Investment Operations

Clearstream Studying Clearance and Settlement Best Practices in Emerging Markets

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Clearstream and devFinance firm Frontclear have signed a grant agreement formalizing their shared commitment to address clearing and settlement challenges in emerging and frontier markets (EMDCs) in Africa, Asia and Latin America.

EMDCs are largely cut-off from global settlement platforms, industry experts say. Their lack of access is attributable to multiple factors including macro-economic volatility, insufficient regulatory frameworks, illiquid local currency securities and platform challenges, among others.

Nonetheless, EMDC interbank markets are changing and authorities are prioritizing development of clearing and settlement market infrastructure as well as operational policies and rules at a national level. Money market frameworks are evolving as regulators improve legal frameworks and seek to expand interbank activity. As a result, there are visible efforts to improve national settlement infrastructure and to investigate central clearing options as transaction interest and volumes expand.

Against this backdrop, Frontclear has initiated a project to analyze a wide variety of developed and developing country experiences with clearing and settlement, the purpose of which will be to derive learning and best practice for nascent market regulators.

“This agreement with Clearstream is additional evidence of Frontclear’s commitment to stable and inclusive interbank markets in emerging and developing countries,” noted Ingrid Hagen, Vice President Strategic Projects at Frontclear. “We look forward to developing useful input for our regulatory counterparties across EMDC markets,” she added.

The Frontclear and Clearstream partnership will be joined in this effort by EBRD and ABN AMRO Clearing Bank.

“Clearstream has a long and globally recognized experience in connecting emerging and frontier markets to its post-trade settlement and custody platform,” said Jan Willems, Head of Global Markets, Clearstream. “Clearstream will offer its experience in best practices for post-trade, relying on concrete cases of successful market integration.”