Central securities depositories (CSDs) ensure quick settlement and safe custody of securities by operating securities accounts, providing central custodial services and offering services around dividend and interest payments, for example. As a critical post-trading infrastructure, CSDs perform a crucial function for the European financial system. This means they also have an important role to play in further integrating capital markets in the EU, thus making them more efficient and competitive. Central banks, too, have a keen interest in CSDs functioning reliably, particularly from the vantage point of financial stability, not least because CSDs are integral to the collateralisation of central bank monetary policy operations.

To account for the particular role of CSDs, the EU established the Regulation on improving securities settlement in the EU (the Central Securities Depositories Regulation, or CSDR) as an effective supervisory and oversight regime applicable to all EU CSDs.

The CSD landscape in the EU has evolved over time and is fairly diverse, despite the euro being the bloc’s single currency. This is partly the outcome of the EU’s unique legal character. A variety of measures have been initiated in the past decades to dismantle the barriers obstructing cross-border European securities settlement. One notable example is the TARGET2-Securities (T2S) settlement platform operated by the Eurosystem since 2015, which has helped to remove numerous technical obstacles. Furthermore, a clear tendency towards consolidation is evident among EU CSDs. Europe stands out in the global CSD landscape by being home to two international central securities depositories (ICSDs), which operate with more of a cross-border remit. Given that changes in this setting are more likely to come about as a result of evolution than through radical realignment, at least in the short and medium term, it would be appropriate to continue the current path of market-driven integration and consolidation. It is a journey that could also see the role and use of T2S being strengthened further. On a supplementary note, the momentum surrounding the capital markets union should be leveraged, especially in terms of ongoing digitalisation, to harmonise the national differences that still persist in terms of tax and securities legislation or to mitigate this fragmentation by implementing an optional, European special regime for large-scale issues, for example.

New technologies such as tokenisation and distributed ledger technology (DLT) could, over the long run, transform the structure of securities settlement and the role that CSDs play both globally and in Europe. Central banks, policymakers and market participants are engaged in dialogue and should agree as early as possible on a longer-term vision for settlement one decade from now and the necessary steps that lead there. From today’s perspective, however, it is inevitable that conventional and innovative structures like DLT will coexist for some time to come. At the same time, it is important for an adequate regulatory framework to be in place to ensure that settlement remains safe and secure, even in a new technical landscape.

Central securities depositories (CSDs) are critical to the efficient functioning of the financial system and are systemically important to financial markets. Historically, CSDs were established to mitigate risk in the post-trade domain and increase the efficiency of settlement and custody. When securities are issued, CSDs perform a kind of notary function and ensure that the securities issued are registered correctly. 1 They offer securities accounts, central custodial services and other securities services, which can also include services surrounding corporate actions (such as dividend distributions and interest income) and repayments of bonds. 2 In addition, they ensure that securities are transferred quickly and safely by operating securities settlement systems. Thus, CSDs provide services at every stage of a security’s lifetime. Furthermore, they offer other services, for example in the areas of collateral management and securities lending transactions. Hence, they make an important contribution to the stability and security of the financial system.

Immobilising physical securities for the whole (domestic) market is one of the key efficiency gains that CSDs have unlocked. Immobilisation meant that the arduous task of moving physical certificates from one depository to another was eliminated. As CSDs generally keep the securities entrusted to them as collective holdings, with the respective securities account holders each having a suitably documented share of those holdings and share transfers taking place by “book entry settlement”, this arrangement is often also known as “collective safe custody”. The first immobilisation of securities in central institutions to facilitate settlement without physical delivery took place at the end of the 19th century in Germany; these institutions were called Kassenvereine. 3 Historically, CSDs were set up in many countries by, or under the leadership of, national authorities such as the central bank or the finance ministry. This public involvement was seen to be justified because CSDs were regarded as critical service providers operating in a market environment characterised by significant economies of scale and scope (network effects). Most European CSDs have been taken into private ownership since financial markets were liberalised in the 1980s and 1990s. According to World Bank data, in 2022, 41 out of 107 CSDs worldwide were operated by central banks, and 66 by the private sector; in high-income OECD countries, almost 80% of CSDs were operated by private stakeholders. 4

