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Europe’s CSDs are facing a regulatory squeeze warns Nasdaq 

April 23, 2015

Elliott Holley, Banking Technology

European banks and CSDs will be forced to change their business models under relentless pressure from Basel III, CSDR and T2S. That may involve consolidating services, as well as considering opportunities for collaboration, according to Henri Bergström, head of global post trade solutions at Nasdaq.

“Many of the small and medium CSDs in Europe are fighting for survival, in part because of the heavy cost of T2S and CSDR,” he said. “They are being forced to invest a lot without increasing their revenue – in fact, they will have to outsource their settlement under T2S to the ECB, which will actually decrease their revenue. There will have to be an adjustment.”

Basel III requires banks to set aside more collateral, among other measures. T2S is the European Central Bank project to harmonise settlement across Europe. CSDR aims to harmonise settlement cycles and provide common rules for CSDs across Europe. Each of these sets of rules places obligations on post-trade businesses. According to Bergström, national CSDs may be replaced by broader regional businesses.

Read more: Banking Technology

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