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CEBS published its response to the ECOFIN’s request for a review of ‘the coverage of risks borne by custodians (…) so as to ensure a level playing field while avoiding inconsistencies in the treatment of custodians and double regulation’.
The review compared the relevant ESCB-CESR draft Recommendations for Securities Settlement Systems and for Central Counterparties with the Capital Requirements Directive and other relevant EU Directives and Level 3 guidance applicable to custodian banks.
The report finds that, in general, the draft Recommendations relevant to custodian banks participating in the clearing and settlement system are covered in the Capital Requirements Directive and/or other banking relevant regulations. However, where custodian banks internalise settlement activities, CEBS finds that some recommendations relating to the design of the clearing and settlement system are either not met or only partially/indirectly met by the Capital Requirements Directive.
Draft Recommendations for Securities Settlement Systems and for Central Counterparties