Antecedents of Clearance and Settlement Process Redesign: A Case of Indian Capital Markets

Abstract

Clearance and settlement process is at the core of capital markets infrastructure. Globally, these markets have witnessed enormous changes which have been accompanied with many redesigns to underlying clearance and settlement process. Existing research has focused on various facets of the clearance and settlement process including regulation, technology, process design, operations and integration of the process, right through processing and its impact on performance and structure. Using a case study methodology, this study reveals that the following are the suggested redesigns to the clearance and settlement process in the Indian capital markets: introduction of novation, settlement in dematerialized mode, introduction of rolling settlement, ban on deferral products, introduction of settlement on T+3 and then on T+2 basis, and the introduction of elaborate risk management tools.