The international dimension is becoming increasingly important for CSDs in the EU. CSDs catered for their own national financial markets exclusively, to begin with. Over time, in the case of cross-border securities transactions, CSDs used their links with other CSDs to also enable the delivery of securities issued in other markets via that country’s CSD. For this purpose, domestic CSDs open accounts with foreign CSDs and usually become ordinary participants in that country’s settlement process. Since the early 1970s, Europe has also been home to two international CSDs (ICSDs), which take care of the settlement and custody of securities that were not issued within a national framework, in particular.

Custody chains and securities settlement in the EU encompass both CSDs and custodian banks. CSDs occupy a prominent position in the securities settlement ecosystem over the entire life cycle of a security. However, custodians and other professional market players play a major role in this regard as well. To wit, it is usually local or global custodians that act as participants and account holders with CSDs and deposit both their customers’ and their own holdings there. 5 Incidentally, banks are not obliged to hold their holdings themselves with a CSD, but can also engage another custodian for this purpose. This option is very popular in international business because the custodian abroad is able to provide a tailored service, like in terms of tax treatment or corporate actions over the lifetime of a given security. As CSDs, too, have broadened their repertoire of services in recent years, customer relations between CSDs and participants has undergone change, especially at large international custodians. Furthermore, keys relationships exist between (I)CSDs and national central banks (see Chart 5.1).

The CSD ecosystem in the EU and the financial market infrastructures they operate provide stable and efficient technical foundations for the European capital market. However, those foundations are still very much structured along national borders. This fragmentation hampers capital market-based financing for enterprises and risk sharing across national borders, amongst other things. This situation would be remedied by the capital markets union. Measures surrounding this initiative have been discussed recently, like in the recent Letta and Draghi reports for the EU, which also address institutional topics (such as the structure of supervision) and infrastructural aspects. 6

As systemically important infrastructure, CSDs are crucial to the stability and efficiency of financial markets. CSDs are characterised by the following features. When securities are issued, they perform a kind of notary function and ensure that the securities issued are registered correctly; they operate trading or settlement systems that are generally considered critical; they exhibit significant economies of scale; they provide services that benefit a great many market participants; they are subject to government involvement or influence. 7 The systemic importance of CSDs has resulted in their activities being subjected to particular regulation, supervision and oversight.

In the EU, CSDs are governed by a host of regulations and directives that are designed to guarantee the safety and efficiency of financial markets. One key regulatory framework for CSDs is Regulation (EU) No 909/2014 on improving securities settlement in the European Union and on central securities depositories (the Central Securities Depositories Regulation, or CSDR). 8 The CSDR was implemented to create a level regulatory playing field for CSDs in the EU. In combination with the Markets in Financial Instruments Directive (MiFID) for trading, and the European Market Infrastructure Regulation (EMIR) for clearing, the CSDR establishes a comprehensive European regulatory framework for financial market infrastructures. The main objective of CSDR is to harmonise and improve securities settlement processes, increase the safety of securities settlement, and strengthen settlement discipline. The CSDR defines a CSD as a legal person that operates a securities settlement system and provides at least one of the following two services: (a) initial recording of securities in a book-entry system (“notary service”); (b) providing and maintaining securities accounts at the top tier level (“central maintenance service”). 9

The CSDR is the single European regime for the supervision of CSDs. The CSDR transposed what had been a fairly non-binding regulatory framework for the risk-oriented monitoring of financial market infrastructures, including by central banks (CPMI/IOSCO Principles for Financial Market Infrastructures), and the previously national supervisory frameworks governing CSDs (as covered in Germany by the Banking Act), into a legally binding European regime. The Regulation defines a harmonised regulatory framework in the EU, setting out requirements for the CSDs and providing a single supervisory and oversight mandate for the competent authorities. It stipulates, inter alia, that CSDs must be authorised and supervised by the competent authorities of their home country. Being the designated competent national authority in Germany, the Federal Financial Supervisory Authority (BaFin) periodically reviews the relevant arrangements, processes and mechanisms implemented by Clearstream Banking AG, the authorised CSD for Germany. BaFin furthermore evaluates the risks to which the CSD is, or might be, exposed. The European Securities and Markets Authority (ESMA) plays a key role in coordinating this supervision of CSDs in the EU. 10 Furthermore, BaFin involves the Bundesbank, in its capacity as an oversight authority, in the periodic reviews and evaluations, in particular as regards the functioning of the securities settlement systems operated by the CSD. Where settlement in these systems takes place in euro, the Eurosystem must also be involved.

