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?	The Dutch Central Depository uses BIS model 1.
2.	Does the market have a rolling settlement cycle of T+3 or shorter for all exchange traded instruments?	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?	The current settlement period for the Dutch securities market for all stock exchange related products is T +3. At the moment there is research from American origin to shorten the settlement process to T +1. Next to this, central matching organisations like GSTPA came into existence. The introduction and implementation of T+1 and central matching will be enormous for the Dutch securities market. Fail rates could be decreased if implementation of T + 1/Central matching is connected to the implementation of Straight Through Processing, that is automating settlement transactions without any manual intervention. There are no official preparations for T +1/ central matching made as yet in the Dutch securities market.
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?	Matching of trade details of all stock exchange traded stocks and bonds is achieved by the Dutch depository at T + 3.
5.	Is the depository scrip-less, and, if not, is it working to enable scrip-less settlement?	Yes, within Necigef securities transfers are settled by book-entry only.
6.	Does the market allow partial settlements?	No partial settlements are allowed.
7.	Can the depository accommodate same day turnarounds?	T + 0/T + 1 is perhaps technically possible for the depository, but not for the most part of the Dutch securities market.

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.