Generally, the enhanced processes allow a Local Settlement Agent to reject both purchase and sell trades if it does not receive (matched) settlement instructions from its clients. The DVP changes also provides a ‘buy-in’ mechanism to facilitate settlement of rejected sell trades.
This means that the Local Settlement Agents will now have full control of securities. Therefore, there will no longer be a need to establish segregated custody and trading accounts in order to mitigate the risk from Local Clearing Members having unlimited access to the trading accounts. The Settlement Agents account will remain as an optional feature whereby clients will have a choice to determine how they wish to manage assets.