European Banking Authority consults on 2.5% activity threshold for CSDR prudential requirements for CSDs offering banking-type ancillary services

The European Banking Authority has launched a public consultation on draft Regulatory Technical Standards to define the activity threshold at which a Central Securities Depository providing banking-type ancillary services must comply with prudential risk management requirements under the Central Securities Depositories Regulation. The proposal is intended to facilitate more foreign-currency settlement in commercial bank money without increasing risks in CSDs or the wider financial system. The draft standards would set staggered, risk-sensitive requirements based on the level and type of banking-type ancillary services activity. EBA analysis indicates that the maximum activity level before the CSDR requirements apply would be 2.5% of the annual total value of all securities transactions against cash settled on the CSD’s books, corresponding to up to EUR 6.25 billion per year. Below 1.5% and up to EUR 3.25 billion, CSDs would only need to meet basic prudential requirements covering creditworthiness, liquidity risk management policies and procedures, and a recovery plan. Banking-type ancillary services include providing cash accounts and accepting deposits from participants in a securities settlement system, and payment services involving the processing of cash and foreign exchange transactions. Comments are due by 16 June 2025. The EBA will hold a public hearing on 13 May 2025, with registration closing on 9 May 2025, and plans to publish contributions after the consultation closes unless respondents request otherwise.