## 1deuea2022004

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### Executive summary — role, scope, and overall assessment
- CBF is a central securities depository (CSD) in Germany providing custody and settlement services; licensed pursuant to Art. 16 of the CSDR on January 21, 2020 and authorized to provide banking-type ancillary services under Art. 54 CSDR on August 24, 2021.
- Operates two securities settlement systems (SSSs): CASCADE / T2S and Creation; participant in the CBL-Creation SSS as operated by Clearstream Banking Luxembourg (CBL).
- Uses T2S to settle securities transactions in central bank money (CBM) in EUR; non-EUR settlement mainly in commercial bank money (CoBM) via CBL cash correspondent bank (CCB) network.
- Total value of securities held on accounts in 2020: EUR 10.6 trillion.
- Participants as of end-2020: 290 (half domiciled abroad).
- Observance ratings: Observed for 20 Principles, Broadly Observed for 1 Principle.
- Key priorities: address governance concentration (CEO concurrently COO/CRO/internal audit), enhance monitoring of indirect participants, simplify fee schedules and invoice reconciliation.

### Activity and market metrics (selected figures)
- Market value of outstanding securities held in collective safe custody:
  - €7,951 billion as of end-2019
  - €8,580 billion as of 31 December 2020
  - Increase: 7.9 percent
- Asset class value changes:
  - Bonds in safe custody: 14.9 per cent higher than previous year
  - Equities, certificates and options in safe custody: 2.2 per cent increase
- Transactions:
  - Total transactions processed in 2020: 180.1 million
  - Increase in volume versus 2019: 50.6 percent
  - On-exchange transactions: 78.6 million (44.0 million in 2019)
  - CCP settlement: 21.0 million (15.9 million in 2019)
  - OTC transactions: 80.5 million (59.6 million in 2019)
  - Executed transactions in foreign securities: 35 million (increase of 95.6 percent)
- Number of security issues increased by 28.0 percent in 2020; total different securities in custody end-2020: 3,444,677
  - Bonds: 163,264 (164,513 in 2019)
  - Equities, investment shares and participation certificates: 20,586 (20,373 in 2019)
  - Warrants and certificates: 3,260,827 (2,547,532 in 2019)
- Non-collective safe custody value end-2020: €1,414 billion (compared to €1,316 billion at end-2019)
- Participants by year (Table 1):
  - Number of transactions (millions): 2017: 118.5; 2018: 129.26; 2019: 136.15; 2020: 215.5; 2021 (YTD, as of July 31, 2021): 120.78
  - Value of transactions (trillions): 2017: 85.842; 2018: 88.004; 2019: 102.706; 2020: 198.684; 2021 (YTD): 97.176
  - Total Revenues (excl. NII, OCI, VRC; in millions): 2017: 436.687; 2018: 427.104; 2019: 478.705; 2020: 554.186; 2021 (YTD): 367.869
  - Average daily value of transactions (millions): 2017: 1.747; 2018: 1.702; 2019: 1.907; 2020: 2.181; 2021 (YTD): 2.991
  - Peak value of transactions (by month; in millions): 2017: 33.628; 2018: 44.773; 2019: 50.792; 2020: 52.415; 2021 (YTD): 66.942
  - Number of participants: 2017: 311; 2018: 305; 2019: 300; 2020: 290; 2021 (YTD): 283
  - Foreign participants: 2017: 145; 2018: 144; 2019: 145; 2020: 145; 2021 (YTD): 142

### Group structure, service model, and regulatory framework
- Ownership and group:
  - CBF is a subsidiary of Clearstream Holding AG, which is owned by Deutsche Börse AG (DBAG); group includes CBF, Clearstream Banking Luxembourg (CBL), and LuxCSD under OneClearstream integrated platform.
  - Shared services include treasury, credit and liquidity risk management, and collateral management.
- Regulatory and oversight authorities:
  - BaFin: National Competent Authority for regulation, supervision and national resolution authority.
  - Deutsche Bundesbank (DBB): Oversight of SSSs and represents the Eurosystem as central bank of issue.
  - ECB and DBB involved in authorization/supervision pursuant to Article 12(1) of the CSDR.
  - Federal Office for Information Security (BSI): computer and communication security oversight in Germany.
- Banking status and prudential regime:
  - CBF authorized as a credit institution pursuant to Section 32 German Banking Act; considered a “Less Significant Institution” pursuant to the Single Supervisory Mechanism (SSM).
  - Subject to Recovery and Resolution Act (transposes BRRD); BaFin empowered with early intervention and responsible for resolution planning.

### Governance — strengths, weaknesses, and recommended remedial actions
- Strengths:
  - Comprehensive governance arrangements with Executive Board (EB) and Supervisory Board (SB) two-tier system; committees for audit, risk and remuneration; publicly disclosed governance information.
  - Suitability assessments, conflict of interest policies, and documented roles/responsibilities.
- Weaknesses (concentration of responsibilities):
  - Single EB member (the CEO) holds multiple responsibilities including global operations, internal audit, risk management, credit, and compliance (titles CEO, COO, CRO).
  - Chair of the Risk Committee is currently the CRO of Deutsche Börse (not independent).
  - EB composition at time: four members (temporarily; previously five; plan to onboard fifth member subject to regulatory approval).
- Recommended remedial actions (from assessment):
  - Separate responsibility for internal audit from that of risk management and compliance at the EB level (minimum requirement).
  - Appoint an independent member as Chair of the Risk Committee.
  - Conduct periodic, independent reviews of Supervisory Board performance.
  - Timeframe key in prioritized list: Near Term (NT) < 12 months; Medium Term (MT) 12–24 months; Long Term (LT) > 24 months.

### Risk management framework and financial risk controls
- Framework overview:
  - Adequate policies, procedures and systems to identify, monitor, mitigate and report risks; framework validated regularly by CBF EB.
  - Key Risk Indicators (KRIs) used for operational and business risk management.
  - Recovery, restructuring and resolution plans maintained and updated by a Recovery and Resolution Planning unit.
- Credit risk:
  - All CBF credit services outsourced to Clearstream Services and Clearstream Banking Singapore; Group Credit implements credit strategy and provides independent credit assessments.
  - Credit facilities are exclusively collateralized, with case-by-case exceptions for some non-commercial entities per EU Regulation No 575/2013.
  - Near real time monitoring via Credit Exposure Monitoring Tool.
- Collateral management:
  - Eligibility criteria: high credit quality, minimum market risk, high liquidity, immediate accessibility and valuation.
  - Collateral evaluated automated and near real-time, conservative haircuts, monitoring of concentration limits at participant- and CSD-level.
  - Current practice: ex post action when concentration limits breached; Recommendation: implement ex ante evaluation of collateral concentration limit breaches.
- Liquidity risk and resources:
  - Holds sufficient qualifying liquid resources in euro; can obtain euro liquidity from DBB and access ECB standing facilities.
  - Maintains cash balances in USD and GBP with two CCBs; committed, secured FX swap facilities with two credit institutions (Toronto-Dominion Bank: EUR 100 million convertible into USD, GBP, AUD, CAD, CHF, DKK, JPY, NOK, SEK, HKD and SGD; Standard Chartered Bank: EUR 100 million convertible into same currencies listed).
  - Uncommitted overdraft facilities with CCBs and intraday USD credit line of USD 350 million with Clearstream Banking S.A.
  - Real-time liquidity monitoring and expected cash flow calculations via an intraday liquidity monitoring tool outsourced to CBL.
  - Regular liquidity and reverse stress tests including default of the two participants with largest exposures; recommendation: broaden CCB base and hold overdraft cash accounts in USD and GBP with more than a single credit institution.
- Capital and business risk buffers:
  - CBF holds liquid net assets funded by equity equal to at least 8 months of current operating expenses (stated).
  - Investment portfolio: exclusively EUR-denominated, ECB eligible, L1 HQLA assets, unencumbered and under direct control of the treasury (outsourced to CBL).

### Settlement finality, money settlement, and default management
- Settlement finality:
  - Defined in Article 39(1),(2),(5) of CSDR, Section 14 Depotgesetz, and CBF General Terms and Conditions (GTC); DvP Model 1 used for CASCADE/T2S and Creation.
  - CASCADE/T2S: cash legs in EUR executed in CBM via T2S and TARGET2.
  - Creation: non-EUR and non-T2S-eligible settlements executed in CoBM on CBF books or via CBL’s network of CCBs.
  - Settlement day and cycles: settlement day starts about 18:45 CET; NTS starts about 20:00 CET; RTS ends about 18:00 CET.
- Default management:
  - Two default types: general and contractual.
  - Early Warning Framework with indicators and monitoring thresholds; Default Management Process (DMP) includes suspension of credit limits and timely liquidation of collateral.
  - Allocation of credit losses: Clearstream Liquidation Framework means CBF will carry the loss; no mutualization with other participants.
  - Default management testing and disclosure: DMP reviewed/tested/updated at least annually; CDM conducts default management testing involving participants and authorities.

### Operational risk, cyber resilience, business continuity, and data centres
- Cyber resilience and information security:
  - Aligns with Eurosystem CROE categories and CPMI-IOSCO guidance; dedicated staff training, identity and access management, network segmentation, penetration testing, TIBER-DE exercises.
  - Biannual assurance assessments and participation in Eurosystem’s Cyber Resilience Survey.
- Business continuity:
  - Dual data center strategy with Recovery Time Objective (RTO) of 2 hours for critical systems; BCPs tested at least annually (announced or unannounced) in live production environments; BCPs reviewed at least every 6 months.
  - Two current data centers located within 8 km of one another; each data center provides >100 percent of production workload; synchronous data mirroring (RPO=0) targeted.
  - New Data Centre Setup and Strategy with Phase 1 upgrade and Phase 2 assessment of out-of-region cold infrastructure with asynchronous replication.
  - Recommendation: strongly consider feasibility and business case for a third, cold data site at sufficient distance from Frankfurt (mission recommends).
- Capacity and resilience:
  - Core platforms designed to cope with settlement volume peaks 50 percent greater than average daily activity; headroom indicator drives capacity upgrades.
  - Average system availability in 2020: 100 percent.

### Links, participation, access, and indirect participant monitoring
- Links and contractual documentation:
  - All link arrangements contractually documented; CBF EB responsible for approval of new links; comprehensive assessment process for new links and continuous monitoring with at least annual legal framework review.
- Participation criteria and account structures:
  - Risk-based and publicly disclosed participation criteria in line with Art. 33 CSDR.
  - Direct participants only; omnibus accounts permitted with requirement that no single interest exceed 25 percent of total value in that omnibus account — if exceeded, segregation required.
  - For key participants, disclosure required of underlying clients constituting 10 percent or more of their settlement activity.
- Indirect participant monitoring deficiency:
  - CBF relies on direct participant disclosure to identify underlying clients; no system-level thresholds gauging underlying clients’ business relative to total CBF activity.
  - Recommendation: develop technical and operational capacity to increase transparency of direct participants’ clients and broaden identification criteria to include system-level thresholds.

