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Booklet:
Wholesale
Payment Systems Section: Securities Settlement Systems Subsection: Spacer |
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The
major securities markets in the United States include the government securities
market, the corporate equities and bond market, the market for money market
instruments, and the municipal bond market. The instruments traded in
these markets are generally traded through organized exchanges or through
the over-the-counter dealer markets. Major categories of financial instruments
commonly traded include U.S. Treasury securities, government agency securities,
securities issued by federal government-sponsored enterprises, corporate
equities and bonds, money market instruments such as commercial paper,
and municipal (state and local) government securities. Participants in
these markets include securities issuers; intermediaries such as brokers
and dealers; and investors such as insurance companies, investment companies,
non-financial corporations and individuals.
The mechanisms for clearing and settling securities transactions vary
by market and type of instrument, and generally involve two types of specialized
financial intermediaries: clearing corporations and securities depositories.
Clearing corporations provide trade confirmation and comparison services,
and multilateral netting of trade obligations; while, securities depositories
transfer securities ownership on a gross or net basis against payment
via book entry transfers.
Depository institutions play several important roles in securities clearing
and settlement. Not only do depository institutions participate in clearing
and settlement arrangements for themselves, they also act as custodians,
issuing and paying agents, and settling banks for their customers. In
addition depository institutions provide credit to clearing corporations,
securities depositories, and clearing participants for routine and contingency
purposes.