Status: November 22, 2001

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?	No, the market does not use real DVP settlement procedures. Cash and securities clear in different systems at different times at an inter-broker level. The depository is currently analysing and working to improve the settlement /clearing procedures.
2.	Does the market have a rolling settlement cycle of T+3 or shorter for all exchange traded instruments?	The market has various settlement dates. 90% of the transactions are executed value T+3, nevertheless the market allows an extension of two days, provided that both brokers agree in said extension.
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?	As of July 1, 2001, the market reduced settlement cycle from T+5 to T+3. In the short term, there are no plans to reduce this settlement cycle to T+2.
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?	Yes, matching of trades is usually achieved on trade date. Direct and indirect participants get trades matched once they have been imputed in the Bolsa de Valores de Caracas system.
5.	Is the depository scrip-less, and, if not, is it working to enable scrip-less settlement?	Share certificates are never printed, however a transfer slip is necessary for both exchange and OTC transactions.
6.	Does the market allow partial settlements?	No the market does not allow partial settlements.
7.	Can the depository accommodate same day turnarounds?	Yes, it may accommodate same day turnaround.

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.