Five regional associations of central securities depositories (CSDs) have formed the World Forum of CSDs (WFC).
The WFC was formalized at the 11th Global Conference of Central Securities Depositories in Cape Town, South Africa, last week. The conference brought together 230 delegates from 65 countries, representing 70 CSDs. The five regional associations that make up the WFC, representing 125 member CSDs, are: European Central Securities Depositories Association (ECSDA), Asia-Pacific CSD Group (ACG), Americas Central Securities Depositories Association (ACSDA), Africa & Middle East Depositories Association (AMEDA) and the Association of Eurasian Central Securities Depositories (AECSD).
The groups assembled informally in 2007 to form the CSD Contact Group at the 9th Conference of CSDs in Seoul, Korea, under the leadership of Yoshinobu Takeuchi of the Japan Securities Depository Center Inc.
The WFC will encourage the associations to exchange information, discuss issues of common interest and increase their influence and engagement on cross-regional and global developments, as well as providing a common voice on issues relevant to the various associations and their members, according to a release from the group.
The systemic importance of CSDs to securities markets is becoming increasingly apparent to global regulators, although nowhere more so than in Europe. The European Commission announced in November 2010 that it would implement a common regulatory framework for CSDs across the EU. With its recommendations expected in June, the body said in January that the pan-European framework should include common definitions of CSD services, common rules on authorization on ongoing supervision of CSDs, high prudential standards for CSDs and rules on access and interoperability. It also aims to define a standard settlement period, rather than the varying 2 or 3 days (T+2 or T+3) it currently takes to settle equities trades in European markets.
CSDs are also addressed in the upcoming revision of the Markets in Financial Instruments Directive (MiFID) in Europe. Among other initiatives, MiFID II aims to increase competition among CSDs, as well as central counterparties (CCPs). For more on MiFID II, click here to watch a video interview with Ben Blackett-Ord, CEO of Bovill, about MiFID II concerns in the current changing regulatory landscape.
TARGET2-Securities (T2S), the upcoming IT platform for European settlements, is also a key concern of European CSDs. Essentially, T2S will be the outsourced settlement system for European CSDs. Link Up Markets, the joint venture between eight European and two African CSDs, is evidence of the benefits of collaboration among CSDs. Link Up Markets members have had a head start on the T2S requirement of establishing bilateral agreements, along with a common settlement system. Irene Mermigidis, its managing director, discussed the benefits of collaboration with Global Custodian in Feburary.
The World Forum of CSDs will have a board composed of ten members, consisting of the chairs and vice-chairs of each of the five regional associations, with the association that has most recently hosted the Global Conference of CSDs acting as chair for a 2-year term. The board will be supported by the secretariats of the respective associations.
Mohamed Abdel Salam of MCDR (Egypt), representing the Africa and Middle East CSD Association, will take on the role of chair of the newly formed WFC. Takeuchi will be vice-chair.