The Bank of Latvia » For All » Legal » Payment and Settlement Systems » Oversight Policy for the Securities Settlement Systems of Latvia
Oversight Policy for the Securities Settlement Systems of Latvia
Council of the Bank of Latvia
Resolution No. 127/3
Riga, May 11, 2006
ON APPROVAL OF THE OVERSIGHT POLICY FOR THE SECURITIES SETTLEMENT SYSTEMS OF LATVIA
The Council of the Bank of Latvia hereby r e
s o l v e s:
To approve the "Oversight Policy for the Securities Settlement Systems of Latvia" (enclosed).
| Governor of the Bank of Latvia |
I. Rimsevics |
APPROVED
by the Council of the Bank of Latvia
Resolution No. 127/3
May 11,
2006
I. Rimsevics
Governor, Bank of Latvia
OVERSIGHT POLICY FOR THE SECURITIES SETTLEMENT SYSTEMS OF LATVIA
1. The tasks and role of the Bank of Latvia concerning
securities settlement
1.1. One of the tasks of the Bank of Latvia under the Law "On the Bank of Latvia" is to promote smooth operation of the payment systems in Latvia. Since part of the payments are related to securities settlements, problems in the securities settlement infrastructure may cause disturbances in payment systems operation and affect the implementation of the monetary policy. Hence, in order to ensure smooth operation of the payment systems, the Bank of Latvia performs, inter alia, oversight of the securities settlement systems functioning in Latvia (hereinafter, the Systems).
1.2. Oversight is an activity for promoting smooth operation of the securities settlement infrastructure, and it can be achieved by monitoring the operation of the existing Systems, evaluating them as per the tasks set and proposing the necessary changes.
1.3. The Bank of Latvia identifies the potential risks related to securities settlements and supports the reduction of these risks.
1.4. VNS, the Bank of Latvia's securities settlement System and DENOS, the securities settlement System of the Latvian Central Depository operate in Latvia. The Bank of Latvia uses the same oversight core principles for both Systems.
1.5. The Bank of Latvia performs System oversight independently of other institutions.
2. oversight core principles
2.1. The Bank of Latvia performs System oversight in line
with the following:
2.1.1. standards
of the European System of Central Banks and the Committee of European Securities
Regulators (ESCB-CESR);
2.1.2.
recommendations of the Committee on Payment and Settlement Systems and the
Technical Committee of the International Organization of Securities Commissions
(CPSS-IOSCO);
2.1.3. legislation
of the European Central Bank (hereinafter, the ECB) and the Bank for
International Settlements.
2.2. In the System oversight process the Bank of Latvia:
2.2.1. performs
assessment of the System operation on the basis of the international standards,
recommendations and legislation referred to under Item 2.1;
2.2.2. advises
System operators on the elaboration of the legislation related to the System
operation;
2.2.3. advises
System operators and System participants concerning securities settlement risks;
2.2.4. compiles
and analyzes the System operation statistics;
2.2.5. compiles
and analyzes information on the identified disruptions in the System operation;
2.2.6. assesses
the results of the System oversight on a regular basis.
2.3. Performing the System oversight, the Bank of Latvia may
request the following information from the System operators:
2.3.1. the
System's functional and technical specification;
2.3.2. documents
related to the System's development;
2.3.3. a risk
analysis performed by the System's operator, as well as the description of the
risk management procedures;
2.3.4. the
System's operational statistics;
2.3.5. information
on the disruption of the System's operation.
2.4. The Bank of Latvia has separated the System oversight and the ensuring of the VNS operation.
3. COOPERATION WITH other ORGANISATIONS
3.1. The Bank of Latvia cooperates with System operators,
System participants and other parties involved, e.g. the Association of Latvian
Commercial Banks. Within the framework of this cooperation the Bank of Latvia:
3.1.1. informs
System operators of topical issues concerning securities settlements and
development projects;
3.1.2. informs the
institutions listed under Item 3.1 of the topical issues concerning securities
settlement, inter alia standards and recommendations, at the ECB and other
international institutions;
3.1.3. may request
information from the System's operator on the topical issues at the
international securities trading or settlement alliance where the System
operator is a member.
3.2. As regards System oversight, the Bank of Latvia
cooperates with the Financial and Capital Market Commission (hereinafter, the
Commission) contributing as follows:
3.2.1. subject to
the Commission's request, the Bank of Latvia issues its opinion to the
Commission on the System's regulations and amendments thereto prior to their
approval;
3.2.2. subject to
mutual agreement, the Bank of Latvia and the Commission may audit the compliance
of System operators and System participants with particular requirements or
regulations, inter alia the capability of the respective institutions to meet
their obligations towards their customers or other participants of the Systems.
3.3. In System oversight, the Bank of Latvia cooperates with the central banks and financial supervision institutions of the Member States of the European Economic Area, member states of the same international securities trading or settlement alliance where Latvia is a member, as well as countries where securities settlement systems that the Systems have established links with are located. Within the cooperation framework, representatives of the Bank of Latvia participate in projects related to System oversight, drafting and discussion of documents.
3.4. To improve the exchange of information concerning System oversight, the Bank of Latvia may conclude cooperation agreements with the institutions listed under Items 3.1 - 3.3, as well as other institutions.
4. INFORMING THE PUBLIC
4.1. To increase financial market awareness of these issues, the Bank of Latvia publishes information on the System operation in its Annual Report and Financial Stability Report (at least on an annual basis), incorporating information on the accomplished tasks in System oversight, as well as statistical analysis of the securities settlement.
4.2. As regards the operation of the VNS, the Bank of Latvia prepares and publishes answers to questions from the document Disclosure Framework for Securities Settlement Systems published by CPSS-IOSCO. The answers are updated when necessary. Legislative acts related to the VNS operation and publications are available on the Bank of Latvia's Website.
4.3. The Bank of Latvia provides information on the System operation to several international institutions, inter alia the ECB. The compiled information is available on the ECB's Website (www.ecb.int).
4.4. Key information on Systems is available on the Website of the European Commission.
