Latin American Capital Markets

192 RUBEN LEEnot agree to merge.This idea was subsequently retracted.The Depository Trust andClearing Corporation (DTCC), the single American organization that acts as a CCPfor all cash securities, has also indicated its interest in playing a role in this linkage orconsolidation process. As yet, however; no resolution has been reached as to the bestregional industrial model.CooperationThere are many ways in which CCPs may cooperate with each other to promote regionalcapital market integration.The DTCC (2000) has identified some of these, severalof which may operate simultaneously. For example, dialogue can be valuable as ameans of sharing basic expertise and developing common industry positions on commonproblems. CCPs may cooperate through shared standards on communications,messaging, technology, and operating standards and systems. Collateral optimizationarrangements, such as agreements on cross-guarantees, cross-collateralization, andcross-margining, would allow one CCP to take account of relevant margins, collateral,and positions held in another Shared technology investment could reduce developmentcosts if similar platforms were adopted. And business policies and plans couldlead to harmonization of policies and procedures.These forms of cooperation may intheory bring about similar benefits to those obtainable from a merger; however; inpractice, maintaining the necessary level of cooperation would be difficult.The DTCC has noted that three business models could facilitate these formsof cooperation. First, an integrating clearer could act as a clearinghouse and CCP forother CCPs, enabling trade and settlement novation and netting across a regionserved by different types of asset-specific (such as equities or futures) CCPs and nationalCCPs. Second, a joint venture could arise, for example, among major CCPsto provide common services, such as operational processing or the developmentand management of technology. Third, an application system provider (ASP) couldremotely deliver and maintain technology. This could occur if a large CCP deliveredtechnology to a smaller one or if a joint venture were established to deliver technologyto a number of CCPs.Chicago Mercantile Exchange-Singapore International Monetary Exchange LinkOne of the few instances of CCPs cooperating has been in the futures markets withthe mutual offset arrangement agreed between the Chicago Mercantile Exchange(CME) and the Singapore International Monetary Exchange (SIMEX) on September 7,Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub