[9276]
September 26, 1997
TO: INTERNATIONAL COMMITTEE No. 34-97
SECURITIES OPERATIONS SUBCOMMITTEE
RE: REPORT ON EMERGING MARKET CLEARANCE AND SETTLEMENT ISSUES
______________________________________________________________________________
Enclosed is a copy of a Report titled "Emerging Market Clearance and Settlement Issues for
Investment Funds" that was compiled by the Institute. The Institute undertook this initiative, with the
support of other mutual associations around the world, to bring attention to the particular problems
mutual funds face when trading in emerging markets and to encourage efforts by emerging markets to
improve clearance and settlement practices.
Part I of the report describes why exposure to clearance and settlement risks in emerging markets
creates problems for mutual funds and describes recommended practices that would eliminate or reduce
these risks. Part II of the report assesses the current status of clearance and settlement practices in 21
emerging market countries and whether the recommended practices exist in those markets.
We have discussed this initiative with emerging market regulators and officials of the
International Finance Corporation and the World Bank. The Institute will present the report to the
Emerging Market Clearance and Settlement Committee of the International Organization of Securities
Commissions on November 2, 1997 and will use the report as a basis for communications and
discussions with regulators and market officials in the 21 countries covered by the report.
We will keep you informed of developments.
Mary S. Podesta
Associate Counsel - International