The final report on the draft regulatory technical standards (RTS) determines the threshold for Central Securities Depositories (CSD) providing banking-type ancillary services. This threshold, set at a minimum of EUR 3.75 billion and a maximum of EUR 6.25 billion, is linked to the total settlement volume and aims to establish appropriate risk management requirements. The report also emphasizes the importance of…
This document is the final report of the European Banking Authority (EBA) published in December 2025. It presents the Regulatory Technical Standards (RTS) related to the determination of the threshold mentioned in Article 54(5) of the European regulation on central securities depositories (CSDR), as well as the associated risk management and prudential requirements to mitigate risks related to the designation of credit institutions pursuant to Article 54(2a) of the CSDR. The scope covers banking-type ancillary services provided by central securities depositories (CSDs) in the European Union, particularly the management of cash payments in securities settlement systems, over an annual period. The document comprises 36 pages.
- Subject: The EBA is mandated to determine a dynamic threshold for CSDs not authorized to provide banking-type ancillary services, below which they may use designated credit institutions to settle cash payments without these institutions being subject to the full requirements of Article 54(4) of the CSDR (p. 3).
- Importance: This threshold aims to balance securities settlement efficiency, financial stability, and risk management, notably avoiding an undesired shift from central bank money (CeBM) to commercial bank money (CoBM) settlement (p. 3, 5).
- Main findings: The EBA proposes a minimum threshold of 3.75 billion euros and 1.5% of the annual settlement volume, and a maximum threshold of 6.25 billion euros and 2.5% of the annual volume, incorporating parameters related to the liquidity of currencies used and the number and quality of designated credit institutions (p. 3, 7).
- Conclusions: The threshold is calibrated dynamically and proportionally to the risk profile of CSDs and designated institutions, with basic prudential requirements for activities below a certain level, and advanced requirements beyond (p. 3, 9-10).
- Recommendations: Adoption of a graduated approach to prudential requirements, maintenance of the proposed threshold despite limited data, and clarification of the exclusion of central bank money settlement from the threshold calculation. The EBA emphasizes that thresholds and requirements aim to maintain a security level while fostering efficiency and competitiveness of CSDs in the EU (p. 3, 29-36).
- The CSDR (Regulation (EU) No 909/2014) harmonizes securities settlement rules in Europe, distinguishing CSDs authorized to provide banking ancillary services and those that are not (p. 4).
- The CSDR revision (Regulation (EU) 2023/2845) modifies access conditions for CSDs to banking services, notably expanding the possibility to use other CSDs or credit institutions to settle cash payments, subject to an appropriate threshold (p. 4).
- The objective is to define this threshold, which must allow increased settlement efficiency, avoid systemic risks, enable multi-currency settlement, and preserve preference for central bank money settlement (p. 4-5).
- The EBA is mandated to determine this threshold and associated prudential requirements, considering credit, liquidity, market stability risks, and ensuring fair treatment among CSDs (p. 5).
- The previous threshold was set at 1% of the annual settlement volume or 2.5 billion euros, which proved restrictive and costly for non-bank CSDs (p. 5).
- The document aims to clarify the use of the threshold, notably including foreign currency settlements but excluding central bank money settlement from the calculation (p. 5-6).
Dynamic threshold and parameters:
- The threshold is defined by the formula: threshold = min(x1 * V1, x2), where V1 is the total annual cash transaction volume, x1 and x2 are parameters composed of several sub-parameters (p. 7, 16).
- x1 is a percentage of the total volume, including a base 1.5% (y1), an adjustment for currency liquidity (y1_liq_fx), and an adjustment related to the number and quality of designated settlement agents (y1_SA) (p. 7-8, 16-17).
- x2 is an absolute amount, including a base 3.75 billion euros (y2), an adjustment for currency liquidity (y2_liq_fx), and an adjustment related to settlement agents (y2_SA) (p. 7-8, 16-17).
- Adjustments related to settlement agents depend on the number of institutions participating in the system and their credit rating (p. 8, 20).
