Nowadays, creating a robust clearing and settlement environment has become an often-discussed topic. The emerging markets, the growth of financial markets, the increased focus on cross-border activity and financial market deregulation in different parts of the world have made the settlement process complex. This article looks into the issues involved in the implementation of clearing and settlement system. Hence, the need for looking into the implementation issues.

The challenge before dynamic economies in the post-globalization era during the 1990s has been how to develop financial "infrastructure" mechanisms like Risk-free Clearing and Settlement systems. Appropriately, development of "infrastructure" mechanisms remained an important item on the agendas of development of financial systems of various countries. In India, the Reserve Bank of India (RBI) responded to this requirement by coming out with its vision document in the year 2001 that targeted building a "Risk-free Clearing and Settlement System" by the year 2008. In this institution-building exercise, the credibility and success of such systems depend on the ability to operate "risk-free" systems. The importance of innovations needs to be recognized in the process of development of such systems. Also, it should be noted that in the operation of these systems, market participants play an important role.

The financial and liquidity risks represented in the form of default of a participating member in the clearing house by not fulfilling its payment or settlement obligations, and thereby delays in completing the settlement process, are fraught with grave risks. Also with huge volumes of transactions taking place, the threat of operational risks has increased. This risk also has a compounding effect with the emergence of technology as a facilitator for handling these huge volumes of transactions representing both wholesale and retail payments segments.

Treasury Management Magazine, Risk-free Clearing and Settlement Systems, Financial Markets, Liquidity Risks, International Fund Transfers, Foreign Segments, Rural Sector, Customer Facilitation, Risk-free Environment, International Central Banking Community, Financial Systems, Credit Markets, Decision-making Process, Securities and Exchange Board of India, SEBI, International Organization of Securities Commissions, IOSCO, Forex Markets, Central Securities Depositories.