Finance:Central securities depository

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Short description: Depository holding financial securities

A central securities depository (CSD) is a specialized financial market infrastructure organization holding securities such as shares or bonds, either in certificated or uncertificated (dematerialized) form, allowing ownership to be easily transferred through a book entry rather than by a transfer of physical certificates. This allows brokers and financial companies to hold their securities at one location where they can be available for clearing and settlement. In recent decades this has usually been done electronically, making it much faster and easier than was traditionally the case where physical certificates had to be exchanged after a trade had been completed.

In some cases these organizations also carry out centralized comparison and transaction processing such as clearing and settlement of securities transfers, securities pledges, and securities freezes.

In modern corporate debt markets, investors achieve collateralization through CSDs. The CSDs operate as trustees for the owners of the security whereby the collateral is stored and automatically transferred to the lenders in case of non-performance.[1]

History

Building of the Berliner Kassenverein, ca. 1900
The same building after postwar reconstruction

The first recorded CSD was the Wiener Giro- und Cassen-Verein in Vienna, established in 1872.[2]: 39  Also in 1872, the Berliner Kassenverein (de) introduced a CSD-like service (German: Giro-Effekten-Depots), discontinued it two years later, and revived it on a permanent basis in 1882. Similarly named Kassenverein institutions subsequently spread in Germany, and under the German occupation of France, also to France in the early 1940s. The United States adopted the CSD model with the creation of the Depository Trust Company in 1973 following coordinated initiatives of the financial industry in the late 1960s. In the United Kingdom, the CREST project was only initiated in 1993, leading to the 1996 creation of CRESTCo as the country's first CSD.

The development of the eurobond market in the 1960s led to the first so-called international CSD or ICSD in the form of the Euroclear System initially developed by the Morgan Guaranty branch in Brussels, started in 1968 and reorganized in late 2000 as Euroclear Bank. In reaction, a group of other banks in 1970 founded a competing entity in nearby Luxembourg, initially called Cedel and rebranded in 2000 as Clearstream Banking SA. At least initially, Euroclear was viewed as largely aligned with buy side interests whereas Cedel was closer to the sell side.[2]: 35-37 

Scope

A CSD can be national or international in nature, and may be for a specific type of security, such as government bonds.

Domestic central securities depository

Many countries have one domestic CSD that was traditionally associated with the national stock exchange. These organizations are typically heavily regulated by the government and may or may not be separate from the exchanges where trading in securities occurs.

International central securities depository (ICSD)

An international CSD is a central securities depository that settles trades in international securities such as eurobonds although many also settle trades in various domestic securities, usually through direct or indirect (through local agents) links to local CSDs. Examples of international CSDs include Clearstream Banking SA (previously Cedel), Euroclear Bank, and SIX SIS. While viewed as a national CSD rather than an ICSD, the US Depository Trust Company (DTC) does hold over $2 trillion in non-US securities and in American depositary receipts from over 100 nations.

Functions

  • Safekeeping Securities may be in dematerialized form, book-entry only form (with one or more "global" certificates), or in physical form immobilized within the CSD.
  • Deposit and withdrawal Supporting deposits and withdrawals involves the relationship between the transfer agent and/or issuers and the CSD. It also covers the CSD's role within the underwriting process or listing of new issues in a market.
  • Dividend, interest, and principal processing, as well as corporate actions including proxy voting Paying and transfer agents, as well as issuers are involved in these processes, depending on the level of services provided by the CSD and its relationship with these entities.
  • Other services CSDs offer additional services aside from those considered core services. These services include securities lending and borrowing, matching, and repo settlement, or ISIN assistance.
  • Pledge - Central depositories provide pledging of share and securities. Every country is required to provide legal framework to protect the interest of the pledger and pledgee.

However, there are risks and responsibilities regarding these services that must be taken into consideration in analyzing and evaluating each market on a case-by-case basis.[3]

Regional and global bodies

Alexandru Savva, director of the Moldovan Central Securities Depository, speaking to NBM gorvenor Octavian Armașu, 2018

CSDs have formed five regional associative bodies with partly overlapping membership: for example, the Central Securities Depository of Turkey (Turkish: Merkezi Kayıt Kuruluşu, MKK) is an associate member of ECSDA and a full member of ACG, AECSD and AMEDA. The five associations, in turn, have formed a global body, the World Forum of Central Securities Depositories.

