29 Aug 2016 – This year’s edition of the Factbook offers an up-to-date overview of the CSD landscape in Europe.
A steady increase in the value of securities held on CSD accounts since 2011
From 2014 to 2015, the total value of securities held at European CSDs increased by 4.2%, adding to the upward trend since 2011.
A stable number of securities deliveries
In 2015, European CSDs collectively processed around 473 million delivery instructions. This number excludes MKK, the Turkish CSD, which alone processed 171 million instructions. In terms of value, these delivery instructions represented over EUR 1.15 quadrillion, slightly below last year’s settlement volumes.
A wide array of financial instruments
All European CSDs settle equities and the overwhelming majority settle corporate bonds and government securities. Besides, more than 80% of CSDs have developed services for investment funds, not only limited to settlement but also including order routing and valuation services. Other instruments accepted for settlement include Depository Receipts, cooperative share units, asset backed securities and structured products.
Diverse ownership models
In the EU, stock exchanges represent the main shareholder category for CSDs, whereas other European CSDs outside the EU are characterised by a stronger involvement of the State in the CSD capital. In both EU and non-EU CSDs, CSD participants represent on average a little less than a third of CSD owners. The following pie chart shows the proportion of shareholders from different categories in a theoretical CSD aggregating data from all 41 ECSDA members:
An international client base
CSD participants are typically wholesale financial firms. In 2015, the average European CSD had around 105 participants, 81% of which were domestic financial institutions. These figures do not take into account the two ICSDs aside since, by nature, these do not operate in a domestic environment. The proportion of foreign participants tends to be higher in countries with a high degree of regional integration (e.g. Benelux, Nordics).
54% of European CSDs offer a special type of securities account for end investors whereby the CSD has direct access to information on the identity of end investors. In 12 European countries, end investor segregation at the CSD is mandatory, at least in certain cases. In 9 countries, end investor accounts are optional. In the remaining 17 countries, there is no special type of account for end investor holdings. CSDs typically allow their users to segregate client assets in a flexible way, but they do not have direct access to information on the identity of end investors, which is kept by CSD participants. The number of securities accounts maintained by a CSD varies considerably from country to country (from less than 1,000 accounts to more than 10 million).
Other interesting facts on European CSDs
- With the exception of Ireland, all EU countries have a CSD operating on their territory. Belgium hosts 3 CSDs (including one operated by the central bank), and Luxembourg 4 (including VPLux which is a subsidiary of VP, the Danish CSD).
- EU CSDs are subject to the CSD Regulation, which entered into force on 17 September 2014 and regulates all CSD activities. All European CSDs have to comply with the international oversight Principles of CPMI and IOSCO.
- 7 ECSDA members operate with a banking license and are therefore subject to the relevant banking laws.
- The vast majority of European CSDs (85%) operates an RTGS or “real-time gross settlement” model. Other settlement models involve some form of netting, for cash and/or securities, and are typically used for on-exchange transactions.
- ECSDA members collectively employ more than 8,000 people, among which 82% are employed by EU-based CSDs. Excluding the two ICSDs, the average European CSD has slightly more than 100 employees.