MINIMUM STANDARDS OF THE LAMFALUSSY REPORT

The six minimum standards for the design and operation of cross-border and multi-currency netting schemes or systems. (i) Netting systems should have a well-founded legal basis under all relevant jurisdictions. (ii) Netting scheme participants should have a clear understanding of the impact of the particular scheme on each of the financial risks affected by the netting process. (iii) Multilateral netting systems should have clearly defined procedures for the management of credit risks and liquidity risks which specify the respective responsibilities of the netting provider and the participants. These procedures should also ensure that all parties have both the incentives and the capabilities to manage and contain each of the risks they bear and that limits are placed on the maximum level of credit exposure which can be produced by each participant. (iv) Multilateral netting systems should, as a minimum, be capable of ensuring the timely completion of daily settlements in the event of an inability to settle by