Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 5

The major risks in Securities Systems should be mitigated by five key measures:

• the implementation of real delivery versus payment
• the adoption of a trade date plus one settlement cycle in a form that does not increase operational risk.
• the minimisation of funding and liquidity constraints by enabling stock lending and borrowing, broad based cross collateralisation, the use of repos and netting as appropriate
• the enforcement of scrip-less settlement
• the establishment of mandatory trade matching and settlement performance measures.

1.	Does the market use DvP settlement procedures in accordance with one of the recognised BIS models? If so, which one? If the model is not BIS model 1, are there plans to move to this model?	OTC: Model 1 Exchange: Model 3 The Vienna Stock Exchange has no plans to move to Model 1. The current clearing and settlement procedure is a very safe (see also item 2 of Recommendation 4) and efficient one.
2.	Does the market have a rolling settlement cycle of T+3 or shorter for all exchange traded instruments?	Yes, T+3.
3.	Could the market reduce the current settlement period to T+2 or below, without increasing fails rates? If so, how would this be achieved, and what plans are there to shorten the existing settlement cycle?	Current rate of delayed deliveries is 0,3%. 99,7% are settled in time. It is difficult to predict whether change to T+2 would increase this rate. However, there is no demand from the market participants to change to T+2. If this were demanded, this could be achieved by simply changing a parameter within the system of the Clearing House.
4.	Is matching of trade details achieved on trade date, at least for direct market participants; and by trade date plus one for indirect participants?	OTC: Matching is mandatory for DvP and occurs immediately, as soon as two identical instructions are entered into the system, regardless of when settlement will be carried out. Stock Exchange trades: Matching in the electronic system takes place at the time of completion of the transaction.
5.	Is the depository scrip-less, and, if not, is it working to enable scrip-less settlement?	In Austria, almost all securities (bonds more than 90%, equities and the like over 70%) are represented by a global certificate (Immobilisation). Existence of at least one physical piece of paper is required to fulfil legal requirements to constitute a security. Nevertheless, all settlements in the CSD are book entry based, there is no exchange of certificates.
6.	Does the market allow partial settlements?	OTC: no. Exchange: yes.
7.	Can the depository accommodate same day turnarounds?	Yes, the CSD system operates in 5 batches throughout the day. Receipts in one batch can be delivered in the next batch cycle. If both parties use the cash accounts held directly with the CSD for the settlement, back to back transactions can also be effected.

Bank of International Settlements (BIS) Settlement Models

Model 1:	Systems that settle transfer instructions for both securities and funds on a trade-by-trade (gross) basis, with final (unconditional) transfer of securities from the seller to the buyer (delivery) occurring at the same time as final transfer of funds from the buyer to the seller (payment).
Model 2:	Systems that settle securities transfer instructions on a gross basis, with final transfer of securities from the seller to the buyer (delivery) occurring throughout the processing cycle, but settle funds transfer on a net basis, with final transfer of funds from the buyer to the seller (payment) occurring at the end of the processing cycle.
Model 3:	Systems that settle transfer instructions for both securities and funds on a net basis, with final transfers of both securities and funds occurring at the end of the processing cycle.