How will the
announcement by the London Stock Exchange (LSE) to create a Central Securities
Depository in Luxembourg impact local CSD?
Today, most CSD
are country-based service centers supporting local market participants via
immobilization or elimination of physical certificates, providing book entry trade
settlement, collecting interest and dividend payments and processing corporate
action. Currently little or no interface to other local CSD is available.
The current
local CSD infrastructure requires global participants to join multiple CSD to
establish a first-hand presence in local marketplaces. This is expensive beyond
multiple membership fees. It requires additional record-keeping, compliance with
local regulations, increased risks if regulations don’t offer sufficient
protection and additional interface applications.
There are
two International Central Securities Depositories (ICSD), Clearstream and
Euroclear that address some of inefficiencies of local CSD. They offer services
across multiple marketplaces and offer centralized reporting. The LSE
announcement adds another ICSD entity for global participants.
What is the
ideal CSD? (Local, International or a combination)
Should it be member or privately
owned?
How should they be
regulated?