### Standards, efficiency, transparency, and fees
- Standards and messaging:
  - Fully compliant with ISO 15022 and ISO 20022 standards; all settlement services STP compliant; multiple secure connectivity channels including SWIFT and web portal.
- Client interaction and efficiency:
  - Working Committees, Relationship Management, participant surveys, and KPIs used for service delivery and engagement.
- Transparency and disclosure:
  - Rules, procedures, market data and CPMI-IOSCO Disclosure are publicly disclosed; monthly and biennial publications.
- Fees and invoicing:
  - Fee schedules are published; customers report difficulties with complicated fee schedules and reconciling invoices.
  - Recommendation: CBF should work with customers to find mutually acceptable solutions to ease invoice reconciliation burdens.

### Prioritized recommendations (selected, with timeframes)
- Principle 2 (Governance)
  - Separate responsibility for internal audit from risk management and compliance at EB level. Relevant Parties: CBF, BaFin. Timeframe: NT.
  - Appoint an independent member as Chair of the Risk Committee. Relevant Parties: CBF, BaFin. Timeframe: NT.
  - Conduct periodic independent assessments of SB performance. Relevant Parties: CBF, BaFin. Timeframe: LT.
- Principle 5 (Collateral)
  - Implement capacity for ex ante evaluation of collateral concentration limit breaches. Relevant Parties: CBF, BaFin. Timeframe: MT.
- Principle 7 (Liquidity)
  - Broaden CCB base for risk diversification; hold overdraft accounts in USD and GBP with more than a single institution. Relevant Parties: CBF, BaFin. Timeframe: NT.
- Principle 9 (Settlement)
  - Establish at minimum a subordinate but definite contractual role in CBL–CCB relationships and diversify network for currencies without CBM access. Relevant Parties: CBF, BaFin. Timeframe: LT.
- Principle 17 (Data centres)
  - Assess feasibility and business case for a third, cold data site at sufficient distance from Frankfurt. Relevant Parties: CBF, BaFin. Timeframe: MT.
- Principle 19 (Indirect participants)
  - Develop technical and operational capacity to increase transparency of direct participants’ clients and broaden explicit identification criteria to include system-level thresholds. Relevant Parties: CBF, BaFin. Timeframe: MT/NT.
- Principle 23 (Fees)
  - Work with customers to simplify invoice reconciliation processes. Relevant Parties: CBF, BaFin. Timeframe: MT.

### Authorities’ response (summary)
- BaFin and Deutsche Bundesbank acknowledge recommendations and support separation of internal audit responsibility at EB level; BaFin will ensure appointment of an independent Chair of the Risk Committee.
- BaFin notes legal limitations may affect independent SB reviews under the AktG but considers periodic independent review already takes place in line with legal provisions.
- On money settlement in CoBM and CCB network, BaFin highlights group structure and suggests measures to improve CCB network availability should balance existing CoBM settlement via CBL’s SSS.

_Source: 1deuea2022004 PDF content._

### EXECUTIVE SUMMARY __________________________________________________________________________ 5

### EXECUTIVE SUMMARY

### Role, scope, and licensing
- Clearstream Banking Frankfurt (CBF) is a central securities depository (CSD) in Germany providing mainly custody and settlement services.
- CBF received its license pursuant to Art. 16 of the CSDR on January 21, 2020 allowing it to perform core CSD services as well as non-banking ancillary services.
- CBF was authorized on August 24, 2021 to provide banking-type ancillary services as envisaged under Art. 54 CSDR.
- CBF operates two securities settlement systems (SSSs): CASCADE / T2S and Creation. CBF is also a participant in the CBL-Creation SSS as operated by Clearstream Banking Luxembourg.
- CBF uses the TARGET2-Securities (T2S) platform to settle securities transactions in central bank money (CBM) in EUR; for non-EUR settlement it settles in its books in commercial bank money (CoBM), mainly via the cash correspondent bank (CCB) network of CBL.
- CBF completed the migration of the German securities market to T2S in February 2017.
- Total value of securities held on accounts in 2020 amounted to EUR 10.6 trillion.
- As of end-2020, CBF had 290 participants, half of which were domiciled abroad.

### Group structure and service model
- CBF is a subsidiary of Clearstream Holding AG, which is owned by Deutsche Börse AG. The group comprises:
  - CBF as German CSD,
  - Clearstream Banking Luxembourg (CBL) as international CSD (ICSD),
  - LuxCSD as Luxembourg CSD.
- Under OneClearstream, the Clearstream Group provides harmonized services that allow customers to access all three legally separate CSDs via a single, integrated platform.
- The Group uses shared services including treasury, credit and liquidity risk management, and collateral management.
- CBF settles securities transactions for all German securities and futures markets and for securities traded on various global trading platforms, using both free of payment (FoP) and delivery-versus-payment (DvP) mechanisms.
- CBF’s customers are credit and financial services institutions, foreign CSDs, central counterparties, and national, international and supranational organizations.

### Assessment scope and methodology
- The assessment was conducted under the IMF’s Financial Sector Assessment Program (FSAP) for Germany in February 2022 by Argyris Kahros (IMF) and Dale Connock (IMF external expert).
- CBF was assessed against the CPSS-IOSCO Principles for Financial Market Infrastructures (PFMI), covering Principles 1–5, 7–13, and 15–23 as relevant to a CSD and its integration with CASCADE/T2S and Creation.
- The assessment is holistic, reflecting CBF’s function as CSD and operator of two SSSs; responsibilities of BaFin and DBB as supervisor/overseer were not covered.
- Sources included CBF self-assessment, documentation, laws/regulations, and discussions with BaFin, DBB, ECB, ESMA, CBF, CBL, and market participants.
- Ratings follow the CPSS-IOSCO Disclosure Framework and Assessment Methodology.

### Summary findings and ratings
- Observance ratings: CBF is in observance of 20 principles and in broad observance of 1 principle.
- Strengths:
  - Operates in a highly transparent manner under a solid legal basis.
  - Robust and comprehensive frameworks for managing collateral, credit, liquidity, operational, and business risks.
  - Clear and well-documented rules and procedures for settlement finality and participant default management.
  - Transparent governance arrangements that promote safety and efficiency.
  - Risk-based and publicly disclosed participation criteria.
  - Market participants report high levels of satisfaction with products, services, operations, and transparency; smaller market players can raise concerns via Relationship Management.
  - Generally well-respected and effective organization with highly professional staff.
- Noted interconnections and outsourcing:
  - Settlement in EUR occurs in central bank money via T2S and TARGET2 (RTGS) for the cash leg.
  - Non-T2S-eligible securities and non-EUR settlement are outsourced to the Creation platform operated by CBL.
  - CBF offers FoP settlement functionality and maintains links with several foreign CSDs for foreign securities in collective safe custody.

### Key concerns and deficiencies identified
- Governance concentration:
  - A single Executive Board member (the CEO) holds multiple responsibilities including global operations, risk management, internal audit, and compliance; the CEO is concurrently the COO and CRO.
  - Concern that one Board member is responsible for internal audit in addition to functions subject to audit.
- Recommended governance remedial actions:
  - Separate responsibility for internal audit from that of risk management and compliance at the level of the Executive Board to align with international best practices.
  - Appoint an independent member as Chair of the Risk Committee, in line with CSDR requirements.
  - Implement periodic, independent review of Supervisory Board performance to further strengthen governance.
- Indirect participant monitoring:
  - CBF currently relies on direct participant disclosure for visibility on the activity of underlying clients (indirect participants).
  - CBF should put in place technical and operational capacity to increase direct monitoring of risks posed by indirect participants.
  - CBF has thresholds that trigger identification of underlying clients relative to direct participants’ business, but should also set system-level thresholds gauging underlying clients’ business in relation to total CBF activity.
- Customer experience with fees:
  - Many customers report issues with complicated fee schedules and difficulty reconciling invoices.
  - CBF should work closely with customers to find a mutually acceptable solution to ease invoice reconciliation burdens.

### Overall conclusion
- CBF serves a critical, highly interconnected role in German and international financial markets, operating with substantial strengths in transparency, legal basis, risk frameworks, and operational effectiveness.
- Addressing governance concentration, enhancing monitoring of indirect participants, and simplifying fee structures are priority areas to mitigate identified risks and bring arrangements fully in line with international best practices and CSDR requirements.

_Executive assessors: Argyris Kahros (IMF) and Dale Connock (IMF external expert)._ 

*Source: EXECUTIVE SUMMARY (1deuea2022004)*

### 14.      CBF’s activities have increased significantly. The market value of outstanding securities

### 1deuea2022004 - 14.      CBF’s activities have increased significantly. The market value of outstanding securities held in collective safe custody increased by 7.9 percent from €7,951 billion as of   the end of 2019 to €8,580 billion as of 31 December 2020.

### Activity and market metrics
- Market value of outstanding securities held in collective safe custody:
  - €7,951 billion as of the end of 2019
  - €8,580 billion as of 31 December 2020
  - Increase: 7.9 percent
- Value changes by asset class:
  - Bonds in safe custody: 14.9 per cent higher than in the previous year
  - Equities, certificates and options in safe custody: 2.2 per cent increase
- Transaction volumes and composition:
  - Total transactions processed: 180.1 million transactions in 2020
  - Increase in volume compared with 2019: 50.6 percent
  - On-exchange transactions: 78.6 million (44.0 million in 2019)
  - CCP settlement: 21.0 million (15.9 million in 2019)
  - OTC transactions: 80.5 million (59.6 million in 2019)
- Security issues and custody counts:
  - Number of security issues increased by 28.0 percent in 2020 (due to increased certificates issuance)
  - Total different securities in custody at end-2020: 3,444,677
    - Bonds: 163,264 (164,513 in 2019)
    - Equities, investment shares and participation certificates: 20,586 (20,373 in 2019)
    - Warrants and certificates: 3,260,827 (2,547,532 in 2019)
- Non-collective safe custody (held by foreign depositories):
  - Value as of end-2020: €1,414 billion (compared to €1,316 billion at end-2019)
  - Executed transactions in foreign securities: 35 million transactions (increase of 95.6 percent)
- Participants:
  - Domestic participants: decreased from 155 in 2019 to 145 in 2020
  - Foreign participants: remained unchanged at 145

### T2S (Target2-Securities) — role and oversight
- Purpose and features:
  - Supports national and international CSDs to settle in CBM; facilitates post-trading integration; supports pan-European securities and cash settlement in CBM
  - Multicurrency common platform (currently euro and Danish Krone)
  - Harmonized settlement procedures, cross-border capabilities, collateral and liquidity pooling
  - Technical features include optimization algorithms and a liquidity-saving auto-collateralization mechanism
- Participation and access:
  - At present, 21 CSDs from 20 European countries are connected to T2S
  - To access T2S, a CSD must meet eligibility criteria in the T2S Guideline and sign the Framework Agreement
- Oversight and governance:
  - Subject to continuous oversight by the Eurosystem; ECB as lead overseer
  - Oversight framework based on the PFMI
  - T2S Cooperative Arrangement (established 2016) institutionalizes cooperation among ECB, ESMA, national supervisory and oversight authorities of participating CSDs, and central banks of issue for non-euro currencies (currently Danmark Nationalbank)

