Unintegrated national payment systems as a constraint on the growth of cross-border trade in securities in Comesa region

The pace at which finality of cross-border payments for cross-border purchases of securities is achieved determines the rate at which cross-border securities trades are settled, and with that, the rate of growth of cross-border trade in securities in the Eastern and Southern African region. The study assesses the legal framework for cross-border transfer of payments for securities purchased across international borders so as to establish whether or not it has provided adequate incentives for speedy transfer of such payments at minimum transfer costs. The study employs the doctrinal approach to evaluating legal rules. The main findings of the study were that (a) law and policy permits cross-border trade in securities, (b)law and policy permits cross-border payments, (c) COMESA Treaty provisions do not recognize cross-border payments for securities as admissible to clearing and settlement in the COMESA Clearing House, (d) law does not make provision for regional integration of the national payment system, (e) that it takes weeks for an electronic fund transfer, and a month or more for a cross-border payment by cheque to reach a cross-border beneficiary within the COMESA region, (f) the purchaser of securities is without legal or equitable relief during the waiting period. The study makes recommendations for (a) introduction of legal provisions aimed at fostering full currency convertibility in the national payment system, (b) facilitating regional integration of the national payment system and its streamlining,(c) introduction of a regionally-integrated cross-border multilateral netting payment system especially dedicated to the clearing and settlement of cross-border payment instruction and obligations, and (d) admissibility of cross-border payment instructions and obligations on cross-border trade in intangible financial assetsinto the COMESA Clearing House.