried out through clearing organizations. Firms assume all obligations under contracts. At the same time, the intermediary receives all the rights of the parties to the transaction and carries out settlements through their accounts.

Clearing operations They are also divided according to the principle of cash settlements. Fully Collateralized Compensation Transactions reduce the risk of financial losses to nothing. Transactions are made only if the accounts of all parties have the amount or quantity of valuable assets required for the transaction.

Clearing with partial collateral requires the presence of part of the funds in the accounts. Otherwise, solvency is confirmed by providing data on deposits under other contracts. This is accompanied by an assessment of the companies' full assets made by the clearing organization.

The riskiest type of clearing transactions is without prior collateral. Such transactions are carried out even with empty accounts.

Settlement operations can be performed on both forward and other types of transactions. In addition, they are indicated one-time clearing type And standing transactions.

By scale, clearing operations are divided into local And large-scale. The latter, for example, includes international clearing. It is most often resorted to by those states whose currencies are inconvertible. It would be possible to pay in gold and available convertible assets, but their quantity in the country is limited. Then they resort to compensation transactions. They are governed by clearing agreements. Local same clearing is usually regulated by bills of exchange and is carried out between specific, medium-sized business entities.

If a clearing organization assists in clearing transactions, it must be licensed. The document, in accordance with Russian legislation, is issued by the Federal Financial Markets Service. The Federal Service for Financial Settlements checks, in particular, whether the company conducts any other activities other than providing clearing services. Combining multiple occupations is prohibited. This is stated in the regulations on clearing activities. The only companies with which intermediaries are allowed to work are stock exchanges. Let's look at the main stages of clearing when making transactions through these platforms:

— the basis for clearing, the preliminary stage, becomes making a transaction on the stock exchange. The broker handles the contract on behalf of the parties to the transaction

- after, conditions are checked supplies. It is necessary to agree in detail on the volumes, cost of goods and other important aspects. Reconciliation is especially necessary when the initial agreement was reached verbally, for example, by telephone

The third clearing stage becomes transaction registration

- next, required confirmation of intentions

— the fifth stage of clearing becomes mutual claims calculation. It is determined who pays the broker, commission to the exchange and clearing house, depository

- then carried out directly netting between the parties

All stages of transactions in financial markets are strictly time regulated. The settlement period is specified by the exchange. Sometimes, it may vary depending on the type of securities in which transactions are carried out.