European Central Securities Depositories Association

The European Central Securities Depositories Association (ECSDA), based in Brussels, was established in November 1997 by 13 founding members.[4] As of early 2025, ECSDA had 32 full members and 8 associate members.[5]

  • Austria OeKB CSD
  • Belgium Euroclear Bank
  • Belgium Euroclear Belgium
  • Bulgaria Central Depository AD (CDAD)
  • Croatia SKDD
  • Cyprus Cyprus Stock Exchange (CSE)
  • Czech Republic CSD Prague (CDCP)
  • Denmark Euronext Securities Copenhagen
  • Finland Euroclear Finland
  • France Euroclear France
  • Germany Clearstream Banking AG
  • Greece ATHEXCSD
  • Hungary KELER
  • Iceland Verðbréfamiðstöð Íslands (VBM)
  • Italy Euronext Securities Milan
  • Latvia Estonia Lithuania Nasdaq CSD
  • Luxembourg Clearstream Banking SA
  • Luxembourg LuxCSD
  • Malta Malta Stock Exchange (MSE)
  • Moldova Single Central Securities Depository (DCU)
  • Montenegro CSD & CC Montenegro
  • Netherlands Euroclear Nederland
  • Norway Euronext Securities Oslo
  • Poland KDPW
  • Portugal Euronext Securities Porto
  • Romania Depozitarul Central
  • Slovakia CDCP SR
  • Slovenia KDD Central Securities Clearing Corporation
  • Spain Iberclear
  • Sweden Euroclear Sweden
  • Switzerland SIX SIS
  • United Kingdom Euroclear UK & International

Associate members as of early 2025 were the Registry of Securities (RVP) and Central Registry of Securities JSC Banja Luka (CR HoV RS) in Bosnia and Herzegovina; AIX CSD and KCSD in Kazakhstan; Central Securities Depository AD Skopje in North Macedonia; National Depository of Ukraine (NDU); Central Securities Depository and Clearing House (CR HoV) in Serbia; and the Central Securities Depository of Turkey (MKK).

Asia-Pacific Central Securities Depository Group

The Asia-Pacific Central Securities Depository Group, or Asia-Pacific CSD Group (ACG), was also formed in November 1997.[6] As of early 2025, its membership was as follows.[7]

  • Australia Australian Securities Exchange (ASX)
  • Malaysia Bursa Malaysia Depository (Bursa Depository)
  • Malaysia Bursa Malaysia Securities Clearing (BMSC)
  • Bangladesh Central Depository Bangladesh Limited (CDBL)
  • China China Central Depository & Clearing (CCDC)
  • China China Securities Depository and Clearing Corporation (CSDC)
  • India Central Depository Services Limited (CDSL)
  • Iran Central Securities Depository of Iran (CSDI)
  • Kazakhstan Kazakh Central Securities Depository (KCSD)
  • Nepal CDS and Clearing Limited (CDSC)
  • Pakistan Central Depository Company of Pakistan (CDC Pakistan)
  • Sri Lanka Central Depository System of Sri Lanka (CDS)
  • Turkey Central Securities Depository of Türkiye (MKK)
  • Hong Kong Hong Kong Monetary Authority (HKMA)
  • Hong Kong Hong Kong Securities Clearing Company (HKSCC)
  • India Indian Clearing Corporation Limited (ICCL)
  • Indonesia Indonesia Clearing and Guarantee Corporation (KPEI)
  • Japan Japan Securities Depository Centre (JASDEC)
  • Korea Korea Securities Depository (KSD)
  • India Multi Commodity Exchange Clearing Corporation Limited (MCXCCL)
  • Maldives Maldives Securities Depository
  • Mongolia Mongolian Central Securities Depository (MCSD)
  • Mongolia Mongolian Securities Clearing Center (MSCC)
  • India NSE Clearing Limited
  • India National Securities Depository Limited (NSDL)
  • New Zealand New Zealand Central Securities Depository (NZCSD)
  • Pakistan National Clearing Company of Pakistan Limited (NCCPL)
  • Indonesia Kustodian Sentral Efek Indonesia (KSEI)
  • Philippines Philippine Depository & Trust Corporation (PDTC)
  • Bhutan Royal Securities Exchange of Bhutan (RSEB)
  • China Shanghai Clearing House (SHCH)
  • Singapore Singapore Exchange (SGX)
  • Taiwan Taiwan Depository and Clearing Corporation (TDCC)
  • Thailand Thailand Securities Depository (TSD)
  • Uzbekistan Uzbekistan State Central Securities Depository
  • Vietnam Vietnam Securities Depository and Clearing Corporation (VSDC)

