The EBA publishes Final Report on draft amendments to technical standards on prudential requirements for central securities depositories

The European Banking Authority (EBA) today published a report proposing draft amendments to the Regulatory Technical Standards (RTS) on certain prudential requirements for central securities depositories (CSDs) and designated credit institutions offering ‘banking-type ancillary services’. This mostly responds to changes introduced by the Central Securities Depositories Regulation (CSDR) “Refit”, notably those allowing banking CSDs to provide banking-type ancillary services to other CSDs.

The “CSDR Refit”, to which the EBA contributed, allows banking CSDs to now provide banking-type ancillary services, such as payment services involving cash and foreign exchange transaction, to other CSDs. The policy aim is to increase access to foreign currency for non-banking CSDs, and ultimately settlement efficiency in Europe.

The EBA has updated the RTS setting out the prudential requirements for CSDs. This should avoid that any potential increase in interconnectedness between CSDs raises systemic risk.

These amendments are pragmatic, focusing on the impact of this arrangement on the risk profile of the banking CSD, and the notifications supervisors will need. Other updates to the RTS reflect recent changes in the Capital Requirements Regulation and to align references with the amended CSDR text where relevant.

Legal basis and Background information

The EBA has developed these draft RTS under Article 59(5) of CSDR, which mandates the Authority to further specify details of the frameworks and tools for the monitoring, measuring, management, reporting and public disclosure of the credit and liquidity risks, including those which occur intra-day.

CSDs need to be authorised to provide banking-type ancillary services, which include activities such as offering cash accounts to, and accepting deposits from, participants in a securities settlement system, and providing payment services involving cash and foreign exchange transactions.