In autumn, another milestone will be met: Deutsche Börse subsidiary
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
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.