In addition, the ACG had five associate members: the Association of Global Custodians, Calastone, the Singapore branch of Deutsche Bank, HSBC Hong Kong, and SIX SIS Singapore.

Americas Central Securities Depositories Association

The Americas Central Securities Depositories Association (ACSDA, Spanish: Asociación de Depósitos Centrales de Valores de América) was formed in 1999, with headquarters in Lima.[6] As of early 2025, its membership was as follows.[8]

  • Argentina Caja de Valores
  • Argentina Bolsas y Mercados Argentinos (es) (BYMA)
  • The Bahamas Bahamas Central Securities Depository (BCSD)
  • Barbados Barbados Central Securities Depository (BCSD)
  • Bermuda Bermuda Stock Exchange (BSX)
  • Bolivia Entidad de Depósito de Valores de Bolivia (EDV)
  • Brazil Brasil, Bolsa, Balcão (B3)
  • Canada Canadian Depository for Securities (TMX CDS)
  • Chile Depósito Central de Valores (DCV)
  • Colombia Depósito Centralizado de Valores de Colombia (Deceval)
  • Costa Rica InterClear Central de Valores
  • Costa Rica Central Bank of Costa Rica
  • Dominican Republic Central de Valores Dominicana (CEVALDOM)
  • Anguilla Antigua and Barbuda Dominica Grenada Montserrat Saint Kitts and Nevis Saint Lucia Saint Vincent and the Grenadines Eastern Caribbean Central Securities Depository (ECCSD)
  • Ecuador Depósito Centralizado de Compensación y Liquidación de Valores (Decevale)
  • El Salvador Central de Depósito de Valores (Cedeval)
  • Guatemala Central de Valores Nacional (CVN)
  • Jamaica Bank of Jamaica
  • Jamaica Jamaica Central Securities Depository (JCSD)
  • Mexico Indeval
  • Nicaragua Central Nicaragüense de Valores (Cenival)
  • Panama Central Latinoamericana de Valores (Latinclear)
  • Paraguay Bolsa de Valores de Asunción (BVA)
  • Peru CAVALI
  • Trinidad and Tobago Trinidad and Tobago Central Depository
  • United States Depository Trust & Clearing Corporation
  • Uruguay Central Bank of Uruguay
  • Uruguay Bolsa de Valores de Montevideo
  • Venezuela Caja Venezolana de Valores (CVV)

Association of Eurasian Central Securities Depositories

The Association of Eurasian Central Securities Depositories (AECSD) brings together a number of central securities depositories (CSDs) in 9 countries of the former Soviet Union as well as India, Indonesia, Iran, Mongolia, South Korea, and Turkey. It was formed in Moscow in 2004, following a series of gathering of its would-be members in the previous three years.[9] As of early 2025, a majority of its members (9 of 16) were simultaneously members of the ACG:[10]

  • Azerbaijan National Depository Center of the Republic of Azerbaijan
  • Armenia Central Depository of Armenia (CDA)
  • Belarus Central Securities Depository of the Republic of Belarus
  • Georgia (country) Georgian Central Securities Depository (GCSD)
  • India National Securities Depository Limited of India (NSDL)
  • India Central Depository Services Limited of India (CDSL)
  • Kazakhstan Kazakh Central Securities Depository (KCSD)
  • Kyrgyzstan Central Depository of Kyrgyzstan
  • Russia National Settlement Depository of Russia (NSD)
  • Turkey Central Securities Depository of Türkiye (MKK)
  • Tajikistan Central Depository of Tajikistan
  • Uzbekistan Central Securities Depository of Uzbekistan
  • Indonesia Kustodian Sentral Efek Indonesia (KSEI)
  • Iran Central Securities Depository of Iran (CSDI)
  • Mongolia Mongolian Central Securities Depository (MCSD)
  • Korea Korea Securities Depository (KSD)

