In the clearing and settlement of securities trading, the links to be created among domestic private securities clearing agents should be supplemented by a regional settlement scheme which involves central monetary authorities in the process. These authorities may follow intra-grouping securities transactions and adopt corrective measures to maintain liquidity if necessary. If these monetary authorities are members of already existing regional clearing houses engaged in the settlement of trade transactions, they can enlarge the mandate of these arrangements to include securities dealing in the eligible transactions. This would imply a multilateral system of balancing capital transactions, preferably under a clearing house window separated from the trade transactions.
The mechanism of cross-border clearing will depend on the level of regional capital account convertibility. If it is adopted, clearing and settlement in regional national currencies should be automatic. If not, the countervalue of any cross-border purchase of securities has to be first converted into hard currency. Only then can the transaction be realized. In this case, the decision on whether or not to convert the domestic currency into hard currency will be taken by the central bank of the buyer. In turn, to safeguard himself against this foreign exchange risk, the seller may demand guarantees from the purchaser, making the cross-border transaction time-consuming.