Moreover, the CSDR defines capital requirements. These exist to ensure that CSDs have sufficient financial resources to manage their operational and systemic risks. Furthermore, the Regulation introduced rules to encourage and incentivise the timely settlement of securities transactions, including measures in the event of late settlement, such as cash penalties and, if necessary, mandatory buy-ins, to prevent a settlement fail (e.g. because the seller was unable to deliver the securities). 11

The CSDR promotes interoperability among CSDs as a way of facilitating efficient cross-border securities business in the EU. The CSDR requires CSDs to cooperate, for example by obligating them to facilitate technical and operational links with other CSDs. Furthermore, the Regulation supports the dematerialisation and immobilisation of securities. It does so, amongst other things, by establishing harmonised standards and procedures for securities settlement and custody, but also by setting appropriate requirements for securities issuers. Besides that, obliging CSDs to disclose information on their services and the associated risks and fees also promotes transparency in this key market segment. CSDs must furthermore have appropriate business continuity policies and disaster recovery plans in place, and their supervisory authorities must ensure that an adequate resolution plan is drawn up and complied with. 

Since being adopted, the CSDR has been updated or rounded out in part by the CSRD Refit legislation. In material terms, this reform aimed, amongst other things, to make it easier for CSDs to access services provided by other CSDs, and to simplify the passporting regime governing the provision of cross-border services within the EU. In addition, the CSRD Refit aims to further strengthen cooperation among supervisory and oversight authorities by establishing supervisory colleges for CSDs that provide their services in at least two EU Member States and are therefore systemically important to the securities markets in question. 

There are multiple key points of interaction between central banks and CSDs, which is why the safe and smooth functioning of CSDs is of particular interest to the Eurosystem. Generally speaking, the relationship between central banks and CSDs is characterised by cooperation and regulation. There are some central banks, such as the National Bank of Belgium and the US Federal Reserve, which also operate CSDs of their own. Central banks have a great interest in CSDs functioning reliably, specifically in terms of their role in aggregate financial stability, and perform an oversight function in this context.

On top of this, CSDs have an important role to play in the collateralisation of central bank monetary policy operations, such as intraday or overnight credit. For example, securities held by banks with a CSD can be pledged as collateral for such operations. And last but not least, central banks provide services for settlement in central bank money. This is safer and more liquid than commercial bank money, making it the medium of choice in both regulatory and market terms for the cash settlement of securities transactions settled via CSDs. 12 The aim here is to ensure that cash and securities are transferred synchronously so as to achieve delivery-versus-payment (DvP) settlement, where title to the securities is exchanged for payment. DvP settlement aims to eliminate settlement risk (say, for example, if the buyer has already paid but does not receive the securities). While this principle is applied in different forms around the world, the main model used in the euro area is the integrated model – that is, settlement of both the cash and securities legs takes place via a single technical infrastructure. The TARGET2-Securities (T2S) platform plays a particular role in this regard. 13

T2S is a platform for the central settlement of securities transactions in the EU, with settlement finality in secure central bank money. With T2S, the Eurosystem offers CSDs across Europe a harmonised and centralised service for settling securities transactions in central bank money. The platform offers multi-currency capability, and currently supports settlement in Danish krona as well as in euro. 14 While the cash accounts are controlled by the respective central banks, the corresponding securities accounts fall under the control of the participating CSDs – that is to say, the CSDs have shifted accounts to T2S. T2S commenced operations in June 2015. In March 2025, a total of 24 CSDs from 23 countries (including non-euro area countries like Denmark and Switzerland) were connected to T2S. 15 The ICSD Euroclear Bank will also be rolling out new settlement options in T2S before the end of this year. Other CSDs (from Sweden, for example) intend to join T2S in the future. 16 In 2023, a total of almost 178 million transactions worth just over €200 trillion were settled via T2S. 17 T2S also offers the option of settling transactions automatically using intraday credit from central banks that is collateralised by the transaction itself or the total holdings in the securities account. This option was used in just under one-fifth of all DvP transactions in 2023. 18

