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?	Yes, the market uses a combination of BIS method one and two. The settlement is compliant with the BIS model one except for the use of net-settlement of funds. (BIS recommends for both securities ad funds gross settlement i.e. trade-by-trade instead.)
2.	Does the market have a rolling settlement cycle of T+3 or shorter for all exchange traded instruments?	Normally T+3 on all traded securities except for short term notes that are settled at T+2, but it its up to the parties to agree about a shorter or longer settlement cycle.
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 development in the US is constantly followed with great interest. It is seriously questioned whether the market could adjust to T+2 or shorter settlement schemes without increasing failure rates. Sweden will not take a lead in this process, as the costs are likely to be prohibitive if the current low failure rate should be retained.
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?	For direct members on the fixed income and money market 100% is matched on T+0. On the equity market 25% is matched on T+0; 74 % on T+1, and 1% on T+2 before 18:00.
5.	Is the depository scrip-less, and, if not, is it working to enable scrip-less settlement?	All registration of securities with VPC is scrip-less i.e. in book-entry form.
6.	Does the market allow partial settlements?	No.
7.	Can the depository accommodate same day turnarounds?	Yes.

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.