### CBF financials and throughput (Table 1 figures)
- Number of transactions (millions):
  - 2017: 118.5
  - 2018: 129.26
  - 2019: 136.15
  - 2020: 215.5
  - 2021 (YTD, as of July 31, 2021): 120.78
- Value of transactions (trillions):
  - 2017: 85.842
  - 2018: 88.004
  - 2019: 102.706
  - 2020: 198.684
  - 2021 (YTD): 97.176
- Total Revenues (excl. NII, OCI, VRC; in millions):
  - 2017: 436.687
  - 2018: 427.104
  - 2019: 478.705
  - 2020: 554.186
  - 2021 (YTD): 367.869
- Average daily value of transactions (millions):
  - 2017: 1.747
  - 2018: 1.702
  - 2019: 1.907
  - 2020: 2.181
  - 2021 (YTD): 2.991
- Peak value of transactions (by month; in millions):
  - 2017: 33.628
  - 2018: 44.773
  - 2019: 50.792
  - 2020: 52.415
  - 2021 (YTD): 66.942
- Number of participants:
  - 2017: 311
  - 2018: 305
  - 2019: 300
  - 2020: 290
  - 2021 (YTD): 283
  - Foreign participants:
    - 2017: 145
    - 2018: 144
    - 2019: 145
    - 2020: 145
    - 2021 (YTD): 142

### Governance, regulatory, and oversight framework
- Ownership and structure:
  - CBF is a for-profit entity, wholly owned by Clearstream Holding AG, which is wholly owned by Deutsche Börse AG (DBAG)
  - Clearstream Holding AG is a financial holding company as defined in the German Banking Act (Kreditwesengesetz)
  - CBF has outsourced IT and operations to Clearstream Services; several critical functions are shared within Clearstream Group (credit and liquidity risk management, collateral management, Treasury)
- National and European oversight:
  - BaFin: National Competent Authority (NCA) for regulation and supervision of CBF; also national resolution authority
  - DBB: responsible for oversight of the SSSs operated by CBF and represents the Eurosystem as the central bank of issue
  - Federal Office for Information Security (BSI): responsible for computer and communication security in Germany
  - CBF obtained authorization as a CSD under Art. 16 of the CSDR in January 2020
  - ECB and DBB involved in authorization and supervision pursuant to Article 12(1) of the CSDR
  - Oversight framework applies PFMI; DBB applies PFMI when carrying out oversight
  - ESMA develops and implements RTS and supervisory convergence measures related to the CSDR; co-chairs the T2S Cooperative Arrangement; facilitates reporting under Article 7 and Article 9 of the CSDR
- Banking supervision and prudential regime:
  - CBF is authorized as a credit institution pursuant to Section 32 of the German Banking Act; banking supervision jointly conducted by BaFin and DBB
  - Status as a credit institution is prerequisite for banking-type ancillary services under CSDR (Article 54)
  - As a credit institution, CBF is considered a “Less Significant Institution” pursuant to the Single Supervisory Mechanism (SSM), subject to indirect prudential supervision by the ECB
  - CBF governed by the Recovery and Resolution Act (transposes BRRD), requiring recovery planning and empowering BaFin with early intervention; BaFin responsible for resolution planning

### Fintech initiatives and DLT projects
- D7:
  - Digital post-trade platform using enterprise DLT, potentially CBDC and/or cryptocurrencies, for digital financial instruments across multiple asset classes on centralized and decentralized networks
  - Enabled by the Electronic Securities Act (eWpG) promulgated in late 2021
  - eWpG allows CBF to digitize more than 80 percent of the securities currently held in its systems
  - CBF launched D7 in November 2021 when the first e-securities were issued
- HQLAx:
  - Partnership with HQLAx to develop DLT-based model for collateral swaps in securities lending using tokens instead of securities
  - Aims to increase collateral mobility and improve liquidity management
- Trigger Chain:
  - Cooperation with DBB and Germany’s Finance Agency to develop a settlement interface for electronic securities based on DLT
  - Successfully tested settlement using a “trigger” solution and a transaction coordinator in TARGET2, proving technical feasibility of bridging blockchain and conventional payment systems to settle securities in CBM
- FundsDLT:
  - Decentralized DLT platform aimed at enabling new distribution channels for funds, mutualizing operational costs, reducing processing time, sharing client knowledge, and improving client experience

### Cyber resilience and information security
- Strategy and standards:
  - CBF aligns objectives with the Eurosystem’s five CROE risk management categories—governance, identification, protection, detection, response/recovery—and the three CROE overarching components—testing, situational awareness, learning/evolving
  - CROE based on CPMI-IOSCO guidance on cyber resilience for FMIs and G7 Fundamental Elements of Cyber Security for the Financial Sector
- Measures and practices:
  - Dedicated staff training and adoption of a cyber resilience maturity model to assess and track capabilities
  - Identity and access management systems, network segmentation, network access controls
  - Comprehensive penetration testing and simulation exercises leveraging frameworks such as TIBER-DE (the national German implementation of TIBER-EU)
  - Regular review and continuous improvement of testing methodology
- Governance and reporting:
  - Information Security Framework fits into DBAG group business and security strategy
  - Executive Board (EB) defines and regularly reviews information risk appetite; Information Owner appointed by EB responsible for risk remediation and status reporting
  - Regular assessments of implemented controls for IT and Non-IT assets; management and independent reviews including internal audit; ad-hoc risk assessments based on external triggers
  - Biannual assurance assessment; recently finalized report on KRITIS measures confirmed overall compliance with only very few minor issues; outcome shared with BSI
  - Regular participation in Eurosystem’s Cyber Resilience Survey exercise for structured comparison across euro-area FMIs

### Regulatory developments and market infrastructure reforms
- EU-level:
  - Commission proposal (September 2020) for a Regulation on a pilot regime for FMIs based on DLT as part of the Digital Finance package; DLT pilot regime aims to allow a CSD to operate a DLT-based SSS for specific financial instruments for a predefined period
- National-level:
  - Electronic Securities Act (eWpG) enacted June 2021 enabling issuance, trading, and custody of electronic bearer bonds under German civil law; allows authorized CSDs or custodians authorized as credit institutions to operate electronic registers; CBF launched D7 in November 2021
- Settlement Discipline Regime (SDR):
  - Entry into force: February 1, 2022 (postponed due to COVID-19 and stakeholder requests)
  - SDR under Regulation (EU) N° 2018/1229 introduces regulatory technical standards to increase settlement efficiency, monitor settlement discipline, and address settlement fails
  - CSD obligations under SDR include applying late settlement cash penalties and sending monthly and annual settlement fail reports to competent and relevant authorities

### Summary assessment — organization, governance, and recommendations
- Legal and operational foundation:
  - CBF has a sound, transparent, and enforceable legal basis for settlement, custody and banking activities; rules and contracts are clear and consistent with German and European laws; legal framework supports finality, netting, securities lending, and collateral arrangements; finality protected under German insolvency law implementing the Settlement Finality Directive
- Governance strengths:
  - Governance arrangements are comprehensive and transparent; roles and responsibilities of supervisory and executive boards are well defined and publicly disclosed; Super visory Board composed of six members (two independent, two staff delegates); CBF established key committees for audit, risk, and remuneration
- Governance weaknesses and recommended improvements:
  - Independence of internal control functions at the level of the Executive Board can be improved:
    - Current EB composition: four members (temporarily; previously five; plan to onboard fifth member subject to regulatory approval)
    - One EB member (the CEO) holds multiple critical responsibilities including global operations, internal audit, risk management, credit, and compliance (titles CEO, COO, CRO), creating concentration of responsibilities
    - This set-up is not in violation of German or European laws but is not aligned with international best practices that call for separation across the three lines of defense
    - EBA Guidelines (EBA/GL/2017/11 paragraph 158(c)) state the head of an internal control function should not be subordinate to a person who manages the activities the internal control function monitors and controls
  - Specific recommendations:
    - Separate responsibilities for internal audit from those of risk management and compliance at the level of the EB (minimum requirement)
    - Appoint an independent member as Chair of the Risk Committee (current Chair is the CRO of the Deutsche Börse Group)
    - Conduct periodic, independent reviews of the performance of the Supervisory Board as supported by the PFMI (paragraph 3.2.9 of the PFMI)

*Source: 1deuea2022004 - 14.      CBF’s activities have increased significantly. The market value of outstanding securities held in collective safe custody increased by 7.9 percent from €7,951 billion as of   the end of 2019 to €8,580 billion as of 31 December 2020.*

### 34.      CBF has a robust and comprehensive risk management framework. It has adequate risk

### 1deuea2022004 - 34.      CBF has a robust and comprehensive risk management framework. It has adequate risk

### Risk management framework (overview)
- CBF has adequate risk management policies, procedures, and systems that enable it to identify, monitor, mitigate and report risks to which CBF is exposed.
- Issues are escalated when risks materialize and appropriate measures are taken to avoid and reduce risks without delay.
- The framework is validated regularly by the CBF EB.
- Key Risk Indicators (KRIs) are used for the management of operational and business risks.
- The risk management function is involved in the calculation of financial buffers in line with Basel capital model requirements.
- Interdependencies and related risks from counterparts that perform multiple roles are identified and monitored.
- CBF has a comprehensive recovery plan.
- CBF’s risk management framework sits under the broader umbrella of DBG’s risk management strategy.
- Management of some types of risk are outsourced (e.g., credit and liquidity) and shared within the Clearstream Group; CBF pays adequate attention to risks unique to CBF.

### Recovery, restructuring, and resolution planning
- CBF distinguishes between:
  - recovery plan (mitigating a near-default situation),
  - restructuring and wind-down plan (ensuring a solvent wind-down),
  - resolution plan (insolvent wind-down).
- Recovery and restructuring/wind-down plans are drawn up and maintained by CBF; the resolution plan is owned and drawn up by the National Resolution Authority.
- A Recovery and Resolution Planning unit (part of Clearstream Risk Management) regularly updates and continuously improves the various plans.
- These plans are subject to approval by the CBF EB prior to submission to the regulators.

### Credit risk management (Principles 4–5 and 7)
- CBF has an adequate framework to manage and monitor its credit risk.
- All CBF credit services have been outsourced to Clearstream Services and to Clearstream Banking Singapore (a branch of Clearstream Banking Luxembourg).
- DBG’s Group Credit implements the group’s credit strategy and develops policies/procedures for identifying, measuring, monitoring, controlling and reporting credit risk for all CBF activities.
- Group Credit provides independent credit assessments and credit ratings.
- CBF’s individual credit risk appetite is approved and regularly reviewed by its EB.
- The credit risk borne by CBF mainly results from fully collateralized loans granted to participants in connection with settlement and custody activities.
- Credit risk is monitored at near real time by the Credit Exposure Monitoring Tool, which computes aggregate exposures to relevant counterparts.
- CBF provides two types of credit facilities to customers to increase settlement efficiency; these credit facilities are granted exclusively on a collateralized basis to commercial entities, in line with Article 59(3)(c) of the CSDR.
- Per the Clearstream Credit Strategy, the CBF EB can make case-by-case exceptions to grant uncollateralized credit facilities to non-commercial entities where zero risk weight is applied according to EU Regulation No 575/2013.