The fact that there are more than 25 different CSDs in the EU can be explained by their historical origins and development. Almost all CSDs were set up as institutions that initially centralised the safe custody of securities in a specific national market. Consolidation across national borders was hampered in particular by differences in national laws governing securities and tax matters. In addition, just over 50 years ago, two ICSDs – today known as Euroclear Bank and Clearstream Banking Luxembourg – were established, primarily for securities that were deliberately not issued under the respective national legal system, that were often denominated in US dollars and that were aimed more at international investors.

Chart 5.2 shows the ten largest CSDs in the EU as measured by the value of securities under custody in 2023. Securities held in safe custody at Euroclear Bank (Belgium) were valued at €18.5 trillion in 2023. This was followed by Clearstream Banking AG (Germany), at €11.9 trillion, and Clearstream Banking Luxembourg, at €10.1 trillion. Other significant CSDs are Euroclear France (France), with €9.4 trillion worth of securities in custody, Euronext Milan (formerly Monte Titoli, Italy) with €3.7 trillion and Iberclear (Spain) with €2.5 trillion. 19

The prominent role of some CSDs is also reflected in the value of the annual transactions processed and the number of participants. In 2023, the value of all delivery instructions at Euroclear Bank (Belgium) amounted to €746.2 trillion – an exceptionally high amount by international standards (see Chart 5.3). This means that Euroclear Bank (Belgium) was the most active CSD in the world in terms of the value of transactions processed annually. 20 In the same period, the equivalent figure amounted to €292.3 trillion for Clearstream Banking Luxembourg, €158.2 trillion for Euroclear France and €127.7 trillion for Clearstream Banking AG (Germany). 21

Given the specific nature of CSDs and, in particular, economies of size and scale, it is not surprising that significant merger activity has occurred in recent decades. As a result, four large cross-border groups of enterprises have emerged alongside a number of smaller national CSDs. The aggregated data at the group level show a relatively high concentration (see Chart 5.4). In 2023, 51% of all securities in the EU (by value) were kept in safe custody at Euroclear Group, which includes the ICSD Euroclear Bank as well as the national CSDs in Belgium, Finland, France, Ireland, the Netherlands, Sweden and the United Kingdom. Deutsche Börse Group (ICSD Clearstream Banking Luxembourg and national CSDs in Germany and Luxembourg) had a market share of 33%, followed by Euronext Group (national CSDs in Denmark, Italy, Norway and Portugal) at 9%. Other CSDs, including the newly constituted SIX-BME group with the national CSDs in Switzerland and Spain, had a share of 7%.

The number of participants a CSD has can shed light on the importance of the role it plays for financial markets in the EU and beyond. The two ICSDs Euroclear Bank (Belgium), with 1,832 participants, and Clearstream Banking Luxembourg, with 1,431 participants, have a very clear lead here over the national CSDs (Chart 5.5). The different customer structure shows that they operate in a different market segment to smaller national CSDs.

