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Monthly report: Clearstream readies for CSD-regulation

Release date: 17 Jul 2017 | Clearstream

Monthly report: Clearstream readies for CSD-regulation

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: 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 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.

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

About Clearstream

As an international central securities depository (ICSD) headquartered in Luxembourg, Clearstream, part of Deutsche Börse Group, provides the post-trade infrastructure for the Eurobond market and services for securities from 56 domestic markets worldwide. As a central securities depository (CSD) based in Frankfurt, Clearstream also provides the post-trade infrastructure for the German securities industry offering access to a growing number of international markets. With 13 trillion Euros in assets under custody, Clearstream is one of the world’s largest settlement and custody firms for domestic and international securities.

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