### Collateral management
- CBF has a solid and comprehensive collateral management framework.
- Eligibility criteria include high credit quality, minimum market risk, high liquidity, immediate accessibility and valuation.
- Collateral acceptance criteria are documented in the Clearstream Credit Policy and Clearstream Credit Strategy, reviewed and approved annually by the CBF EB.
- Risk management procedures reduce wrong-way risk and set clear, well-defined, and comprehensive concentration limits.
- Collateral is evaluated in an automated and near to real-time fashion with a sophisticated collateral management system by marking-to-market, setting conservative haircuts, attempting to limit procyclicality, and monitoring adherence to concentration limits at both participant- and CSD-level.
- CBF has a process for ex ante non-acceptance of ineligible collateral and monitors breaches in concentration limits on a daily basis but currently takes action only ex post when a breach is detected.
- Recommendation: CBF should put in place processes for the ex ante evaluation of collateral concentration limit breaches.

### Liquidity risk management
- CBF has a robust framework to measure, monitor, and manage liquidity risk, designed to cover all payment obligations at any time.
- CBF holds sufficient qualifying liquid resources in euro and can obtain euro liquidity from the DBB and has access to ECB standing facilities.
- CBF maintains cash balances in USD and GBP with two CCBs and has committed, secured liquidity FX swap facilities with two credit institutions.
- CBF has uncommitted overdraft facilities with its CCBs and a secure, intraday USD credit line with CBL based on participation in the SSS operated by Clearstream Banking Luxembourg.
- Real-time liquidity monitoring and expected cash flow calculations are conducted via an intraday liquidity monitoring tool, a function outsourced to CBL.
- Regular liquidity and reverse stress tests are conducted at both Clearstream Holding and CBF level, including scenarios such as the default of the two participants with the largest exposures; results are compared with available liquid resources.
- Recommendation: CBF is encouraged to broaden its CCB base for risk diversification and hold overdraft cash accounts in USD and GBP with more than a single credit institution, and to assess the appropriateness of overdraft cash accounts for other currencies.

### Settlement (Principles 8–10)
- Settlement finality is achieved through clearly defined rules and procedures.
- Settlement occurs either Free of Payment (FoP) or Delivery vs Payment (DvP) via CASCADE or Creation (CBF-i).
- Moment of irrevocability for instructions and settlement defined in Article 39(1), (2), and (5) of the CSDR, Section 14 of the German Securities Deposit Act (Depotgesetz), and supported by the CBF General Terms and Conditions (GTC) for participants.
- For external settlements, finality is achieved according to local market rules and practices.
- Money settlement takes place in either CBM (mainly through Target2-securities) or CoBM (at CBF).
- In line with Art. 40(1) of the CSDR, cash payment legs of CASCADE settlements via the T2S platform against payment in EUR are executed in CBM.
- Settlement against payment in CHF for Swiss securities is executed in CBM via a link to the Swiss National Bank.
- For Creation platform settlements, the cash payment leg is executed in CoBM via a network of CCBs that have contractual relationships with CBL.
- CBF holds a limited purpose banking licence in accordance with Art. 54(2)(a) of the CSDR to provide banking services in relation to settlement services.
- Robust mechanisms manage credit and liquidity risks for CoBM settlements, but CBF is reliant on CBL’s network of CCBs for effecting money settlement through Creation.
- Recommendation: CBF should work with CBL to establish, at minimum, a subordinate but definite role in contractual relationships between CBL and its network of CCBs, and diversify the network for currencies to which CBF does not have access to CBM.

### Safeguarding rights of issuers and holders; securities integrity (Principles 11–12)
- Customers may hold securities in segregated or omnibus account structures.
- CBF requires that no single interest in a client omnibus account exceed 25% of the total value of assets in that account; when breached, the direct customer must segregate the corresponding assets into a client segregated account.
- Underlying client assets are segregated from the proprietary assets of the direct customer, and those assets are segregated from the CSD’s assets.
- Participants’ securities are protected under German Insolvency Law from forming part of CBF’s bankruptcy estate.
- Rules, procedures and controls prevent unauthorized creation or deletion of securities.
- In accordance with Art. 37 of the CSDR, negative securities balances are not permitted in participant accounts.
- “Provision checks” are conducted prior to settlement to ensure sufficient securities to execute a delivery instruction, preventing debit balances even intra-day.
- Majority of securities are held in immobilized form with transfer by book entry; reconciliation mechanisms between physical and electronic records are in place.
- The newly adopted Electronic Securities Act (eWpG) allows issuance, trading and custody of electronic securities and modernizes the legislative framework for German securities.

### Delivery versus Payment and participant-default (Principle 13)
- All transactions involving two linked obligations use irrevocable and simultaneous exchange of securities for cash (DvP), whether on T2S or Creation platforms; securities are matched and provisioned prior to settlement and are moved only on confirmation of successful payment.
- Default Management rules and procedures effectively manage the default of a CBF participant.
- Two types of default defined: general and contractual default.
- A comprehensive Early Warning Framework uses indicators and monitoring thresholds across participant activities to identify irregularities indicative of deterioration or default.
- Default Management Process aims to minimize CBF’s financial impact: prompt suspension of credit limits and timely liquidation of collateral reduce impact on CBF resources and limit market disruption.

### General business and operational risk management (Principles 15–17)
- General business risks are well managed.
- An early warning system monitors CBF profitability, operational expenses, cash flows and project expenses.
- Stress testing compares several stress situations against projected Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA).
- Statistical models validate sufficiency of risk-bearing capacity.
- Recovery, restructuring and wind-down plans are maintained.
- CBF holds liquid net assets funded by equity equal to at least 8 months of current operating expenses; these assets are in addition to resources for participant defaults and other financial risks, supporting going-concern operation.
- Custody and investment policies: investment portfolio comprises exclusively EUR-denominated, ECB eligible, L1 HQLA assets, unencumbered and under direct control of the treasury (outsourced to CBL).
- Assets are directly transferrable to the Bundesbank to generate intraday liquidity under stress; CBF has immediate access to its own and customer assets with no liens or pledges affecting access even under default circumstances.
- Legal opinion obtained for each linked jurisdiction to ensure client asset protection where CBF is a direct participant.
- CBF does not engage in proprietary trading; investment strategy objectives include capital preservation and appropriate access to liquidity.

### Operational risk, BCM/BCP, and testing
- CBF’s operational risk framework identifies four main operational risk classes: availability, service deficiencies, damage to physical assets, and legal (and other) risks associated with business practices.
- BCM framework and associated BCPs address direct effects of events (e.g., workspace unavailability, staff unavailability) rather than root causes.
- BCM design considers appropriateness, feasibility and effectiveness of solutions for internal and external needs.
- IT tools support identification, monitoring and management of operational risks and maintain technical infrastructure stability.
- Stringent Change and Project management protocols complemented by robust system, technical acceptance and business readiness testing regimes, involving users/participants as needed.
- KPI-supported BCM incorporates a dual data center strategy with a Recovery Time objective of 2 hours for all critical systems.
- Business Continuity plans address unavailability of systems, workspace, staff and suppliers and are subject to comprehensive testing on an ongoing basis.
- Tests are conducted at least annually, announced or unannounced, during normal business hours in live production environments.
- All BCPs are reviewed at least every 6 months with test outputs measured against functional effectiveness, execution ability and recovery time objectives.

### Data centres and resilience
- CBF uses TSI.STANDARD 4.2 to assess the quality of all its data centres.
- The two current data centers are located within 8km of one another but are assessed via the Trusted Site Infrastructure (TSI) method to ensure no shared single points of failure and distinct risk profiles.
- Consideration has been given to negative impacts of increased distance between sites on latency for real-time data mirroring.
- A new Data Centre Setup and Strategy initiative is underway:
  - Phase 1: upgrade of the older Data Center to state-of-the-art technology to enhance operational stability.
  - Phase 2: assessment of potential benefits of establishing an out-of-region Data Center providing a cold infrastructure with asynchronous data replication; options include a dedicated physical site or a cloud-based solution if regulatory conditions are met.
- Recommendation: Given the critical nature of CBF’s operations, the mission recommends CBF strongly consider the feasibility and business case for a third data site.

### Access and participation criteria (Principles 18–20)
- CBF employs risk-based and publicly disclosed participation criteria in line with Art. 33 of the CSDR to avoid undue legal, financial and operational risk from prospective participants.
- Authority to approve or reject applicants lies with the EB of CBF, which can also terminate participant relationships under defined circumstances (as per numbers VI and XXII of the CBF GTCs).
- CBF maintains contractual relationships only with direct participants and relies on them for identification and management of indirect clients.
- CBF obliges direct participants to disclose identity of underlying clients who maintain assets in a client segregated account; segregated accounts are required if an underlying client’s assets in an omnibus account exceed 25% of total value of that account.
- In line with the CSDR, CBF identifies key participants who must disclose identities of underlying clients that constitute equal to or greater than 10% of the key participant’s settlement activity.
- Identification and monitoring of indirect participant activity is dependent on direct participant disclosure; there is no identification of indirect participants based on activity relative to total CBF activity.
- Recommendation: CBF should develop capacity to increase transparency of direct participants’ clients and broaden explicit identification criteria for clients of direct participants to include system-level thresholds.

*Source: 1deuea2022004 PDF content (sections 34–53).*

### 54.      All link arrangements are contractually documented between CBF and the linking

### 1deuea2022004 - 54.      All link arrangements are contractually documented between CBF and the linking

### Links, contractual documentation, and risk assessment
- All link arrangements are contractually documented between CBF and the linking entity.
- CBF customers can currently avail themselves of a wide variety of CSD links that exist directly with CBF, as well as international links via CBL’s Creation platform.
- Link agreements:
  - Set out the contractual obligations of both parties.
  - Identify the specific services that are provided via the link.
- Governance and oversight:
  - The CBF EB is, ultimately, responsible for the approval of new Link requests.
  - A comprehensive assessment process has been developed to assess technical, operational, legal and credit risks that might be introduced as a consequence of a new link being introduced.
  - A process of continuous monitoring has been implemented with:
    - A review of the legal framework being done, at least, annually.
    - Ongoing monitoring of the operational performance of each link.

### Efficiency (Principles 21–22)
- CBF is recognized for the efficient and effective manner in which it meets the needs of its clients.
- Client interaction and support:
  - Establishment of Working Committees provides effective channels for interaction between CBF and its clients/users.
  - These forums address topics including market and system developments, regulatory changes and management of technical and/or operational disruptions.
  - Smaller clients/users are catered for through a network of Relationship Management personnel that provide a single point of contact to CBF and clear escalation procedures.
- Operational resilience and monitoring:
  - CBF systems are designed to maintain a high standard of operational resilience.
  - A comprehensive KPI framework is used to monitor and measure:
    - Effectiveness of operational service delivery.
    - Outsourced and offshored business activities.
    - A variety of risk elements.
  - IT operational measures monitor application availability, response times and adherence to contracted internal and external obligations.
  - These metrics are shared with the market on an ongoing basis.
- Standards and compliance:
  - CBF is fully compliant with ISO (15022 and 20022) standards as well as IP based and EPTF communication protocols.
  - All CBF settlement services are fully STP compliant.
  - CBF is an active participant in standards bodies and market user groups.

