The Regulation of Central Securities Depositories and the Linkages between CSDs and Large-Value Payment Systems

This paper first describes the Bank of Canada's approach to the design of large-value clearing and settlement systems. It then examines the way the Bank has operated under the Payment Clearing and Settlement Act, passed by Parliament in July 1996. Through this act, the Bank was assigned responsibility for the regulatory oversight of clearing and settlement systems that have the potential to cause systemic risk. The main section of the paper looks at how considerations of safety and costs have been balanced in the development of the Debt Clearing Services (DCS) of the Canadian Depository for Securities (CDS). The final section explores the various linkages between the DCS and the Large Value Transfer System (LVTS).