EBA consults on threshold of activity for CSDs
14 March 2025 Europe
Image: AlirezA/stock.adobe.com
The European Banking Authority (EBA) has launched a public consultation on draft regulatory technical standards relating to the Central Securities Depositories Regulation (CSDR).
The consultation focuses on the threshold of activity at which central securities depositories providing banking-type ancillary services, need to meet certain prudential risk management requirements set out in the CSDR.
The aim of this work is to allow CSDs to do more settlement of foreign currency in commercial bank money without increasing the risk in CSDs or the overall financial system.
The EBA is proposing a threshold with staggered requirements dependent on a CSD’s level and type of activity in banking-type ancillary services.
According to the EBA, this is to ensure that the threshold is risk sensitive and proportionate, without impacting market stability.
The consultation paper shows that the maximum level of activity a CSD can provide before having to meet the requirements set out in the CSDR is 2.5 per cent of the total value of all securities transactions against cash settled in the books of the CSD over one year. This accounts for up to €6.25 billion per year.
Below 1.5 per cent and up to €3.25 billion, CSDs would have to meet basic prudential requirements on credit worthiness, liquidity risk management policy and procedures, and a recovery plan.
The consultation will run until 16 June 2025. A public hearing will be held on 13 May.
The consultation focuses on the threshold of activity at which central securities depositories providing banking-type ancillary services, need to meet certain prudential risk management requirements set out in the CSDR.
The aim of this work is to allow CSDs to do more settlement of foreign currency in commercial bank money without increasing the risk in CSDs or the overall financial system.
The EBA is proposing a threshold with staggered requirements dependent on a CSD’s level and type of activity in banking-type ancillary services.
According to the EBA, this is to ensure that the threshold is risk sensitive and proportionate, without impacting market stability.
The consultation paper shows that the maximum level of activity a CSD can provide before having to meet the requirements set out in the CSDR is 2.5 per cent of the total value of all securities transactions against cash settled in the books of the CSD over one year. This accounts for up to €6.25 billion per year.
Below 1.5 per cent and up to €3.25 billion, CSDs would have to meet basic prudential requirements on credit worthiness, liquidity risk management policy and procedures, and a recovery plan.
The consultation will run until 16 June 2025. A public hearing will be held on 13 May.
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