### Transparency (Principle 23)
- Public disclosure and communication:
  - CBF publicly discloses rules, key procedures and market data.
  - CBF makes extensive use of its website (www.clearstream.com) to communicate with its user base.
  - Most information is freely available with a secure portal available for more sensitive data.
  - CBF has completed the CPSS-IOSCO Disclosure framework for FMIs with the 2021 edition being made available on Clearstream’s website.
- Fees and invoicing:
  - Fee schedules are published.
  - Some concerns have been raised regarding the complexity of fee schedules and the ability to reconcile invoices.
  - Recommendation: CBF should work more closely with its customers to decrease the burden of invoice reconciliation.

### Rating Summary (Table 2)
- Assessment Category — Principles
  - Observed: 1, 3, 4, 5, 7, 8, 9, 10, 11, 12, 13, 15, 16, 17, 18, 19, 20, 21, 22, and 23
  - Broadly Observed: 2
  - Partly Observed: -
  - Not Observed: -
  - Not Applicable: 6, 14, and 24

### Prioritized List of Recommendations for CBF (selected entries from Table 3)
- Principle 1 — (no specific issue text provided in excerpt)
- Principle 2
  - Issue: The independence of internal control functions at the EB level can be improved.
    - Recommended action: At the level of the EB, the responsibility for internal audit should be separated from that of risk management and compliance.
    - Relevant Parties: CBF, BaFin
    - Timeframe for Action: NT
  - Issue: The current Chair of the Risk Committee is not independent.
    - Recommended action: CBF should appoint an independent member as Chair of the Risk Committee since the current Chair is the CRO of Deutsche Börse, CBF’s ultimate parent.
    - Relevant Parties: CBF, BaFin
    - Timeframe for Action: NT
  - Issue: Lack of independent reviews of the performance of the SB.
    - Recommended action: CBF should have periodic independent assessments of the performance of its Supervisory Board.
    - Relevant Parties: CBF, BaFin
    - Timeframe for Action: LT
- Principle 5
  - Issue: There is no automatic prevention of participants breaching collateral concentration limits.
    - Recommended action: CBF is encouraged to put in place the capacity for ex ante evaluation of collateral concentration limit breaches.
    - Relevant Parties: CBF, BaFin
    - Timeframe for Action: MT
- Principle 7
  - Issue: CBF maintains cash overdraft accounts with only one bank in USD and one bank in GBP.
    - Recommended action: CBF is encouraged to broaden its CCB base for the purposes of risk diversification and hold overdraft accounts in USD and GBP with more than a single institution, in addition to assessing the appropriateness of holding overdraft cash accounts for other currencies.
    - Relevant Parties: CBF, BaFin
    - Timeframe for Action: NT
- Principle 9
  - Issue: CBF effects money settlement via CBL’s network of CCBs in the Creation platform.
    - Recommended action: To minimize CBF’s reliance on CBL for access to the network of CCBs required for money settlement, CBF is encouraged to work with CBL and establish, at minimum, a subordinate, but definite, role in the contractual relationships that exist between CBL and its network of CCBs, as well as diversify the network for currencies to which it does not have access to CBM.
    - Relevant Parties: CBF, BaFin
    - Timeframe for Action: LT
- Principle 17
  - Issue: CBF maintains two hot secondary data sites in the general vicinity of Frankfurt with no site at a greater distance.
    - Recommended action: Due to the critical function CBF provides, CBF should assess the feasibility and business case for a third, cold data site at a sufficient distance from Frankfurt.
    - Relevant Parties: CBF, BaFin
    - Timeframe for Action: MT
- Principle 19
  - Issue: CBF relies on direct participant disclosure to identify and manage the risks posed to the system from the customers of its direct participants.
    - Recommended action: Beyond relying on direct participant disclosure, CBF should develop the technical and operational capacity for increasing the transparency with respect to the business of its direct participants’ clients.
    - Relevant Parties: CBF, BaFin
    - Timeframe for Action: MT
  - Issue: For the disclosure of the identity of the underlying clients of direct participants, CBF has only set thresholds of client activity with respect to the activity of the direct participants through which it accesses CBF services, and not with respect to the total activity of CBF.
    - Recommended action: CBF should broaden its explicit identification criteria for the clients of its direct participants to include system-level thresholds.
    - Relevant Parties: CBF, BaFin
    - Timeframe for Action: NT
- Principle 23
  - Issue: CBF participants have difficulties reconciling invoices due to complicated fee schedules.
    - Recommended action: CBF should work with its customers to find a mutually acceptable solution to simplifying the process of reconciling invoices.
    - Relevant Parties: CBF, BaFin
    - Timeframe for Action: MT

- Timeframe key:
  - Near Term (NT): < 12 months
  - Medium Term (MT): 12 to 24 months
  - Long Term (LT): > 24 months

### Authorities’ response (summary points)
- The German authorities (BaFin and Deutsche Bundesbank) thank the IMF assessment team for the study and acknowledge the recommendations where room for improvements has been identified.
- Regarding Principle 2:
  - Authorities support separating responsibility at the level of the EB for internal audit from risk management and compliance.
  - BaFin and Deutsche Bundesbank will take into account the Minimum requirements for risk management (‘MaRisk) further specifying the requirements of the German Banking Act (‘KWG’) with regard to proper business organization, recommending responsibility of the internal audit function by the CEO.
  - BaFin will not prevent a shift of responsibility for the internal audit function within the EB of CBF to ensure a reasonable separation across the three lines of defense.
  - BaFin will ensure that CBF appoints an independent member as Chair of the Risk Committee.
- On independent reviews of the SB:
  - BaFin notes possibilities for independent reviews of the SB may be limited by law (German Stock Corporation Act, Aktiengesetz, ‘AktG’), and considers that periodic, independent review of the SB already takes place in line with legal provisions applicable to German stock companies.
- On money settlement in CoBM and the CCB network:
  - BaFin highlights the interaction of settlement activities of CBF which will be settled on an aggregated basis in the account of CBF in the SSS of CBL, whereby CBF is a participant of CBL.
  - Considering the group structure and outsourcing arrangements between CBF and CBL regarding treasury and default management, BaFin suggests measures to improve the CCB network or availability of relevant currencies should balance the availability of CoBM settlement in relevant currencies through settlement in the SSS operated by CBL.

### Principle 1. Legal Basis — material aspects and legal framework (selected points)
- CBF authorizations and supervision:
  - CBF is authorized as a CSD by BaFin under Art. 16 of the EU Regulation 909/2014 of 23 July 2014.
  - CBF is authorized as a credit institution according to the German Banking Act (Kreditwesengesetz) and is allowed to provide deposit business and lending operations.
  - CBF is subject to banking supervision by BaFin in close cooperation with DBB; as an operator of an SSS, CBF is also subject to DBB’s oversight function.
  - Existing authorizations are described in the database of companies of BaFin (portal MVP link cited in source).
- Contractual and legal bases for services:
  - CBF’s contractual documentation is based on and reflects requirements of German and EU law, including the German Securities Deposit Act (Depotgesetz, DepotG), the German Civil Law Code (Bürgerliches Gesetzbuch, BGB) and CSDR.
- Securities custody structures and services:
  - Collective Safe Custody (CSC): holders of securities held in CSC are granted a proprietary right (a 'right in rem') being a pro rata co-ownership right in a fungible pool of securities represented by a global note or similar, in accordance with section 5 paragraph 1 DepotG.
  - Cross-border CSD-Link holdings: equivalent rights are granted under German law for securities CBF holds via a cross border CSD-Link based on an account relationship in accordance with section 5 paragraph 4 DepotG.
  - Vault Services: third party insourcing of the depository function from custodian banks.
  - Individual Safe Custody: jacket custody of fungible and non-fungible securities certificates where each participant can receive back individual securities certificates with a particular serial number.
  - German Treasury Bonds: Bond issues of the German Federal State and German States are eligible for CSC; upon registration of CBF as holder of a collective registered claim, German Treasury Bonds are deemed by law to be a collective holding eligible for settlement under DepotG.
  - Non-Collective Safe Custody (NCSC): applies to fungible securities kept abroad; the depository bank where the account is kept becomes the legal owner acting as trustee; CBF acts as the depository (intermediary) and keeps positions as book-entry credits on a fiduciary basis through CBL which uses sub-custodians.
- Settlement and ancillary services:
  - CBF settles securities transactions free of payment (FoP) or delivery-versus-payment (DVP).
  - CBF provides notary services, initial recording of securities in a book-entry system, central maintenance services, supporting processing of corporate actions, securities lending and borrowing and collateral management services.
- Material legal documentation includes:
  - The General Terms and Conditions (GTC) of CBF.
  - Securities Lending and Borrowing Rules of Clearstream Banking AG.
  - Special Conditions for Collateral Management.
  - Special Conditions for services related to reporting and payment obligations arising from the French Financial Transaction Tax.
  - Special Conditions for the re-entry of internal instructions on CBF-i Accounts.
  - Special Conditions of Vestima Service of Clearstream Banking AG.
  - GTC and Special Conditions are accompanied by Technical Rules including Participant Handbooks.

- Main legal provisions relevant for establishment and operation of CBF (selected list as provided):
  - The German Banking Act (Kreditwesengesetz), section 1, paragraph 1 and 17.
  - The Securities Deposit Act (Depotgesetz): sections cited include section 1 paragraph 3; section 3 paragraph 1; section 5 paragraphs 1 and 4; sections 6-9; section 9a.
  - The German Civil Code (Bürgerliches Gesetzbuch, BGB): sections cited include section 280 and following; section 929 and following; section 1204 and following.
  - Federal Government Debt Act (Bundesschuldenwesengesetz) (listed in source).

