16 December 2015
The European Banking Authority (EBA) published today its draft Regulatory Technical Standards (RTS) on prudential requirements for Central Securities Depositories (CSDs). These RTS will define a prudential framework for CSDs and harmonise calculations for their capital requirements which currently vary across Member States. These RTS have been developed within the framework of the Central Securities Depositories Regulation (CSDR) to increase the safety and efficiency of securities settlement and settlement infrastructures.
The draft RTS set out the prudential framework that will apply to both CSDs offering banking-type ancillary services and licensed as a credit institution and those CSDs that are not permitted to offer such services but can designate a credit institution to that effect. The EBA specifies the framework for determining capital requirements for all CSDs along with additional requirements that will only apply to those CSDs offering banking-type ancillary services.
The framework for all CSDs builds on the existing banking framework and is applied in a targeted manner that takes into account the specific risk profile of CSDs and will ensure adequate protection against operational, legal, custody, investment and business risks. In addition, those CSDs providing banking-type of ancillary services will need to comply with the additional capital requirements laid down in the Capital Requirements Regulation (CRR). As a consequence, the EBA considered the possible differences between the CRR and CSDR regimes so as to ensure that stricter rules on prudential supervision apply, as required by the CSDR, without duplicating the existing applicable prescriptions in the CRR.
For CSDs offering banking-type ancillary services and licensed as a credit institution, the EBA also includes in its RTS the methodology for determining how an additional risk-based capital surcharge should be calculated, in order to better reflect the risks resulting from the provision of intraday credit. In addition, for those CSDs, requirements also specify the framework and the tools that CSDs are required to develop in order to properly monitor, measure, manage and disclose credit and liquidity risks.
Legal basis and background
The draft RTS have been developed according to Articles 47, 54 and 59 of Regulation (EU) No 909/2014 (CSDR), which mandates the EBA to develop three draft regulatory technical standards (RTS) on prudential requirements for central securities depositories (CSDs).
In developing these technical standards, the EBA has also taken into account Article 46 of Regulation (EU) No 909/2014 (CSDR) and the relevant technical standards being developed by ESMA, the CPSS-IOSCO Principles for Financial Market Infrastructures (‘CPSS-IOSCO principles' or ‘PFMIs) and the BCBS principles for the monitoring and the management of intraday liquidity.