EBA launches public consultation on threshold of activity for CSDs


Europe’s financial regulator for banks introduced the consultation on draft Regulatory Technical Standards (RTS) on the threshold of activity at which CSDs offering banking-type ancillary services are demanded to meet prudential risk management requirements outlined in the Central Securities Depositories Regulation (CSDR). CSDs are specialised financial market infrastructure organisations that have securities either in certified or uncertified form, enabling ownership to be transferred through a book entry. Through this, brokers, as well as financial institutions can have their securities into a single location where they can be cleared or settled. Through this initiative, the EBA intends to enable CSDs to conduct more settlements of foreign currency in commercial bank money without scaling the risk in CSDs or the whole financial system. According to the official press release, the consultation is set to run until 16 June 2025, with a public hearing being assembled on 13 May 2025.

EBA launches public consultation on threshold of activity for CSDs

 

The announcement comes just a few months after the EBA released a consultation paper outlining draft RTSs to guide institutions on managing their crypto-asset exposures. Through this, the regulator intended to standardise the implementation of capital requirements for crypto-asset exposures across the EU, falling in line with the prudential framework set out in the Capital Requirements Regulation (CRR 3). Additionally, the draft RTS aimed to refine the prudential treatment for credit risk, counterparty credit risk (CCR), market risk (MR), and credit valuation adjustment (CVA) risk associated with asset-referenced tokens (ARTs) and other crypto assets.

Ensuring risk sensitivity and proportionality for the threshold

The EBA plans to introduce a threshold with varied requirements based on a CSD’s level and type of activity in banking-type ancillary services, seeking to ensure risk sensitivity and proportionality without negatively impacting market stability. Moreover, the regulator included in the consultation paper an analysis underlining that the maximum level of activity a CSD can deliver before having to meet CSDR requirements is 2.5% of the total value of all securities transactions against cash settled in the books of the CSD over one year, accounting for up to EUR 6.25 billion per year. If they stand below 1.5% and have up to EUR 3.25 billion, CSDs are set to only have to meet basic prudential requirements on creditworthiness, liquidity risk management policy and procedures, and a recovery plan. 
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