Panel Will Seek Faster Processing Of Security Trades
NEW YORK -- The securities and investment communities will form a committee to suggest major changes to speed up the processing of securities trades.</br></br>The committee, which is expected to make its recommendations toward the end of this year, is the U.S. response to a call for uniform securities processing made last March by the Group of Thirty, an international body of bankers and other financial executives. The international body is seeking to tighten by the end of 1992 cash and securities settlement and clearance procedures, which proved weak during the stock market crash of October 1987.</br></br>Pressure for international uniformity also is coming from U.S. institutional investors such as pension and mutual funds, Gerard P. Lynch, a Morgan Stanley & Co. managing director, said in an interview after a news conference. He explained that institutions increasingly are investing in large blocks of foreign securities, and need prompt valuations of their portfolios.</br></br>The industry committee is expected to urge that U.S. securities markets uniformly move to a settlement system where cash and securities are exchanged within three business days after a trade, instead of the present five days. The group also is expected to urge that it take no more than one business day to clear, or match, purchase and sales orders. Certain markets, including the New York Stock Exchange, already are moving toward next-day clearance.</br></br>The intended formation of the committee was announced by Lewis W. Bernard, head of the Group of Thirty's U.S. steering unit, following a briefing of about 60 U.S. securities regulators and executives. Although Mr. Bernard said that the committee probably would present a plan by the fourth quarter, he added that the 1992 target for implementation "is a very, very aggressive date." Several rules changes by financial markets would be necessary to implement the measures, he explained.