Risk management and prudential requirements:
- Basic requirements (Article 2): minimum credit rating (ECAI step 1 or 2) or internal low-risk assessment, clear agreement on transfers and their purpose, robust credit exposure management framework, compliance with business continuity plans, recovery plan submitted to competent authority, documentation on intraday liquidity risk management (p. 8-9, 17).
- Advanced requirements (Article 3): applicable if annual volume exceeds 1.5% of total volume or 3.75 billion euros, include additional prudential requirements (Articles 59 and 60 of the CSDR), capital surcharge for intraday risks, monthly reports to authorities and annual public disclosure on intraday liquidity risk management (p. 9-10, 18).
Consultation and data collected:
- The EBA conducted a voluntary data collection among CSDs, with 13 responses including 9 from larger groups, but data were limited (p. 10-11).
- Three CSDs reported activity below the threshold, all well below current thresholds (p. 10).
- The majority of CSDs did not express interest in using other CSDs as settlement agents (p. 10).
- Only one CSD requested an increase of the threshold to 5.5% (p. 11).
Cost-benefit analysis:
- Increasing the minimum threshold from 1% to 1.5% and from 2.5 to 3.75 billion euros aims to improve efficiency and reduce costs for non-bank CSDs (p. 23-24).
- Adding parameters related to currency liquidity and number of settlement agents introduces risk sensitivity and threshold customization (p. 25).
- The graduated approach to prudential requirements (basic vs advanced) allows better proportionality and balance between costs and risks (p. 26).
Public consultation feedback:
- Broad support for the proposed approach, notably risk sensitivity (p. 31).
- Some criticisms on threshold levels, increased complexity, and regulatory burden for low-activity CSDs (p. 31-36).
- The EBA maintains the proposed thresholds, considering limited data and the need to ensure financial stability (p. 31-36).
- Clarification that cash distributions (dividends, coupons) are included in the settlement volume calculation (p. 30).
- Rejection of proposals for transaction limits or real-time monitoring, deemed outside mandate and too restrictive (p. 32-33).
- Established facts:
- The minimum threshold is set at 3.75 billion euros and 1.5% of the annual settlement volume, with a maximum of 6.25 billion and 2.5% (p. 3, 7).
- Prudential requirements differ according to activity level below the threshold (p. 9-10).
- Data collection revealed low and limited below-threshold activity, with little interest in using other CSDs as settlement agents (p. 10-11).
- Assumptions:
- The threshold must prevent a shift from central bank money settlement to commercial bank money (p. 5-6).
- Risk sensitivity can be modeled via parameters related to currency liquidity and number/quality of settlement agents (p. 7-8).
- Interpretations:
- Increasing the threshold is justified to improve efficiency and reduce costs while maintaining financial stability (p. 23-24).
- The graduated prudential requirements approach allows proportional risk management (p. 26).
- Uncertainties:
- Limited data on future foreign currency settlement volumes (p. 10, 23).
- Potential impact of a larger threshold increase not assessed due to insufficient data (p. 24).
- Increased complexity of threshold calculation and prudential requirements (p. 31-36).
- The EBA recommends adopting a dynamic threshold for the designation of credit institutions providing banking ancillary services to non-authorized CSDs, with a minimum set at 3.75 billion euros and 1.5% of the annual volume, and a maximum at 6.25 billion and 2.5% (p. 3, 23).
- Prudential requirements must be proportional to activity level: basic requirements apply below a certain level, and advanced requirements beyond (p. 9-10, 26).
- The threshold excludes central bank money settlements from the calculation, to avoid discouraging their use (p. 5-6).
- The EBA maintains the proposed thresholds despite limited data, considering this approach prudent and balanced (p. 31-36).
- The document does not provide for transaction limits or real-time monitoring, deemed outside mandate and too restrictive (p. 32-33).
- Implementation of these RTS should allow better settlement efficiency, appropriate risk management, and a fair level of competition among CSDs in the Union (p. 3, 26, 31).
- The regulation will enter into force twenty days after its publication in the Official Journal of the European Union (p. 18).
Synthesis note written from the full document by DataSAI Academy. This note comes from the scientific library of the DataSAI Academy, open to all.