Central Securities Depository

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A Central Securities Depository (CSD) is a specialized financial institution that holds securities such as stocks, bonds, and other financial instruments in electronic or physical form. CSDs play a critical role in the infrastructure of the financial markets by enabling the efficient and secure processing of transactions and the maintenance of ownership records.[1][2][3]


CSDs facilitate the transfer of ownership of securities through book-entry changes. This system eliminates the need for physical movement of paper certificates, enhancing the efficiency and security of financial markets. CSDs are integral to the clearing and settlement processes, ensuring that transactions are completed accurately and within a short period.[4]

Europe has two international CSDs: Euroclear Bank and Clearstream. Euroclear Bank, owned by the private company Euroclear Holdings with 100 shareholders, includes five CSDs. Clearstream, owned by the publicly traded Deutsche Börse with around 52,000 shareholders, includes exchanges and central counterparties. Their different ownership and structures lead to varying agency costs and systemic risk concerns.[5]


Safekeeping and Administration[edit]

CSDs are responsible for the safekeeping of securities, ensuring their security and integrity. They maintain securities in dematerialized (electronic) or immobilized (physical certificates held in a central location) form. This function is crucial for reducing risks such as theft, loss, or damage of physical certificates.

Settlement of Trades[edit]

CSDs facilitate the settlement of trades, which is the process where the ownership of securities is transferred from one party to another. This process typically involves the exchange of securities for payment and is done under the principle of Delivery Versus Payment (DVP) to ensure that the transfer of securities occurs if and only if the corresponding payment is made.

Notary Services[edit]

CSDs provide notary services to ensure the integrity of securities issues. They verify and record the initial ownership of newly issued securities and maintain a registry of all subsequent transactions. This function helps prevent the unauthorized creation or duplication of securities.

Corporate Actions and Dividends[edit]

CSDs manage corporate actions such as mergers, splits, and dividend payments. They ensure that entitlements are accurately processed and distributed to the rightful owners of the securities.

Regulatory Framework[edit]

CSDs operate under strict regulatory frameworks to ensure their reliability and effectiveness. In the European Union, the Central Securities Depositories Regulation (CSDR) sets out the rules and standards for CSDs, aiming to increase the safety and efficiency of securities settlement and CSDs across the EU.

The regulation covers aspects such as operational requirements, governance, and the provision of services.

Global Practices[edit]

Globally, the practices and structure of CSDs can vary. Some countries have a single CSD that handles all types of securities, while others may have multiple CSDs specializing in different types of securities. For example, in Europe, most countries operate a single CSD, whereas in South Asia, it is common to have separate CSDs for government securities and equities.

Challenges and Innovations[edit]

CSDs face various challenges, including the need to adapt to rapidly changing technologies and regulatory environments. Innovations such as blockchain and distributed ledger technology are being explored as potential ways to enhance the efficiency and security of CSD services. These technologies offer possibilities for real-time settlement and enhanced transparency.[6]


  1. Central securities depositories. Deutsche Boerse.
  2. Central Securities Depositories Regulation (CSDR) and the related National Framework. ommission de Surveillance du Secteur Financier, Luxembourg.
  3. Central securities depositories. UK Financial Conduct Authority.
  4. The Roles and Risks of European Central Security Depositories. University of Oxford.
  5. CSD Risk Assessments. {{{org}}}.
  6. ABC of CSD?. Euronext.