Document ID: chunk:federal_register_of_legislation:F2024L00683:body:0:p23
Version: federal_register_of_legislation:F2024L00683
Segment Type: other
Provision Reference: 
Character Range: 63652–66897

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 another currency or currencies takes place.
potential future exposure               Any potential credit exposure that a securities settlement facility could face at a future point in time. Potential future exposure is technically defined as the maximum exposure estimated to occur at a future point in time at a high level of statistical confidence. Potential future exposure arises from potential fluctuations in the market value of a participant's open positions between the time they are incurred or reset to the current market price, and the time they are liquidated or effectively hedged.
principal risk                          The risk that a counterparty will lose the full value involved in a transaction, for example, the risk that a seller of a financial asset will irrevocably deliver the asset, but not receive payment.
procyclicality                          Changes in risk management requirements or practices that are positively correlated with business or credit cycle fluctuations and that may cause or exacerbate financial instability.
real-time gross settlement (RTGS)       The real-time settlement of payments, transfer instructions or other obligations individually on a transaction-by-transaction basis.
reconciliation                          A procedure to verify that two sets of records issued by two different entities match.
related body                            A 'related body corporate' as defined in section 9 of the Corporations Act.
replacement cost                        The unrealised gain on the unsettled contract or the cost of replacing the original contract at market prices that may be changing rapidly during periods of stress.
repurchase agreement (repo)             A contract to sell and subsequently repurchase securities at a specified date and price.
securities                              Any financial product (within the meaning given in the Corporations Act) of a kind in relation to which obligations are prescribed under the Corporations Regulations 2001 for the purposes of section 768A(1)(b) of the Corporations Act.
securities settlement facility          A CS facility that enables its participants to transfer title to or other interests in securities, typically in return for payment. A securities settlement facility may also operate a central securities depository.
segregation                             A method of protecting customer collateral and contractual positions by holding or accounting for them separately from those of the direct participant (such as a carrying firm or broker).
settlement bank                         The entity that maintains accounts with the money settlement agent in order to settle payment obligations arising from securities transfers, both on its own behalf and for other market participants.
settlement risk                         The general term used to designate the risk that settlement in a funds or securities transfer system will not take place as expected. This risk may