On 14 March 2025, the European Banking Authority (EBA) issued a consultation paper containing draft Regulatory Technical Standards (RTS) on the determination of the threshold referred to in Article 54(5) of the Central Securities Depositories Regulation (CSDR) and accompanying appropriate risk management and accompanying prudential requirements to mitigate risks in relation to the designation of credit institutions in accordance with Article 54(2a) of the CSDR.

Background

The CSDR provides for an exemption from the application of the requirements set out in Articles 54(4) and 54(4a) if the designated credit institutions and designated central securities depositories (CSDs), providing banking-type ancillary services to the designating CSD for the cash payments for all or part of a CSD’s securities settlement systems (cash settlement), operate below an appropriate threshold.

Article 54(9) of the CSDR provides a mandate for the EBA to: (i) determine the threshold below which designated credit institutions and designated CSDs may not apply the requirements set out in Article 54(4) as regards the former and 54(4a) as regards both; and (ii) determine accompanying appropriate risk management and prudential requirements to mitigate risks in relation to the designation of credit institutions in accordance with Article 54(2a).

Consultation

The draft RTS presented in the consultation paper develop the two parts of the CSDR’s mandate in conjunction.

The EBA sets out:

  • A formula to determine the threshold to exempt designated credit institutions and designated CSDs from the requirements set out in Articles 54(4) and 54(4a). Such a formula considers the liquidity of the currencies for which settlement is offered and the characteristics of the settlement agents.
  • Some basic risk management and prudential requirements, applicable to all designated credit institutions exempted from the requirements of Art. 54(4), and some advanced risk management and prudential requirements, applicable to designated credit institutions exempted from the requirements of Art. 54(4) but operating above a certain level specified in the RTS

Next steps

The deadline for comments on the consultation paper is 16 June 2025.

A public hearing on the consultation paper will take place on 13 May 2025 from 10:00 to 12:00 CEST. The deadline for registration is 9 May 2025 at 16:00 CEST.

Following feedback from the consultation, the EBA will revise the draft RTS where appropriate and then send them to the European Commission for adoption.