*Source: 1deuea2022004 — IMF assessment chapter content.*

### section 6 (entry of CSD into debt ledger equaling the existence

### section 6 (entry of CSD into debt ledger equaling the existence of a pool of certificates (Wertpapiersammelbestand))

### Legal basis, rules, procedures, and enforceability (Principle 1)
- Legal and regulatory framework governing CBF’s activities includes:
  - Law on the Restructuring of Bonds (Schuldverschreibungsgesetz), section 21.
  - Stock Corporation Act (Aktiengesetz), Commercial Code general rules.
  - Insolvency Code (Insolvenzordnung) in relation to segregation of assets in the case of CBF’s insolvency.
  - Regulation (EU) No 909/2014 of 23 July 2014 (CSDR).
  - Regulation (EU) No 575/2013 of 26 June 2013 (CRR).
  - German Banking Resolution Act (Sanierungs- und Abwicklungsgesetz).
  - Directive 98/26/EC (SFD), as amended by Directive 2009/44/EC and Directive 2010/78/EU.
- Key considerations and practices:
  - Implementation of clear and understandable rules, procedures and contracts addressed in Art. 43 of the CSDR; described in CBF’s CSDR application to BaFin.
  - CBF will notify participants in writing by e-mail and via its website of any changes to the GTC and the effective date; unless the participant informs CBF in writing of any objection within six weeks after the modification has been communicated, the participant will be deemed to have accepted such amendments.
  - Announcements are generally made in German with an English translation or vice versa. All laws and regulations governing CBF are publicly available.
  - CBF’s documentation (GTC, Customer Handbook) is made available on the Clearstream website; client comments are considered to enhance clarity.
  - Regular internal and external reviews of documentation involve the legal department, internal auditors, and independent external law firms; updated versions accessible in German and English.
- Enforceability and cross-border aspects:
  - Rights and interests in financial instruments under deposit with CBF are mainly governed by German law.
  - Third country laws and regulations generally apply to custody and settlement of securities held via a CSD-link or sub-custodian link; market rules of the foreign CSD/sub-custodian govern such securities and are described in Market Link Guides.
  - Annual legal opinions requested from independent law firms address:
    - validity and enforceability of the link agreement;
    - description of the nature of entitlement (rights and interest of CBF in respect of sub-deposited financial instruments);
    - liability questions;
    - no lien, right of redemption, etc. in relation to participant assets other than for claims from purchase, administration, or safe custody;
    - asset segregation;
    - no upper-tier attachment;
    - description of settlement finality rules;
    - description of relevant insolvency law proceedings.
  - Three-point declaration from relevant CSD, depository and agent bank is requested to acknowledge participant asset status and limitation of depository liens to fees from purchase, administration and safe custody.
- Risks to finality and certainty:
  - Avoidance, reversal or stays of CBF actions could potentially result from (i) default of a counterparty (insolvency, liquidation) or (ii) court order, subject to finality rules.
  - CBF obtains reasoned legal opinions/analyses, with independent law firm support where reasonably required, to confirm enforceability of rules and procedures as practicable.
- Key Conclusions for Principle 1:
  - "CBF has a solid, clear, and enforceable legal basis for each material aspect of its activities."
  - Settlement activities governed by a consistent set of laws, regulations, and contractual arrangements; finality of securities and payment transfers protected against unwinding or reversal under German insolvency law.
  - Legal opinions are used to identify and mitigate risks from links; continuous monitoring and regular reviews in place.
- Assessment of Principle 1: Observed
- Recommendations and comments: None

### Governance (Principle 2)
- CBF objectives and strategy:
  - Objectives: contribute to enhancing the safety, efficiency, and transparency of securities markets; safeguard financial markets; ensure timely execution of securities transactions including during extreme stress.
  - Pursuant to the Articles, main objectives include:
    a. a securities clearing and deposit bank and performing all tasks relating to this;
    b. a central accountancy and clearing office to facilitate international securities clearing;
    c. a system for collateral provision and management (Collateral Management).
  - CBF is part of DBG’s "Compass 2023" medium-term strategic plan; strategy pillars and five key strategic actions:
    - Strengthen product areas.
    - Ensure regulatory compliance.
    - Promote internal efficiency.
    - Mobilize growth potential.
    - Foster effectiveness in sales and client services.
  - Strategic emphasis on ESG, OTC to on-exchange shifts, buy-side importance, shift to passive investing, digitization, M&A for asset class expansion, adoption of new technologies, expansion of collateral management and investment fund services, and TARGET2 Securities ("T2S") participation.
- Governance arrangements and disclosure:
  - Ownership: CBF is wholly owned by DBAG through two layers of ownership; Clearstream Holding AG owns CBF.
  - In September 2016 Clearstream Group moved from one-tier to two-tier governance: Executive Board (EB) and Supervisory Board (SB).
  - CBF follows two-tier system per AktG: EB manages and represents (section 76), SB supervises and advises (section 111).
  - Committees set up in line with CSDR: Audit Committee, Risk Committee, Remuneration Committee, and User Committee.
  - Disclosure: governance information, Articles, and Banking License are publicly disclosed on Clearstream’s website; Company Governance and committee tasks are published.
- Board roles, conflicts of interest, and performance review:
  - SB advises and supervises EB; EB realizes corporate objectives and represents CBF; SB approval required for certain EB measures per Rules of Procedures.
  - EB members elected for four-year terms; removable by simple majority; re-eligibility for further terms.
  - Conflicts of interest policy and Principles on management of conflict of interest exist; members with conflicts must declare and abstain from deliberations; records presented to next general meeting.
  - Annual Suitability Assessment used to review overall and individual board performance; SB assessed yearly when annual financial statements approved and relief granted.
- Board composition and suitability:
  - SB members have no executive functions; one third of SB members (two members) are fully independent per art. 27(2) CSDR.
  - Suitability policy aligns with Joint ESMA and EBA guidelines; annual suitability assessments on reputation, honesty, integrity, knowledge, skills, experience, time commitment, and independence.
  - EB qualifications required include university degree (preferably in banking and finance, economics, law, administration, financial regulation, quantitative methods), experience in post-trade industry, managerial experience, strategic planning experience, governance and oversight experience, and board/daily management liability experience.
- Roles, responsibilities, and incentives of management:
  - EB members act as senior managers with sole managerial authority in assigned departments; unanimous resolution required to enact/modify schedule of responsibilities.
  - Promotion to high-level management includes structured leadership interview and Hogan personality inventory.
  - Remuneration policy ties variable remuneration to performance criteria including risk appetite; variable remuneration determination must (i) take due account the risk-bearing capacity, multi-year capital planning and profitability, (ii) ensure ability to maintain or recover appropriate own funds and liquidity, and (iii) ensure ability to meet or recover combined capital buffer requirements.
- Risk governance and internal control independence:
  - DBG Risk Management Policy applies to CBF; risk taxonomy distinguishes five aggregated risk types: Operational Risk, Financial Risk, Business Risk, Pension Risk, and Winding-down and Restructuring Risk.
  - Risk Committee advises SB on risk appetite, tolerance and strategy; tasks include advising SB, submitting proposals to EB within Audit Committee, examining remuneration incentives, reviewing participant conditions, and consulting external experts as needed.
  - Clearstream Risk Committee (CRC) is a sub-committee of the EB of Clearstream Holding AG.
  - Internal Audit: independent third line of defence; Chief Internal Auditor reports to EB, SB and Audit Committee with administrative reporting to CEO and functional reporting to Head of Internal Audit DBAG; internal audit has unrestricted access and independence.
- Identified governance deficiencies and assessments:
  - Independence of internal control functions at EB level can be improved: four EB members present; one member—the CEO—holds responsibility for global operations, internal audit, risk management, credit, and compliance, concentrating critical functions under a single member who retains titles of CEO, COO, and CRO.
  - Chair of CBF’s Risk Committee is the CRO of Deutsche Börse (ultimate parent) and is not independent.
- Key Conclusions for Principle 2:
  - "CBF has comprehensive and adequate governance arrangements." Roles and responsibilities are well defined and publicly disclosed; important committees exist and are chaired by an independent board member.
  - However, concentration of control at EB level and non-independent Risk Committee Chair are governance weaknesses.
- Assessment of Principle 2: Broadly Observed
- Recommendations and comments:
  - Separate responsibilities for internal audit from those of risk management and compliance at the EB level.
  - Appoint an independent Chair for the Risk Committee.
  - Conduct periodic, independent reviews of SB performance.

### Framework for the comprehensive management of risks (Principle 3)
- Risk-management organization and responsibilities:
  - Clearstream Risk Management is responsible for strategies, policies, procedures, processes and handbooks to identify, measure, mitigate and report risks across CBF, CBL and LuxCSD.
  - CBF Risk Management is the independent second line risk control function headed by the Head of Risk Management CBF; receives support services from DBAG per formal service definition agreements containing service qualitative requirements and KPIs.
- Risk-management policies, procedures and taxonomy:
  - Overarching Group Risk Management (GRM) Policy applies to CBF; GRM Procedure outlines a five-step risk management process.
  - DBG Risk Inventory gives DBG risk taxonomy applicable to CBF; Risk Inventory Taxonomy summarized across four levels and includes five aggregated key risk types: Business Risk, Financial Risk, Operational Risk, Pension Risk and Winding-down and Restructuring Risk.
  - CBF included in the DBG corporate risk taxonomy; risk strategy sets limits specifying maximum risk permitted for defined risk types and overall bank risk.
- Risk management processes and oversight:
  - Risk management process stages: identification, notification, assessment, mitigation and reporting.
  - Risk mitigation approach described in the Pillar III report (available on Clearstream website).
  - CBF implements annual internal control cycle including control validation and effectiveness confirmation with final sign-off by responsible owners at board level; results disclosed in various reports including an annual internal control system effectiveness report to Clearstream Banking AG SB.
  - Risk management processes and measurement systems subject to regular reviews by Internal Audit and External Audit.
- Authority, independence and reporting lines:
  - Risk Management function includes GRM, CRM and ERM; roles and responsibilities defined in Group Risk Management Policy and Procedure.
  - 1st Line of Defence (business) responsible for risk control; 3rd Line (Internal Audit) and external auditors/supervisory authorities review implementation.
  - Chief Risk Officer (CRO), Chief Compliance Officer (CCO), Chief Technology Officer (CTO) and Chief Internal Auditor (CIA) have direct access to SB.
  - CBF risk management function is organizationally independent from the business units it controls; remuneration of risk management staff not linked to performance of activities they control.
  - CRO has unrestricted access to CBF units and committees, external auditors and regulatory authorities, and external and internal data across CBF.
- Internal Audit independence and remit:
  - Internal Audit is permanent, independent, objective, and provides assurance and consulting to improve operations and governance; has unrestricted access to activities, records, property and employees consistent with applicable law.
  - Chief Internal Auditor maintains direct communication with SB Chair, Audit Committee, external auditor and regulators as required.
- Key Consideration 1 conclusion:
  - Clearstream Risk Management and CBF Risk Management set out policies and procedures to identify, measure, monitor and manage the range of risks; frameworks are subject to periodic review.

*Source: 1deuea2022004 - section 6 (entry of CSD into debt ledger equaling the existence of a pool of certificates (Wertpapiersammelbestand)) — IMF chapter excerpt*

### 1. Aggregated Risk Types: These types are chosen by DBG and

### 1. Aggregated Risk Types

### Aggregated Risk Types
- These types are chosen by DBG and CBF’s Executive Management for reporting and management and are the aggregate of the eight Risk Types.
- These are the Risks (if material) that are reported in internal and external risk reports.

### Risk Types
- these risks are more manageable and provide the split of Financial Risk.
- Credit, Liquidity, Market and Operational Risks are always material, by definition.

### Risk Clusters
- Like Risk Items are grouped together for the purposes of the materiality assessment.
- When new risk items are identified, new clusters can be proposed.

*Source: 1deuea2022004 - 1. Aggregated Risk Types: These types are chosen by DBG and*

### 4. Risk Items: The potential risk items that the Group may be

### 4. Risk Items: The potential risk items that the Group may be exposed to due to its current and future business operations. Some risk items may overlap.

### Risk inventory, identification, assessment and approval
- Annual Risk Inventory Process follows stages: Identification and Notification, Assessment and Review, and Approval.
- Identification stage: review current Risk Inventory and include new risks affecting risk, financial (net asset), finance, earnings and liquidity situations; uses a variety of internal and external sources.
- Assessment stage covers three activities:
  - determination of materiality of each risk item on the entity level;
  - assessment of risk concentrations;
  - review of appropriateness of materiality thresholds.
- ESG figures’ potential impact on each risk cluster is considered with input from the DBG Sustainability Team.
- Risk Inventory Process is reviewed annually by Risk Management and approved by CBF's EB.
- Risk type specific items/drivers may be identified in addition to DBG-wide process.

