243 - Toward a Uniform Functional Model of Payment and Securities Settlement Systems

DNB Working Papers
Date 29 March 2010

The aim of this paper is to provide a uniform representation of functional concepts used in the field of payment and securities settlement systems. The framework developed here is encompassing the whole field while using as few elements as possible. It provides a basic functional model for analyzing and tracing the life cycle of the financial legs of a transaction. In line with the network properties of the field the model is based on formal graphs. The visualization of these graphs can be considered as a symbolic language. It is shown on the basis of a number of examples that the framework is capable of representing basic notions of payment and securities settlement systems.

Keywords: payment systems, securities settlement systems, settlement risk exposure, functional graph modeling, instruction life cycle, financial market infrastructures. JEL Codes: E42, G10, G20.