The present Disclosure Framework for Securities Settlement Systems builds on the earlier work of the CPSS and IOSCO by providing a protocol for the review of a securities settlement system's operation and its allocation of risks. The Disclosure Framework was developed by a Working Group with representatives from the CPSS and IOSCO, as well as private sector and emerging markets settlement system operators. The benefits of a broad, collective approach to developing the Disclosure Framework are underscored by the increasing volume, diversity, and complexity of global securities trading, as well as by the expanding efficiency of and linkages between securities settlement systems.

The Disclosure Framework is intended as a tool for system operators and participants to use in discussing the risks associated with securities settlement arrangements, and does not seek to provide common answers to all practical issues of risk management faced by securities settlement systems. The contribution of the Disclosure Framework will naturally depend on the positive cooperation of settlement system operators in devoting their own resources to its completion. In the view of the CPSS and IOSCO, as well as the system operators represented on the Working Group, the cost of these resources will be far outweighed by the risk management benefits.

Mr. Gilbert and his colleagues are to be congratulated on having completed this important undertaking within tight time constraints. Able assistance in editing and publishing the report was provided by the BIS and IOSCO.

William J. McDonough,
Chairman Anthony Neoh, Chairman Committee on Payment and Settlement Systems Technical Committee, IOSCO