Payment, Settlement and Clearing Systems

Levin & Srinivasan advises sovereign clients, including central banks and clearing institutions, in the development and reform of payment, settlement, and clearing systems for the transfer of cash and securities.  We assist these clients in formulating and implementing strategies to minimize systemic risks, including addressing issues such as:  the physical safety and security of system facilities; the development, testing, and execution of high-volume contingency plans; the unwind of transactions in the event of settlement failure; the frequency of clearing cycles; the irrevocability and matching of payment instructions; the advisability, structure, and implementation of overdraft facilities and of “participants’ funds”, collateral or other security requirements, participant indemnification, contribution, or insurance requirements, or other support or enhancement mechanisms; bilateral and multilateral netting; the imposition of bilateral settlement limits; the reconciliation of payments and settlements; the existence of liens or other encumbrances on participant assets held by clearing institutions; and the insolvency of clearing institutions or their participants.

We also counsel our clients with respect to, among other things:  the organizational structure of clearing entities; the relationships among regulators, clearing entities, and clearing entity participants; the potential liabilities, direct and indirect, of clearing entities and their participants arising as a result of actions by such entities or their participants; and the availability of sovereign guaranties or sovereign immunity with respect to clearing entity liabilities.