The ICSDs Euroclear Bank (Belgium) and Clearstream Banking Luxembourg are only partially comparable to national CSDs as they did not develop in a purely national context. 22 Both organisations play an important role in the efficiency and security of European and global financial markets through their exceptional size and high connectivity to a large number of international private institutional investors and financial institutions as well as to many central banks. 23

The emergence of Euroclear dates back to the late 1960s, when the Brussels branch of the Morgan Guaranty Trust Company of New York founded the Euroclear system. 24 The system was developed to simplify the settlement of cross-border securities transactions and to minimise associated risks, in particular with regard to Eurobonds. These are European bonds issued outside the country in whose currency they are denominated. 25 The creation of Euroclear and the introduction of computerised systems were responses to the rapid growth of the Eurobond market in the 1960s and the associated challenges in settling securities transactions. Euroclear Bank was established in 2000 and acquired numerous national CSDs in the years that followed. 26 Euroclear is privately owned, with the largest shareholders coming from France (just under 30%), Belgium (13%) and New Zealand (9%). An investment company owned by the Chinese central bank holds a further 7%. 27

Cedel (Centrale de Livraison de Valeurs Mobilières) was launched in 1970 in response to the same market needs and with the same objective as Euroclear by a group of investors comprising a total of 66 large international banks. 28 In 2000, Cedel merged with Deutsche Börse Clearing AG, the settlement division of Deutsche Börse, to form Clearstream and what is today Clearstream Banking Luxembourg, the ICSD of the Deutsche Börse Group. Deutsche Börse is a listed company with a broad international group of shareholders. The German CSD Clearstream Banking AG and the Luxembourg CSD LuxCSD are also owned by Deutsche Börse. 29

The ICSDs Euroclear Bank and Clearstream Banking Luxembourg play a special role in the European and international financial system. They deal, amongst other things, with settlement in foreign currencies and act as overarching hubs for international investors in Europe. Their customer base and services, which include securities lending and collateral management, for example, are global in scope, albeit now with a stronger European focus, especially in the Eurobonds segment. 30 The concept of an ICSD only exists in this form in Europe (see the supplementary information on Central securities depositories in the United States, China and Japan). However, the distinction between (national) CSDs and ICSDs is no longer as clear cut as it used to be. The CSDR, for example, does not distinguish between these two types of CSDs.

In addition, the two ICSDs Clearstream Banking Luxembourg and Euroclear Bank play an important role in technological developments in European and international bond markets. Together, they have greatly simplified the issuance procedure for international bonds in recent years. For example, in the past Eurobonds had to undergo a cumbersome conveyance process when transferred between customers of different ICSDs; the allocation of Eurobonds is now determined purely on the basis of the ICSDs’ records. Today, it is also possible to issue electronic global certificates 31 as well as use electronic signatures on all issuance documents for Eurobonds. This innovation makes the issuance of Eurobonds easier and their safe custody more secure.

The fact that there are more than 25 different CSDs in the EU is often interpreted as an indication that the European settlement landscape is fissured, poorly integrated and inferior to that of other currency areas in terms of costs, settlement efficiency and investor access to the European capital market. 32 This discussion is currently also taking place in the broader context of the capital markets union. The objective of the capital markets union is to facilitate cross-border investment and attract more investment to the EU. In addition to measures to promote securitisation, the introduction of European investment products and changes in capital market supervision, the need for infrastructure consolidation is another matter that has been raised, not least with reference to market structures in the United States. In this context, it should first be borne in mind that the EU is an entity that has developed over time and lacks the characteristics of a centralised state. This means, for example, that the EU Member States have separate legal systems with some material differences. There have already been various initiatives, especially since the introduction of the euro as a single currency (now encompassing 20 Member States), to bring about greater integration of the European capital market and European post-trading infrastructure.

The barriers identified in the Giovannini Reports from 2001 and 2003 are of key importance here. The group led by Alberto Giovannini with broad market expertise identified 15 barriers to greater post-trade integration, which can be sub-divided into three areas: (i) national differences in technical requirements/market practice; (ii) national differences in tax procedures; (iii) and national differences in securities legislation. 33 Subsequently, attempts were made to remove the identified barriers both through greater cooperation between market participants (for example to harmonise the processing of capital services) and on the policy front (for example, through the introduction of the CSDR). In 2016 and 2017, the European Commission once again called on an expert group, the European Post Trade Forum, to take stock of the post-trade structure in Europe. 34

T2S makes a very concrete and substantial contribution to the integration of securities settlement. The objective of this single settlement platform is to simplify cross-border settlement, lower the costs of securities settlement over the medium term, reduce liquidity and collateral requirements for settlement and strengthen competition between different providers. The actual function of CSDs was deliberately left untouched. T2S was able, in particular, to remove a number of the technical barriers identified in the Giovannini Report and, in addition, to initiate further harmonisation. From the Bundesbank’s perspective, T2S has proven to be a successful European model in terms of the efficiency and reliability of securities settlement.

