Clearing, settlement and registry of securities trades are an essential component of any financial system. These activities, whose function is to effect the exchange of securities for cash, encompass all the post-trade process up to change of ownership of the securities and registration of the new owner. Though post-trade mechanisms are less visible than trading processes, it is essential that they work properly and offer legal certainty in order to guarantee the financial system's efficiency, competitiveness and stability. 

Late in 2007, the CNMV and the Bank of Spain published a joint report entitled "Securities clearing, settlement and registry systems in Europe. Current situation, ongoing initiatives, and recommendations.” One of the report's main conclusions was that certain specific features of Spain's clearing and settlement system needed to be modified in pursuit of greater standardisation between domestic post-trade processes and practices or standards that are accepted throughout Europe. 

The process of reform commenced in February 2010 with the publication of a consultation paper entitled "Reforms to the securities clearing, settlement and registry system: consultation paper," which described and detailed the modifications required to attain the objectives set out in broad terms in the aforementioned joint report. That same month, the CNMV established a Steering Committee for the reform process, chaired by the Vice-Chairman of the CNMV and comprising the Bank of Spain, the Spanish Banking Association (AEB), the Spanish Confederation of Savings Banks (CECA), the Investors Compensation Scheme (FOGAIN) and Bolsas y Mercados Españoles (BME). 

The committee met regularly throughout 2010 in order to advise the CNMV and serve as a forum for debate on the main aspects of the ongoing process. Additionally, to attain its goals, the Steering Committee established two groups of experts to carry out technical work. After analysing the aspects susceptible to improvement with the industry representatives, the CNMV concluded this phase by publishing this consultation paper setting out detailed proposals for change, the main features of which are as follows: 
1) Review the principles of the system and the current mechanisms for ensuring delivery, while allowing revocation of settlement orders as the last-resort mechanism for resolving incidents and shift finality to the time of settlement of the transaction, in line with the trend in other European systems. 
2) Allow for the establishment of a Central Counterparty (CCP) to clear trades in the multilateral stock market platform and replace the existing multilateral settlement system with a bilateral model based purely on balances. 
3) Replace the current system of tracking ownership using registry references (RR) with an oversight system for tracking securities accounts and balances that provides equivalent performance in terms of security and supervision capabilities. 
The purpose of the public consultation is to obtain feedback on the content and scope of the proposal, and subsequently refer any legal modifications proposal to the Ministry of Economy and Finance.

The three main aspects of the reform include: 
- the creation of a Central Counterparty and changes in the time of finality at the Central Securities Depository (CSD) and in the principle of assured delivery;
- settlement by balances and elimination of the Registry References; and
- amendments to the principles of the registry system.

Written contributions can be sent until 28th February 2011.

Consultation paper