Settlement
BYMA settles Primary Placement and Secondary Trading transactions, ensuring the application of the Delivery vs Payment – DVP principle, both in asset-backed and non-asset-backed securities.
In Secondary Trading transactions for the PPT segment, BYMA acts as Central Counterparty.
By contrast, SENEBI transactions, which settlement is not asset-backed, are settled bilaterally in BYMA processes but BYMA does not act as Central Counterparty.
BYMA can also settle transactions closed in other markets. In that case, buyer and seller must provide the complete details of the transaction.
The settlement system operates in real time and enables the monitoring and settlement of positions derived from the transactions made by each Member Brokers’ Trading Desks.
Transmitted data confidentiality and integrity are guaranteed for each trading desk by means of the Safe Communications System.
Respecting good practices of corporate governance is the key cornerstone BYMA will follow to achieve a long term success.
Clearing
BYMA can also act as Clearing House for BYMA closed transactions. The clearing House offers a unique and centralized clearing and settlement mechanism, with netting of the transactions made by each Clearing Member Broker for a certain maturity (minimizing the movement of securities and funds) and consolidation (simultaneous transference of securities and equivalent values), thus improving transactions in a timely manner.
Additionally, BYMA provides the possibility of settling transactions through clearing houses of foreign countries.
Benefits of a Clearing House:
- It standardizes and automates capture of transactions and post-operation processing.
- It provides a “golden record” of each transaction.
- It provides a group of trading terms and conditions, thus minimizing legal risk.
- It provides a solid payment system.
- It maintains the confidentiality of operations once concluded.
Central Counterparty and Guarantee Systems
As Central Counterparty, BYMA takes part in the settlement of asset-backed transactions. At the moment of settlement, BYMA provides funds to sellers and securities to buyers. Thus, BYMA is the only settlement counterparty of each Member Broker in the asset-backed segment.
Accordingly, BYMA manages a Guarantee System that enables calculation and management of forward transactions collaterals, meant to verify that member Brokers comply with the different Guarantee requirements within the time limits established by BYMA.
Benefits of a Central Counterparty
- It reduces the credit risk of counterparty, and enables multilateral exposure netting.
- It eliminates the need of Brokers to perform counterparty risk analysis.
- It acts until transaction maturity and delivery of transacted instruments.
- EIt is subject to transparent and effective regulations and supervisions.
- It reduces uncertainty related to Broker non-compliance.