Document ID: chunk:federal_register_of_legislation:F2024L00683:body:0:p22
Version: federal_register_of_legislation:F2024L00683
Segment Type: other
Provision Reference: 
Character Range: 60721–63905

assets whereby the value of those underlying assets is calculated as the market value of the assets reduced by a certain percentage (the 'haircut'). Haircuts are applied by a collateral taker in order to protect itself from losses resulting from declines in the market value of a security in the event that it needs to liquidate that collateral.
immobilisation                          The act of concentrating the location of securities in a depository and transferring ownership by book entry.
investment risk                         The risk of loss faced by a securities settlement facility when it invests its own or its participants' resources, such as collateral.
investor central securities depository  A term used in the context of central securities depository links. An investor central securities depository – or a third party acting on behalf of the investor central securities depository – opens an account in another central securities depository (the issuer central securities depository) so as to enable the cross-system settlement of securities transactions.
issuer central securities depository    A central securities depository in which securities are issued (or immobilised). The issuer central securities depository opens accounts allowing investors (in a direct holding system) and intermediaries (including investor central securities depositories) to hold these securities.
legal risk                              The risk of the unexpected application of a law or regulation, usually resulting in a loss.
linked FMI                              An FMI that is connected with one or more other FMIs, either directly or through an intermediary, according to a set of contractual and operational arrangements between the FMIs involved in the link.
liquidity risk                          The risk that a counterparty, whether a participant or other entity, will have insufficient funds to meet its financial obligations as and when expected, although it may be able to do so in the future.
money settlement agent                  The entity whose assets are used to settle the ultimate payment obligations arising from securities transfers within a securities settlement facility, or other clearing and settlement activities. Accounts with the money settlement agent are held by settlement banks, which may act on their own behalf and/or offer payment services to participants that do not have accounts with the money settlement agent.
multilateral net batch                  The settlement of groups of payments, transfer instructions or other obligations together at a discrete, often pre-specified time, where these obligations have been offset among multiple participants.
operational risk                        The risk that deficiencies in information systems or internal processes, human errors, management failures or disruptions from external events will result in the reduction, deterioration or breakdown of services provided by a securities settlement facility.
payment versus payment (PvP)            A settlement mechanism that ensures that the final transfer of a payment in one currency occurs if and only if the final transfer of a payment in