### Systems, data collection, handbooks and operational controls
- Systems/databases/reports automatically collect internal/external loss data, scenarios, and KRIs.
- Risk management receives internal Production Issue Logs weekly and Production Error Log reports upon operational risk events.
- Credit Exposure Monitoring Tool (CEMT) enables Clearstream International to aggregate exposures from cash, securities financing, and treasury activities throughout the day.
- CBF Risk Management Handbooks exist for most risks; each Handbook describes objectives, scope, definitions, root causes, roles/responsibilities, instruments/methods and reporting.
- Control environment includes IT controls plus cybersecurity, local/physical access management, stress testing/VaR, BCM, project management process, four-eye principle, etc.

### Risk measurement: Value at Risk (VaR), stress testing and consolidation
- Standardized approach: concept of “Value at Risk” (VaR) to measure/express overall risk appetite and prioritize risk management.
- VaR purpose: indicates maximum cumulative loss if certain independent loss events materialize over a specific horizon.
- CBF models, in line with the Basel II / III framework, use a one-year time horizon and recognize correlations between individual risk estimates when calculating the capital charge for operational risk.
- Between individual risk types, a correlation of “1” is implemented (most conservative).
- VaR used to detect potential risk concentrations; stress tests use more conservative parameters than regular VaR calculations.
- Liquidity risk reporting excluded from consolidated VaR and covered by the CBF Liquidity Stress Testing Model.

### Risk management systems and IT tooling
- Risk management system: implementation of risk framework in processes, roles and responsibilities per Risk Strategies.
- IT support for operational, financial and business risk: multiple IT systems and data sources support Clearstream Risk Management processes.
- Wide range of IT tools, controls and procedures to minimize operational risk impact for settlement systems; examples include processing and infrastructure monitoring.
- SIAM (Simulation, Insurance, Allocation and Measuring of risks) is one of four RITA components used with MATLAB Monte Carlo simulation to determine VaR at different confidence levels for financial, business and operational risk.

### Participant incentives, onboarding, monitoring and safeguards (Key Consideration 2)
- Aim: set adequate and comprehensive risk management standards to ensure sustainability of CBF’s CSD operations and protect CSDs, users and clients, CSD links, CCPs, trading venues, payment systems, settlement banks, liquidity providers and investors.
- On-boarding: comprehensive on-boarding reviews, regular and ongoing review processes focused on fraud, legal offences and regulatory compliance; high standards for acceptance and eligibility criteria; possible deferment of existing participants.
- Participant reporting/queries: participants can make online queries on security and cash transactions/balances; CBF provides various reports to enable participants better to manage risks they pose to CBF.
- Connectivity/validation/monitoring safeguards: participant access and account creation in web-based applications activated only through (i) authenticated means (SWIFT/authorized letters and faxes) and (ii) conformity to CSD participant documentation.
- Disaster recovery: CBF participates in SWIFT disaster recovery testing twice a year.
- Reconciliation and reporting for participant-related settlement activities to improve settlement efficiency, minimize settlement fails and identify settlement issues.

### Interdependencies, critical service providers and material risks (Key Consideration 3)
- Material risks include:
  - (i) availability risk from reliance and connectivity to SWIFT, IT systems and applications for essential core services;
  - (ii) service deficiency risks from operational interdependencies of critical outsourcing & third-party governed services, CSD market links and supplier network providers;
  - (iii) operational risks posed by key participants and credit risks related to participants in default, potentially impacting business services and financial market stability.
- Market link arrangements: identified during link creation or maintenance via yearly DDVs to supplier/link arrangement reviews and ongoing monitoring.
- Critical service provider governance: framework procedure based on CPMI IOSCO FMI assessment methodology for CSP risks such as SWIFT.

### Risk-management tools specific to risk categories
- IT systems for Operational Risk store: (i) internal loss data and KRIs; (ii) external loss data; (iii) operational risk scenario documentation; (iv) process controls; (v) an Incident notification mailbox.
- Business Risk tools: controlling figures for KRIs and Risk IT Architecture (RITA) with data collection into RITA, excel input workbooks, SIAM model and MATLAB function library.
- SIAM + MATLAB used for automated data collection and Monte Carlo simulation to determine VaR on different confidence levels.

### Scenarios preventing provision of critical operations & recovery/resolution planning (Key Consideration 4)
- Critical business lines identified per EBA Technical Advice: custody, settlement, global securities financing, investment fund services, treasury and IT; assessment uses qualitative and quantitative parameters including strategic importance, net revenue, contribution to total net revenue, EBIT, contribution to total EBIT.
- Recovery scenarios included in the recovery plan: plausible near-default scenarios—two idiosyncratic, two systemic, and two combined (one fast-moving, one slow-moving). Scenarios test adequacy of recovery measures with execution plans and identified barriers.
- Examples of scenario types:
  - Different market-wide scenarios affecting liquidity and capital profile.
  - Combination of idiosyncratic and market-wide scenarios to derive larger stress magnitude.
- Distinction among plans:
  - Recovery plan (near-default mitigation) and restructuring and wind-down plan (solvent wind-down): drawn up and maintained by CBF; updated at least annually; approved by CBF EB before submission to regulators.
  - Resolution plan (insolvent wind-down): owned and drawn up by the NRA; CBF supports NRA for resolution planning.
- Recovery options grouped by aspect: capital, liquidity, risk positions and operational capacity.
- Recovery and Resolution Planning unit (part of Clearstream Risk Management) responsible for updates and continuous improvement.

### Key operational and liquidity measures (Principles 7, 9 and related)
- Intraday credit and facilities:
  - CBF provides Unconfirmed Funds Facility (UCF) and Technical Overdraft Facility (TOF); sizes defined by trading activity, participant creditworthiness/rating and collateral/bank guarantees availability.
  - TOFs enable intraday borrowing to purchase securities and facilitate FX trades; may exceptionally facilitate cash withdrawals upon EB approval; always fully collateralized except specific zero risk weight exception for some non-commercial entities per EU Regulation No 575/2013.
- Collateral and haircuts:
  - Collateral eligibility: debt instruments, transferable securities and money market instruments issued by governments, certain public authorities and issuers with low credit risk (rated BBB- or above).
  - Haircut practices: automatic collateral haircut calculation, flexible parameters, regular haircut back testing, mark-to-market collateral valuation, five-day maximum liquidation period considered; where no price available, issue price used; beyond 2 days, haircut of 100 percent applied.
  - Collateral concentration limits include exact caps:
    - Issuer: Maximum 25 percent of securities issued by entities belonging to same group.
    - Country: Maximum 25 percent on any single country rated BBB- (Standard & Poor’s /Fitch) or Baa3 (Moody’s).
    - Wrong Way Risk - Issuer Type: Maximum 20 percent on securities issued by Financial institutions rated BBB- (Standard & Poor’s /Fitch) or Baa3 (Moody’s).
    - Wrong Way Risk - Same Country: Maximum 10 percent on securities issued by an entity of the same country as that of the participant if country is rated BBB- (Standard & Poor’s /Fitch) or Baa3 (Moody’s).
    - Instrument type: Maximum 50 percent concentration on Equities, Certificates of Deposit, Commercial Paper and Convertible bonds (No concentration limit on straight bonds).
    - Settlement currency: No concentration limit on EUR, USD, GBP, CHF, JPY, AUD, CAD, NZD, NOK, DKK and SEK. Maximum 30 percent on securities issued in currencies not TOF eligible.
    - Credit rating: Maximum 20 percent on securities rated BBB- (Standard & Poor’s /Fitch) or Baa3 (Moody’s).
    - ECB Eligibility: Maximum 70 percent on securities not eligible at the ECB.
    - Liquidity: Max 25 percent on securities with low liquidity score.
    - Price Volatility: Maximum 25 percent on securities with high volatility score.
- Liquidity resources and facilities (Principle 7):
  - Ex ante liquidity measures include:
    - permanent liquidity buffer in top 3 currencies at Clearstream Holding level;
    - committed secured liquidity (FX swap) facilities with two creditworthy financial institutions;
    - uncommitted overdraft facilities with its CCBs;
    - intraday secure credit line of USD 350 million with Clearstream Banking S.A.;
    - real-time liquidity monitoring and expected cash flow calculation via ILM tool;
    - maintaining sufficient qualifying liquid resources to cope with Cover 2 or similar stress scenario.
  - Committed FX facilities specifics:
    - Toronto-Dominion Bank: EUR 100 million convertible into USD, GBP, AUD, CAD, CHF, DKK, JPY, NOK, SEK, HKD and SGD.
    - Standard Chartered Bank: EUR 100 million convertible into USD, GBP, AUD, CAD, CHF, DKK, JPY, NOK, SEK, HKD and SGD.
  - CBF has routine credit access at the DBB and may pledge ECB-eligible securities to generate intraday EUR liquidity.
  - Minimum QLR requirement derived from Cover 2: sufficient to cover liquidity impact caused by default of two participants including their parent undertaking and subsidiaries against whom CBF has the largest intraday liquidity exposure.
  - Supplemental liquid resources include residual participant cash on omnibus account in CBL and CBL’s intraday credit line USD 350 million.
  - Recommendation: encouraged to broaden CCB base and hold overdraft cash accounts in USD and GBP with more than a single credit institution.

### Money settlement and settlement finality (Principles 8 and 9)
- CASCADE/T2S settlement:
  - Transactions in CASCADE conducted in central bank money (CBM) via T2S on participants’ T2 DCA at the central bank.
  - Settlement finality defined in CBF’s GTC and in Section 14 of the German Securities Deposit Act (Depotgesetz).
  - T2S settlement cycles: night-time settlement (NTS) and up to two real-time settlement cycles (RTS); settlement day starts at about 18:45 CET; NTS starts about 20:00 CET and RTS ends about 18:00 CET.
  - DVP Model 1 used; finality reached when securities and corresponding cash on TARGET2 have been executed/booked.
- Creation (CBF-i) settlement:
  - Non-EUR T2S cash settlement and many external settlements are settled in commercial bank money (CoBM) on CBF’s own books or via CBL network of CCBs.
  - CBF holds cash accounts for participants in Creation; CoBM settlement applies for non-EUR T2S cash settlement and bridge/external transactions to Euroclear Bank.
- Recommendation: to minimize reliance on CBL for access to CCB network, CBF encouraged to establish a subordinate but definite contractual role in CBL–CCB relationships and diversify network for currencies without CBM access.

### Default management, participant rules and recovery of losses (Principle 13 & related)
- Default definitions:
  - General default: participant unable to fulfil contractual obligation and insolvency proceedings opened.
  - Contractual default: participant unable or unwilling to fulfil scheduled obligations in a timely manner.
- Early Warning Framework based on indicators and monitoring thresholds to identify defaults early.
- Default Management Process (DMP) phases: monitoring, pre-emptive measures (e.g., suspend credit limits), corrective measures (e.g., liquidate pledged collateral), communication (including ESMA guidelines to competent authority).
- Use of financial resources: defaulting participant’s assets are first used to cover exposures; Recovery Plan lists other financial resources (e.g., parent equity injection, intragroup funding, earnings retention).
- Allocation of credit losses: Clearstream Liquidation Framework means CBF will carry the loss; no mutualization of loss with other participants.
- Participant collateral enforcement: “TOF & UCF agreement” and GTC define waterfall principle for allocation of proceeds after collateral enforcement.
- Testing and disclosure: DMP reviewed/tested/updated at least annually; CDM conducts default management testing that may involve participants, FMIs and competent authority; overview published on Clearstream website.

