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Cross-border clearing: Implications for developing markets
Journal of Securities Operations & Custody,
15
(4),
315-324
(2023)
Abstract
The widespread introduction of central clearing in many jurisdictions has introduced the benefits of more robust and transparent risk management for markets, with the ultimate objective of improving investor protection. All jurisdictions wish to optimise an ‘open for business’ model that attracts international flows and supports deep, liquid and high-quality markets. The inconsistent adoption of central clearing by different jurisdictions may, however, introduce market fragmentation effects and negatively affect liquidity. Liquidity pools may move away from jurisdictions where central clearing requirements are more onerous than in other jurisdictions, or where central clearing has not yet been adopted at all. Jurisdictions must ensure a considered approach when reconciling their local regulatory and market expectations with cross-border and global clearing expectations, and the impact this may introduce to trading behaviour.
Keywords: central clearing; regulatory equivalence; market fragmentation
The full article is available to subscribers to the journal.
Author's Biography
Alicia Greenwood joined the JSE in February 2016 as Director of the Post Trade Services division, and is responsible for risk management, clearing and guaranteeing the settlement of central order book equity and bond transactions. Alicia is also the CEO of JSE Clear, the central counterparty clearing house (CCP) for listed derivatives in the equities, interest rate, foreign exchange and commodities markets. Alicia’s business career spans more than 20 years working in management consulting, investment banking and capital markets. Her experience has been acquired at some of South Africa’s leading companies in these fields, including Accenture, Discovery, Standard Bank and the JSE. Alicia has worked extensively in strategy development, risk management, capital management and clearing and settlement, both in South Africa and across numerous African countries. She has experience in portfolio optimisation and regulatory transformation, and has overseen large-scale business and IT projects and joint ventures. Alicia holds a PhD in chemistry from the University of Cape Town, having majored in chemistry and mathematics, and is published in various scientific journals.
