Latin American Capital Markets

244 ANDREW HOOKing clearing organizations formed a new association, CCP-12, dedicated to improvintglobal clearing, netting, and central counterpart services. 3 Three specialist workinggroups will focus on collateral management, linkages, and risk management and bestpractices. Also in 2001, the Group of 30 formed a high-level committee to undertakea comprehensive review of clearance and settlement arrangements in global capitalmarkets. The study will identify potential vulnerabilities in global clearing and settlementinfrastructure and recommend steps to ensure its continued safe and efficientoperation, with special emphasis on cross-border activity. Finally, the CPSS/IOSCOrecommendations identify cross-border issues as a high priority for future work.Role of Public PolicyOver the past five years, public policy, technology, and institutional organization andcompetition have been driving change in financial sector infrastructure. Changes inthese areas are likely to shape the future evolution of markets and to play a criticalrole in the success or failure of developing capital markets. Renewed attention by officialson financial stability worldwide is leading to more emphasis on internationalstandards and best practices, which are enforced in part through international institutionssuch as the IMF and World Bank and in part by the markets and investors. Box8-1 presents an example of an ongoing initiative to develop modern recommendationsfor security clearance and settlement systems.The public sector has been playing an important role in shaping the developmentof market infrastructure by emphasizing safety and reliability issues and, morerecently, competition policy. With financial sector liberalization, privatization, and deregulation,capital markets around the world have grown in volume, and the authoritieshave recognized the importance of market-friendly measures to reduce and limit risksassociated with capital markets.The rapid growth of cross-border transactions has underlinedthe importance of consistent and effective risk measures in a wide range ofmarkets and countries. Key factors in public policy are:• Increased international coordination on standards and best practices for financialmarkets and tighter risk controls3 As of mid-2001, membership included the Australian Stock Exchange Limited (ASX), the Brazilian Clearing and DepositoryCorporation (CBLS), the Canadian Depository for Securities Limited (CSD), Clearnet, the Depository Trustand Clearing Corporation, Eurex Clearing AG, Hong Kong Exchanges and Clearing Limited (HKEx), S. D. Indeval Mexico,London Clearing House (LCH), the Options Clearing Corporation (OCC), Singapore Exchange Limited (SGX)/the Central Depository (Pte) Limited.Tokyo Stock Exchange (TSE), and the Chicago Mercantile Exchange Inc. (CME).Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub