The EBA publishes its final draft technical standards setting out the threshold and prudential risk management requirements of central securities depositories and credit institutions providing banking-type ancillary services

The European Banking Authority (EBA) today published its final draft Regulatory Technical Standards (RTS) establishing the threshold up to which- non-banking CSDs (“designating CSDs”) may use banking CSDs or credit institutions for cash settlement without entities needing additional authorisation.

Key features of the RTS include:

• Threshold levels: the minimum threshold level is set at EUR 3.75 billion and 1.5% of annual settlement volume, while the maximum threshold is EUR 6.25 billion and 2.5% of annual settlement volume.
• Dynamic thresholds: the standards introduce aa dynamic threshold that adjusts according to the risk profile of both the designating CSD and the designated credit institution. As activity levels increase, so do the prudential and risk management requirements.
• Accompanying risk management and prudential measures: proportionate to the threshold

Legal basis and background

Article 54(9) of Regulation (EU) No 909/2014 (CSDR), mandates the EBA to develop draft RTS to determine the threshold referred to in paragraph 5 of Article 54 of CSDR and accompanying appropriate risk management and prudential requirements to mitigate risks in relation to the designation of credit institutions in accordance with paragraph 2a of Article 54 of CSDR.