In view of the aim of increasing competition between CSDs, one note of criticism is that the vast majority of transactions in T2S are still settled within individual CSDs (“intra-CSD”); in 2023 this amounted to 97.7% of transactions in unit terms and 96.6% of transactions in value terms. Accordingly, settlement between different CSDs (“cross-CSD”) accounted for only a very small share of all transactions. 35

 However, as explained above, it should be borne in mind that the function of CSDs is heavily influenced by economies of scale and that there have been considerable moves to consolidate this space in recent years. The fact that integration was often initially aimed solely at company law aspects is not surprising given the high costs involved in technical system integration. Participants, too, often cling to traditional settlement practices for longer, partly because of the different (national) legal frameworks. For example, a substantial part of cross-border securities settlement is likely to continue to take place via custodian banks rather than T2S, especially in transactions in foreign (EU) markets. The interplay between the ICSDs and T2S is likely to improve further thanks to Deutsche Börse Group’s OneClearstream approach 36 and the direct participation of Euroclear Bank.

After more than 20 years, many of the identified barriers to better integration in the post-trade sector have yet to be eliminated despite T2S, say market participants. Further deepening of the capital markets union is therefore likely to depend to a greater extent on further harmonisation of tax, company, insolvency and securities law. At the same time, efforts to integrate the market sector should also be further pursued. Moreover, this is also likely to benefit the issuance of securities in Europe, as the current issuance process is strongly geared to the respective national context. Against this background, the European Commission, with the support of the Eurosystem, has launched its own EU-wide issuance service (see the supplementary information on the EU Issuance Service).

Technological innovations have the potential to fundamentally alter Europe’s post-trade infrastructure in the coming years. Tokenisation and distributed ledger technology (DLT) may take on a special role in this process. Tokenisation can be defined as the digital representation of an asset, including the rights and obligations it confers and the transferability this makes possible. In order to classify a financial instrument as a security, the tradability criterion must likewise be met. 37 Conceptually, one can distinguish between two types of tokenisation. First, there is digital representation, which is already possible for conventionally issued securities. Second, tokens can be used to generate purely digital securities. In Germany, for example, crypto-securities can be generated pursuant to the Electronic Securities Act (Gesetz über elektronische Wertpapiere), which was introduced in 2021. 38 The use of tokenisation could lead to significant efficiency gains in the post-trade domain.

In the future, tokenisation could, from a technical perspective, significantly shorten the currently long custody chains between issuers and investors, which also involve local and global custodian banks and CSDs for instance. In addition, smart contracts could be used to make asset servicing (such as the distribution of dividends) more efficient. 39 The use of DLT could allow both investors and issuers to use a single source of truth, which is likely to significantly reduce the need for coordination and the errors that are prone to occur during this coordination. The use of DLT generally allows an “atomic settlement” – in other words, the instant and simultaneous (final) settlement of both legs of a fully digital securities transaction using a smart contract (this might even take place in a joint process step with the conclusion of the underlying transaction). This short overview illustrates that DLT could fundamentally change the role of today’s market participants in the ecosystem, including CSDs.

The tokenisation of securities through DLT has the potential to reduce the costs and complexity of settlement and custody. Many observers assume that value-added chains in the securities sector will become noticeably more efficient through the use of distributed control and access rights, and that intermediaries, in particular, will have to adapt to a significantly changed environment. However, any transition to token-based systems is unlikely to take place abruptly. On the contrary, the level of efficiency already achieved, the cooperation needed among the various market players and the not inconsiderable investment required mean that the transition is likely to be long term and fairly gradual. In the meantime, there will need to be interoperability between today’s account-based systems and the new infrastructures built on token structures. In May 2024, the three major central securities depositories, US-based Depository Trust and Clearing Corporation (DTCC) and Europe's Clearstream and Euroclear, published the “Digital Asset Securities Control Principles”, which cover legal certainty, regulatory compliance, resilience and security, safeguarding customer assets, connectivity and interoperability, as well as operational scalability. 40 The objective is to initiate an international debate on the framework and standards for DLT-based settlement and custody of securities.

