Central Securities Depositories (CSDs)

CSDs are systemically important infrastructures in modern securities markets. They perform crucial services that allow at a minimum the registration, safekeeping, settlement of securities in exchange for cash and efficient processing of securities transactions in financial markets. While securities markets traditionally relied on the physical exchange of paper, CSDs now assume a critical role to guarantee a safe and efficient transfer of securities that exist to a large extent only in book entry form. They have now become a central point of reference for an entire market. Furthermore, being located at the end of the post-trading process, CSDs witness all the settlement fails occurring during the settlement period. They are therefore a key element of any policy of settlement discipline. Given the systemic importance of CSDs and their strategic position at the end of the post-trading process, there is a strong need for an appropriate regulatory framework for CSDs.

The initiative is an important part of the Commission’s agenda to enhance the safety and soundness of the financial system. Together with the Regulation on "OTC derivatives, central counterparties and trade repositories" (EMIR) that entered into force on 16 August 2012 and the Markets in Financial Instruments Directive (MiFID, currently under review), it will form a framework in which systemically important securities infrastructures (trading venues, central counterparties, trade repositories and central securities depositories) are subject to common rules on a European level.