Document ID: chunk:federal_register_of_legislation:F2024L00683:body:0:p21
Version: federal_register_of_legislation:F2024L00683
Segment Type: other
Provision Reference: 
Character Range: 57707–60966

within a netting set with a counterparty that would be lost upon the default of the counterparty.
custody risk                            The risk of loss on assets held in custody in the event of a custodian's (or sub-custodian's) insolvency, negligence, fraud, poor administration or inadequate recordkeeping.
default                                 An event stipulated in an agreement as constituting a breach or default. Generally, such events relate to a failure to complete a transfer of funds or securities in accordance with the terms and rules of the system in question.
deferred net settlement (DNS)           A net settlement mechanism that settles on a net basis at the end of a predefined settlement cycle.
delivery versus delivery (DvD)          A securities settlement mechanism that links two securities transfers in such a way as to ensure that delivery of one security occurs if and only if the corresponding delivery of the other security occurs.
delivery versus payment (DvP)           A securities settlement mechanism that links a securities transfer and a funds transfer in such a way as to ensure that delivery occurs if and only if the corresponding payment occurs.
dematerialisation                       The elimination of physical certificates or documents of title that represent ownership of securities so that securities exist only as accounting records.
external administration                 This term has the meaning given by section 5 of the Payment Systems and Netting Act 1998.
final settlement                        The irrevocable and unconditional transfer of an asset or financial instrument, or the discharge of an obligation by the securities settlement facility or its participants in accordance with the terms of the underlying contract. Final settlement is a legally defined moment.
financial market infrastructure (FMI)   A multilateral system among participating institutions, including the operator of the system, used for the purposes of clearing, settling or recording payments, securities, derivatives or other financial transactions. Examples of FMIs include central counterparties, securities settlement facilities, securities settlement systems, central securities depositories, payment systems and trade repositories.
general business risk                   Any potential impairment of a securities settlement facility's financial position (as a business concern) as a consequence of a decline in its revenues or an increase in its expenses, such that expenses exceed revenues and result in a loss that must be charged against capital.
governance                              The set of relationships between a securities settlement facility's owners, board of directors (or equivalent), management and other relevant parties, including participants, authorities and other stakeholders (such as participants' customers, other interdependent FMIs and the broader market).
haircut                                 A risk control measure applied to underlying 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