The Role of the Clearing Agent on the International Securities Market (ISM)

 

The Role


A clearing agent is a participant of the Barbados Central Securities Depository Inc (BCSDI) which acts on behalf of an ISM trading participant in interfacing with the BCSDI – they are the intermediary between buyers and sellers of financial instruments.

The purpose of a clearing agent is to improve the efficiency of the markets and add stability to the financial system.

 

Who Qualifies


The following are eligible to become BCSDI participants:

  • ISM trading participants*;
  • Banks regulated by the Central Bank of Barbados (CBB) who already act as clearing agents for International Securities Market (ISM) trading participants (subject to authorization from CBB)*;
  • Foreign central depositories regulated by an overseas regulator acceptable to the BCSDI.

 

Regulatory Requirements


  • Clearing and settlement procedures are outlined in the ISM Clearing and Settlement Rules (Series 3000).
  • For qualifying participants of the BCSDI, the following rules are notable:

 

  • Applicants must demonstrate to the BCSDI that they are able to enter instructions into and receive output from the BCSDI system in an efficient manner.
  • Applicants must demonstrate to the BCSDI that they are able to make payments to and receive payments from CBB foreign currency accounts.
  • Applicants must provide BCSDI with details of the bank to which funds, due to the ISM trading participant, should be remitted.

 

Registration Documents


Clearing Agent Approval

An applicant for approval as a Clearing Agent on the ISM must file a completed “Application for Participation in the BCSDI as a Clearing Agent” with the Barbados Stock Exchange.

This form can be found under Appendix 3 A of the Definitive Guide to Being a Clearing Agent on the International Securities Market.

 

Approval for Clearing and Settlement of ISM Securities

An applicant for participant status in the BCSDI to clear and settle ISM listed securities through BCSDI must file a completed “Application to clear and settle ISM securities through BCSDI” with the Barbados Stock Exchange.

This form can be found under Appendix 3 B of the Definitive Guide to Being a Clearing Agent on the International Securities Market.

 

International Securities Lending Association

Parties acting through one or more Designated Offices may enter into transactions in which one party (Lender) will transfer to the other (Borrower) securities and financial instruments (Securities) against the transfer of Collateral with a simultaneous agreement by Borrower to transfer to Lender Securities equivalent to such Securities on a fixed date or on demand against the transfer to Borrower by Lender of assets equivalent to such Collateral.

In all such cases, a completed “Global Master Securities Lending Agreement” must be filed with the Barbados Stock Exchange.

This agreement can be found under Appendix 3 C of the Definitive Guide to Being a Clearing Agent on the International Securities Market.

 

* Only ISM trading participants and banks approved under Rule 3101.1 (2) may act as clearing agents for other ISM trading participants.

 

Quick Links