Clearing and settlement systems allow operations in the post-trade environment: clearing and settlement. Once parties have reached agreement on a securities transaction, for example, on the stock exchange or another trading venue, a settlement process is triggered. As a result, the trade is executed and the buyer obtains all rights vested in the underlying securities and the seller receives the agreed monetary compensation.
The Bank of Finland sees its role in the context of securities clearing and settlement systems in three areas:
as overseer, user (outsourced tasks) and service provider.
In performing its oversight function, the Bank of Finland seeks to ensure that risks inherent in systems are kept at acceptable levels and activities remain aligned with efficiency targets by verifying that system operation meets with internationally agreed recommendations. Eligible assets used as collateral in Eurosystem monetary policy operations are held in custody with central securities depositories. The Bank of Finland has outsourced the maintenance of its collateral management accounts related to these operations to Euroclear Finland.
The provision of cheque account services by the Bank of Finland enables the use of central bank money in the clearing and settlement of shares and debt securities. In using central bank money, the system can reduce liquidity and counterparty risks related to operations.