CLEARING and settlement are supposed to ensure that share, bond and derivative deals are completed safely and on time. These back-office processes are arcane, unglamorous and too often taken for granted—until things go wrong, when their importance becomes painfully apparent. The financial crisis of 2007-09 and the “flash crash” of American stockmarkets in May 2010 revealed numerous faults in the plumbing. Efforts are under way to mend these, but regulators have been slow to attend to some worrying new blockages arising from today’s high-frequency and tightly coupled markets.
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