Technical innovations, regulatory changes and market-driven developments will continue to innovatively alter European securities developments in the coming years. It should be borne in mind that trading and settlement systems represent the “rail network” of the capital market, figuratively speaking. Changes, say in the product range or at upstream process stages, can therefore also impact settlement systems. In particular, there are currently plans to reduce the time span between trading and settlement from currently up to two business days (known as settlement on “T+2”) to one business day (“T+1”), thereby making the financial markets in the EU more modern and efficient overall.

After the time between the execution and settlement of transactions was reduced to one business day in the United States, Canada and Mexico in May 2024 and a similar step was announced in the United Kingdom, the EU also took the policy decision to shorten the settlement cycle for (exchange-traded) transactions from T+2 to T+1. ESMA presented a comprehensive analysis on this topic in November 2024, taking into account the complex situation within the EU. In February 2025, the European Commission presented a proposal to amend the CSDR. Under this proposal, the transition to T+1 would take place in October 2027 in the EU, allowing it to move in step with corresponding projects in Switzerland and the United Kingdom. The potential benefits of a migration are expected to include lower counterparty and market risk as transactions are open for a shorter period of time as well as less need for collateral to be posted (where settlement is conducted using a central counterparty). A reduction to T+1 will require a significant concentration, in particular, of the necessary process steps upstream of settlement, thus leading to considerable adjustments at the affected market participants. In the settlement systems themselves, there could, for instance, be changes in the timing of delivery patterns, which may require additional investment. The ongoing project work within the EU is being managed and coordinated under the joint leadership of the European Commission, the ECB and ESMA. Within the affected areas, the technical transition work will mainly be carried out by the respective market and industry players.

The changeover to T+1 will require considerable efforts from all market participants over the coming years. However, this must not be allowed to lead to any let-up in efforts to further integrate the post-trade infrastructure. For example, the current momentum to deepen the capital markets union should also, in particular, be channelled into further concrete efforts to harmonise tax, corporate, insolvency and, more generally, securities legislation. One option would be to provide the market with the choice of a special European regime – for larger issues, for example.

Given that structures have evolved historically and perform well and in view of the existing framework conditions, the idea, occasionally mooted, of significantly reducing the number of central securities depositories operating in Europe is not very realistic for the time being. In any case, such a step would require comprehensive harmonisation of tax and securities law. In addition, a wide range of regulatory, legal and – in view of ownership structures – company law issues would arise. It therefore appears beneficial to continue with the market-driven consolidation approach. To this end, competition between central securities depositories should be further increased, for example by further intensifying the use of T2S. In particular, cross-border settlement between the central securities depositories participating in T2S should be further promoted, by completing mutual ties, amongst other things.

The potential of tokenisation and DLT must be rigorously explored and developed. For one thing, the Eurosystem should, even in the short term, provide a range of services allowing the settlement of DLT-based securities transactions in central bank money via appropriate interoperability interfaces. 41 Moreover, a dialogue with all relevant market participants should be launched quickly on what digital securities settlement might look like over the next decade, taking into account the experiences of the past 20 years. This includes considering whether – like with T2S – the objective could be a common DLT infrastructure and what exactly its design should look like. In any case, steps must be taken to ensure that all risk categories relating to settlement, some of which may have changed, are effectively limited through an appropriate regulatory framework even if new technologies are used. In today’s structure, for instance, this framework is provided by the CSDR, in particular. In this respect, specific roles and functions that are subject to a specific regulatory regime will also have to be defined in the future European securities settlement ecosystem. Above all, work at the European level on common digital securities legislation should be initiated as quickly as possible in order to overcome any potential further fragmentation.

Bank for International Settlements (2024a), China – Value of Securities held, CCDC depository and settlement system, Central securities depositories .