Africa & Middle East Depositories Association

The Africa & Middle East Depositories Association (AMEDA) was established in April 2005.[6] As of early 2025, its membership was as follows.[11]

  • United Arab Emirates Abu Dhabi Securities Market
  • Algeria Algérie Clearing
  • Bahrain Bahrain Clear Company
  • Botswana Central Securities Depository of Botswana
  • Ivory Coast Benin Burkina Faso Guinea-Bissau Ivory Coast Mali Niger Senegal Togo Dépositaire Central/Banque de Règlement of the West African Economic and Monetary Union (DC/BR)
  • United Arab Emirates Dubai Central Securities Depository
  • Egypt Misr for Central Clearing, Depository & Registry (MCDR)
  • Egypt Egyptian Central Securities Depository (ECSD)
  • Ghana Central Securities Depository (Ghana) Limited
  • Iraq Iraqi Depository Center
  • Jordan Securities Depository Center
  • Kenya Central Depository & Settlement Corporation (CDSC Kenya)
  • Kuwait Kuwait Clearing Company
  • Lebanon Midclear
  • Libya Libyan Stock Market
  • Mauritius Central Depository & Settlement Co. Ltd. (CDS Mauritius)
  • Morocco Maroclear
  • Nigeria Nigeria Central Securities Clearing System (CSCS)
  • Nigeria FMDQ Depository Limited
  • Oman Muscat Clearing & Depository (SAOC)
  • State of Palestine Palestine Exchange (PEX)
  • Qatar Edaa
  • Rwanda National Bank of Rwanda
  • Saudi Arabia Edaa
  • South Africa Strate CSD
  • Sudan Khartoum Stock Exchange
  • Syria Damascus Securities Exchange
  • Tanzania CSD & Registry Company Limited
  • Tunisia Tunisie Clearing
  • Turkey Central Securities Depository of Türkiye (MKK)
  • Zambia Lusaka Securities Exchange
  • Zimbabwe Chengetedzai Depository Company
  • Zimbabwe Zimbabwe Stock Exchange

World Forum of CSDs

The World Forum of Central Securities Depositories, or World Forum of CSDs, brings together the ECSDA, ACG, ACSDA, AECSD, and AMEDA.[6]

See also

References

  1. ↑ Flandreau, Marc; Pietrosanti, Stefano; Schuster, Carlotta E. (2024). "Sovereign Collateral" (in en). The Journal of Economic History 84 (1): 191–231. doi:10.1017/S0022050724000020. ISSN 0022-0507. https://www.cambridge.org/core/journals/journal-of-economic-history/article/sovereign-collateral/5DB8417E5A12878BE87816BA86B0D64E. 
  2. ↑ 2.0 2.1 Peter Norman (2007). Plumbers and Visionaries: Securities Settlement and Europe's Financial Market. London: John Wiley & Sons. 
  3. ↑ exchange-handbook.co uk article on the risks associated with Depositories, at the Handbook of world stock, derivative and commodity exchanges website.
  4. ↑ "ECSDA History". ECSDA. https://ecsda.eu/history. 
  5. ↑ "List of Members". https://ecsda.eu/members-2/list-of-members. 
  6. ↑ 6.0 6.1 6.2 6.3 "Member Associations". https://worldcsds.wordpress.com/about/member-associations/. 
  7. ↑ "Member List". https://www.acgcsd.org/acg_01-08.aspx. 
  8. ↑ "Our Members". https://www.acsda.org/association/members. 
  9. ↑ "About the Association". https://aecsd.org/en/aecsd/about/. 
  10. ↑ "Association members". https://aecsd.org/en/aecsd/members/. 
  11. ↑ "Members". https://www.ameda.org.eg/members/. 



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