Monthly report / Clearstream readies for CSD-regulation

17.07.2017
  • CSDR to further harmonise European settlement sector and strengthen asset safety
  • CSD applications due end September 2017
  • Asset safety a key concern for Clearstream

In autumn, another milestone will be met: Clearstream will apply for new licenses to operate under the Central Securities Depositories Regulation (CSDR). CSDR obligations require Europe’s CSDs to submit their application files to local regulators by 30 September 2017. Authorisations are expected to be granted from mid-May 2018 onwards.

This will be a first step to even further bolster safety and stability across Europe’s capital markets in a post-financial-crisis world. As the new regulatory keystone for the sector, CSDR aims to harmonise the different rules, which apply to European CSDs in order to create an improved and level playing field for the industry, and enhance legal and operational conditions for EU-wide cross border settlement via TARGET2-Securities (T2S).

Already today, asset safety is a key concern for Clearstream: “We are holding securities from all across the globe, some 70 central banks entrust their assets to Clearstream”, says Marc Robert-Nicoud, CEO of Clearstream Holding. “We are the ‘safe haven’ for our customers’ assets. It is therefore in our primary interest to ensure that our clients have absolute confidence in the safe deposit of the assets they entrust to us.”

CSDR is another piece in the puzzle: It seeks to mitigate systemic risk in the financial markets by addressing customer onboarding and risk management protocols, enhancing capital requirements and governance, as well as introducing a European passport for CSDs.

Headquartered in Luxembourg and Frankfurt, Clearstream’s business is subject to regulatory regimes that are among the strictest in the world in terms of assuring safety for depositors and end investors. Clearstream already has a strict ‘Know Your Customer’ (KYC) policy in place and applies the most advanced operational risk management methods as set out in the Basel II banking recommendations.

CSD customers will be directly impacted by the CSDR as well, for example, by a new settlement discipline regime, which introduces mandatory buy-ins, cash penalties for settlement failures and internalised settlement reports. Clearstream is supporting its clients to adapt to this new regime.

For further information on CSDR requirements, see our news roundup. For further information on how Clearstream keeps assets as safe as possible, read our customer briefing and wider infomration on our dedicated asset safety webpages.

In June 2017, Clearstream held a total of €13,460 billion Assets under Custody, a stable increase of 4% compared to €12,993 billion in June 2016. Settlement and Assets under Custody as business drivers are showing overall growth.

Business overview

 June
2017
June
2016
Change (%)1YTD 2017YTD 2016Change (%)1
International business (ICSD)
Securities deposits (EUR bn)6,6886,807-2%6,7626,7350%
Number of transactions (mn)3.7325%2217.427%
Domestic business (CSD)2
Securities deposits (EUR bn)4,5584,3305%4,5224,4073%
Number of transactions (mn)86.818%44.539.712%
Investment Funds Services (IFS) 
Securities deposits (EUR bn)2,2141,85619%2,1591,84817%
Number of transactions (mn)1.91.617%11.4927%
Total
Assets under Custody (EUR bn)13,46012,9934%13,44312,9903%
Global Securities Financing (GSF)
Volume outstanding (EUR bn)452.7520.8-13%470.5527.4-11%

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1. Due to rounding, growth rates cannot be calculated from figures in the chart.
2. On 6 February 2017, Clearstream Banking Frankfurt transferred its settlement volume to the pan-European securities settlement platform TARGET2-Securities. Since 7 February 2017, German settlement volume is processed solely via T2S.