Bank for International Settlements (2024b), China – Value of Securities held, SD&C, Central securities depositories .

Bank for International Settlements (2024c), Japan – Value of Securities held, JASDEC, Central securities depositories .

Bank for International Settlements (2024d), Japan – Value of Securities held, BOJ-NET JGB Services, Central securities depositories .

Bank for International Settlements (2012), Principles for financial market infrastructures .

Bech, M. L., J. Hancock, and A. Wadsworth (2020), On the future of securities settlement , BIS Quarterly Review.

Chan, D., F. Fontan, S. Rosati and D. Russo (2007), The Securities Custody Industry , ECB Occasional Paper, No 68.

Clearstream (2025), OneClearstream .

Clearstream (2024a), CBL Client Handbook .

Clearstream (2024b), Streamlining Eurobond primary market issuance .

Clearstream (2024c), Building the digital asset securities ecosystem .

Deutsche Börse (2024), Towards an EU Savings and Investments Union .

Deutsche Bundesbank (2024a), Central securities depositories .

Deutsche Bundesbank (2024b), TARGET2-Securities .

Deutsche Bundesbank (2019), Crypto tokens in payments and securities settlement , Monthly Report, July 2019.

Deutsche Bundesbank (2012), The new CPSS-IOSCO Principles for financial market infrastructures , Monthly Report, July 2012.

Droll, T. and A. Minto (2022), Hare or Hedgehog? The Role of Law in Shaping Current Technological Trends in the Securities Post-trading System , Accounting, Economics, and Law: A Convivium.

DTCC (2024), DTCC Annual Report 2023 .

Euroclear (2024a), Unlocking scale and competitiveness in Europe’s market .

Euroclear (2024b), Our history .

Euroclear (2024c), Top 20 shareholders Euroclear Holding SA/NV .

European Central Bank (2025), Eurosystem expands initiative to settle DLT-based transactions in central bank money .

European Central Bank (2024a), TARGET2-Securities Annual Report 2023 .

European Central Bank (2024b), Central Securities Depositories (CSDs) connected to T2S .

European Central Bank (2024c), Securities settlement statistics .

European Central Bank (2021), Euroclear Bank joins T2S .

European Commission (2024a), Enrico Letta's Report on the Future of the Single Market .

European Commission (2024b), The Draghi report on EU competitiveness .

European Commission (2023), Factsheet The EU Issuance Service .

European Commission (2016), Giovannini reports .

European Post Trade Form (2017), European Post Trade Form Report .

European Securities and Markets Authority (2024a), CSDR .

European Securities and Markets Authority (2024b), Central Securities Depositories .

European Union (2014), Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories .

Federal Financial Supervisory Authority (2019), Tokenisation .

Federal Reserve (2024), Fedwire Securities Service – Annual Statistics .

Ferran, E. and E. Hickman (2021), Central Securities Depositories in the EU , in Financial Market Infrastructures: Law and Regulation (eds J.-H. Binder and P. Saguato), Oxford University Press, pp. 333-357.

International Capital Market Services Association (2024), White Paper: The Eurobond Market – where global issuers meet global investors .

International Monetary Fund (2023), Belgium: Financial Sector Assessment Program-Detailed Assessment of Observance-Assessment of the CPSS–IOSCO Principles for Financial Market Infrastructures Euroclear Bank .

International Monetary Fund (2017), Luxembourg: Financial Sector Assessment Program: Detailed Assessment of Observance-Assessment of Observance of the CPSS-IOSCO Principles for Financial Market Infrastructures: Clearstream Banking Luxembourg .

Lee, R. (2011), Running the World’s Markets: The Governance of Financial Infrastructure , Princeton University Press.

LuxCSD (2024), Company Governance .

Riksbank (2024), The Riksbank wants to use the European T2 platform for payment settlement .

Stafford, P. (2020), China emerges as fifth biggest Euroclear shareholder , Financial Times.

World Bank (2023), A Snapshot Payment Systems Worldwide – Summary Outcomes of the Sixth Global Payment Systems Survey .