Central securities depositories and securities settlement systems (2024)

FAQs

What is a CSD settlement system? ›

A transaction is 'settled' once the CSD has: credited the account of the buyer with the purchased securities (and debited the corresponding cash amount) debited the account of the seller with the securities (and credited its account with the corresponding cash amount).

Central securities depositories ( CSDs ) are financial market infrastructures that hold and transfer fungible securities. This occurs either in the form of physical certificates, which is now fairly unusual, or in the form of book-entry securities.

By value of securities held, the largest CSD/SSS is the Fedwire Securities Service for US government and agency securities (Graph A1, left-hand panel).

In modern corporate debt markets, investors achieve collateralization through CSDs. The CSDs operate as trustees for the owners of the security whereby the collateral is stored and automatically transferred to the lenders in case of non-performance.

The purpose of centralising government's supplier database is to reduce duplication of effort and cost for both supplier and government while enabling electronic procurement processes.

Clearing takes place at the break in the value chain between real post-trade services and those services performed at a prior level. CSD services are traditional post-trade services, which mainly involve settlement, legal transfer of ownership and custody.

Under the CSD system, there is total elimination of risk such as the loss, mutilation and theft of certificates associated with holding and trading of paper-based securities of investors. The CSD system ensures Delivery vs. Payment (DVP) where securities and funds are settled simultaneously.

Incorporated on 30th August 1991, the CDS acts as a depository in respect of securities traded on the CSE and holds the securities in custody on behalf of shareholders of the listed companies.

A depository functions as a connection between the public companies that issue financial securities and the investors or shareholders. A depository holds the securities of customers and gives them back when the customers want.

As their name suggests, SSSs are “systems” and have no legal personality, unlike the CSDs that operate them. 2 They allow the securities to be transferred and the corresponding cash payment to be settled in accordance with a set of contractually and legally enforceable rules.

What is a securities settlement system? ›

Securities settlement is the transfer of ownership in accordance with the terms of an underlying agreement. Typically, the agreement is either to sell securities, to use securities as collateral for other obligations or to lend securities.

CDSL was initially promoted by BSE Ltd. Currently, the top shareholders are BSE Limited, Standard Chartered Bank, PPFAS Mutual Fund, HDFC Bank and LIC.

The Centre for the Study of Developing Societies (CSDS) is an Indian research institute for social sciences and humanities. It was founded in 1963 by Rajni Kothari and is largely funded by the Indian Council of Social Science Research.

The main corporate actions undertaken by the CSD are coupon payments and maturities payments on the above mentioned securities.

What is the difference between a CSD and an ICSD? Whereas CSDs were primarily created to serve their domestic market, ICSDs or “international CSDs” were created in the 1970s to settle eurobonds, i.e. international bonds denominated in a different currency from that of the country in which they are issued.

A central securities depository (CSD) is an institution that holds financial instruments, including equities, bonds, money market instruments and mutual funds.

A custodian of securities

By maintaining electronic records of ownership, a CSD simplifies the process of transferring securities between parties.

CSD plans (Cadastral Survey Data plans) are like Deposited Plans, but may contain other information, such as Mark and Observation Reports, Occupation Diagrams, an 'S' Sheet, and a 'T' Sheet.