CSNET: A PROPOSAL FOR NETWORK CLEARANCE AND SETTLEMENT

Abstract

I present a brief introduction to exchange-based clearance and settlement, and current practical and research problems posed by various inefficiencies that exist in this process. Then, open network protocols are reviewed to set the stage for the design of a hypothetical clearance and settlement network (CSnet). Important and desirable attributes such as security, robustness, and extensibility will be discussed. A practical networked implementation of order flow and execution, the Financial Information Exchange (FIX) protocol will be discussed since it parallels in several key areas the CSnet proposal. Further directions for study in the area will be indicated.