### Business risk, capital and recovery/wind-down resources (Principle 15)
- Business risk framework: scenario analysis, early warning KRIs, capital model; Business Risk Handbook documents responsibilities and processes.
- Stress testing and reverse stress tests compare worst-case and combined scenarios against projected EBITDA and risk-bearing capacity.
- Capital requirements under CSDR: capital necessary estimated via scenario analysis; capital requirement is higher of scenario result and regulatory minima, with specific comparators including last audited net income after tax and 25 percent of annual gross operational expenses.
- Recovery/resolution:
  - Recovery, restructuring and wind-down plans maintained by CBF; recovery options include earnings retention, parent equity injection, intragroup funding, cost reduction, liquidity buffers and revolving credit facilities.
  - CBF holds liquid net assets funded by equity equal to at least eight months of current operating expenses (stated).
  - Assets to cover business risk: EUR-denominated ECB eligible L1 HQLA, remaining life below 10 years, unencumbered and under Treasury control.
  - Recovery plan includes capability to raise additional equity; activation sequence: retain earnings, increase equity via parent (DBAG), then third-party investors.

### Custody, safekeeping, physical deliveries and segregation (Principles 10–11, 16)
- Physical deliveries:
  - Eligible physical securities: German-law governed securities and foreign securities not governed by German law; custody arrangements and obligations defined in GTC and German law.
  - Vault reconciliation: daily vault reconciliations; physical certificates reconciled every three years, Global Notes every two years; from 2022 process moving to predominantly digital reconciliation with annual completeness checks and spot-checks.
  - Fees and costs for physical delivery specified in CBF fee schedule.
- CSD integrity and safekeeping:
  - Securities can be held in Collective Safe Custody (CSC), Individual Safe-Custody (Streifbandverwahrung) or Non-collective safe custody (CBF-i).
  - Daily internal and external reconciliations and issuer/agent obligations to reconcile daily.
  - Unauthorized creation/deletion prevented by procedures: authorized credits only upon receipt or corporate actions; provision checks before instruction release.
  - Overdrafts in securities accounts not allowed by CBF systems; T2S may result in negative securities positions reflected by T2S if applicable.
- Custody and investment risk:
  - Assets held at supervised/regulatory entities with due diligence, annual officer certificates, legal opinions, Three-Point-Declarations for non-German custodians.
  - Investment strategy: capital preservation and liquidity access; Treasury invests in HQLA, “buy and hold”, 90 percent of funds placed secured where possible.
  - CBF has immediate access to own and participant assets; no liens/pledges can affect assets per contractual/legal setup.

### Operational risk, IT resilience, business continuity, data centres and testing (Principle 17)
- Operational risk framework: Operational Risk Handbook, event data collection, external loss data, KRIs, scenario analysis, capital models (AMA), reporting and IT support.
- Four main operational risk classes: Availability risk, Service deficiency, Damage to physical assets, Legal/business practice risks.
- Roles and governance: EB ultimate responsibility; Risk Owners, Operational Risk representatives, individual employees; three lines of defense model.
- Change/project management: three sub-processes—project planning/initiation, monitoring/control/reporting, closure; Market Member Readiness team reviews participant impacts.
- Operational reliability: KPIs and service level agreements; monthly KPI reporting to Operations Committee.
- Capacity and scalability:
  - Core platforms (Creation and CASCADE) designed to cope with settlement volume peaks 50 percent greater than average daily activity; additional infrastructure capacity can be assigned as needed.
  - “Headroom” indicator drives capacity upgrades; capacity management report monthly.
- Information and physical security:
  - Corporate security policy, Physical Security Standard and ISAE 3402 recognition; access control, CCTV, 24/7 security, intrusion/fire monitoring.
  - Information Security Framework (ISF) with Chief Information Security Officer and dedicated teams (Information Security Engineering, Assurance, CERT, IAM, etc.); policies reviewed at least annually.
- Business continuity objectives and recovery time objectives:
  - Mission critical functions must be resumed within Recovery Time Objective (RTO) of 2 hours.
  - Business continuity solutions: Physical Local Backup (Replication - Hot Standby), Business transfer, Dispersed operations, Remote Working, Staff recall.
- Secondary sites and data centres:
  - Operations distributed across Luxembourg, Frankfurt, Cork, Singapore and Prague; backup facilities in Luxembourg, Cork and Frankfurt.
  - Two DCs in Frankfurt with physical distance ~8 km; each DC provides capacity for >100 percent of production workload; synchronous data mirroring; RPO=0 and RTO<2h targeted.
  - DC features: different vendors per DC, emergency power supplies, separate power sources and carriers, not located in flooding/earthquake zones, distinct risk profiles.
  - Planned consideration: feasibility/business case for an Out of Region (OOR) data center (cold infrastructure with asynchronous replication) to mitigate simultaneous local DC outages.
- BCM testing:
  - BCPs tested at least annually, announced or unannounced, in live production; tests include workspace unavailability, staff unavailability and IT unavailability (data centre failover).
  - Test results consolidated and remediation tracked.
- Recommendation (assessment): mission recommends CBF strongly consider feasibility and business case for a third data site (despite existing mitigations and planned assessments).

### Access, participation criteria and tiering (Principles 18–19)
- Participation criteria:
  - Publicly disclosed, transparent, objective and non-discriminatory; based on legal, financial and operational risk assessment and AML/CTF/sanctions considerations.
  - Eligible applicants: regulated financial institutions (credit institutions and investment firms), sovereign and supranational institutions, CCPs; unregulated entities may be accepted for limited purpose (receiving collateral).
  - Prohibited: natural persons, entities from jurisdictions subject to FATF “call to action”, entities causing sanction breaches.
  - CBF does not provide indirect participation; no tiered or indirect participation arrangements are maintained.
- Monitoring and exit:
  - Continuous monitoring and periodic review cycles per Customer Due Diligence procedure; frequency depends on participant risk classification.
  - Suspension/termination rights in GTC; immediate suspension or termination for material breach.
- Tiered participation risks:
  - CBF maintains only direct participants; therefore risks from tiered participation arrangements are not material. Participants must designate accounts into account categories per GTC.

### Key conclusions, assessments and notable numeric/statutory points
- Principle 3: CBF has adequate risk management policies, procedures and systems; framework validated regularly by CBF EB. Assessment: Observed. Recommendations: None.
- Principle 4 (Credit Risk): CBF maintains comprehensive credit framework, collateralization, conservative haircuts, and active monitoring. Assessment: Observed. Recommendations: None.
- Principle 5 (Collateral): Solid collateral management framework; recommendation to implement ex ante evaluation of concentration limit breaches (CBF currently acts ex post).
- Principle 6 (Margin): Not applicable (CBF does not act as a CCP).
- Principle 7 (Liquidity Risk): Robust liquidity framework; QLR and committed facilities in place, CBF holds sufficient QLR in euro and has access to DBB/ECB standing facilities; CBF encouraged to broaden CCB base and diversify overdraft accounts in USD and GBP. Assessment: Observed.
- Principle 8 (Settlement Finality): Finality clearly defined for CASCADE/T2S and Creation; settlement finality achieved in accordance with domestic/local rules. Assessment: Observed.
- Principle 9 (Money Settlements): CASCADE/T2S in CBM; non-EUR T2S cash and Creation settlements in CoBM on CBF books and via CBL/CCB network; robust risk management applied. Assessment: Observed. Recommendation: diversify contractual position and CCB network.
- Principle 10 (Physical Deliveries): GTC and German law define obligations; vault reconciliations and monitoring in place. Assessment: Observed.
- Principle 11 (CSD): Securities immobilized/dematerialized; segregation, daily reconciliations, Three-Point-Declarations and legal opinions used to protect assets. Assessment: Observed.
- Principle 12 (Exchange-of-value Settlement Systems): DVP Model 1 eliminates principal risk via irrevocable/simultaneous exchange. Assessment: Observed.
- Principle 13 (Participant-default Rules): Clear DMP, Early Warning Framework, testing and disclosure. Assessment: Observed.
- Principle 14 (Segregation and Portability): Not applicable (CBF not a CCP).
- Principle 15 (General Business Risk): CBF holds liquid net assets funded by equity equal to at least eight months of current operating expenses (stated); recovery/resolution plans and stress testing in place. Assessment: Observed.
- Principle 16 (Custody & Investment Risks): Investments exclusively EUR-denominated ECB eligible L1 HQLA with remaining life below 10 years; immediate access to own and participant assets; no proprietary trading. Assessment: Observed.
- Principle 17 (Operational Risk): Comprehensive operational risk framework, IT resilience, dual DC architecture with RTO targets and extensive BCM testing; recommendation to consider third data site feasibility. Assessment: Observed.
- Principle 18 (Access & Participation): Access criteria publicly disclosed and risk-based; authority to approve/reject rests with CBF EB. Assessment: Observed.
- Principle 19 (Tiered Participation): CBF maintains only direct participation; no tiered participation risk material. Assessment: Observed.

*Source: 4. Risk Items: The potential risk items that the Group may be exposed to due to its current and future business operations (extracted content).*

### 1. Proprietary

### 1. Proprietary

### Key items
- 1. Proprietary
- 2. Client – Segregated

*Source: 1deuea2022004 - 1. Proprietary*

### 3. Client – Omnibus

### 3. Client – Omnibus

### Omnibus account structure and client identification
- When a participant’s account is segregated, the CBF direct participant is required to disclose to CBF the identity of its underlying client (the party for which the securities were deposited); the account name may or may not incorporate this disclosure at the discretion of CBF’s direct participant.
- In the omnibus structure, CBF’s direct participant aggregates the assets of several of its underlying clients.
- CBF requires that no single interest in a client’s omnibus account should exceed 25 percent of the total value of assets deposited on that account over time as represented by its direct participant.
- When a single interest does exceed that threshold, CBF requires the direct participant to segregate the corresponding assets onto a dedicated client account.
- For client-segregated accounts, CBF seeks to identify the party to whom its direct participant owes the securities deposited on the account and records this information in its Know Your Customer (KYC) file.

### Information collection, KYC, and compliance monitoring
- CBF may gather information from CBF key participants (as defined by Art. 67 DR 2017/392 (cf. number 4 GTC)).
- CBF can request declarations and representations from a participant’s client as to the purpose of an intended transaction and compliance with legal regulations.
- Relationship Management teams conduct the process and reviews are performed by the Compliance team.
- CBF collects information on regulatory, business and control arrangements of direct participants servicing third party business, and obtains information on the geography, products and type of client supported through any client accounts.
- CBF aims to update participant client information on an annual basis.
- CBF evaluates risks arising from participant accounts with regard to Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) obligations and sanctions compliance; the conduct of clients of direct participants is identified as a significant component of overall operational risk.
- If identity or client-franchise information triggers heightened AML/CFT, sanctions or related risk concerns, CBF may:
  - require the direct participant to disclose additional information (including the identity of the underlying client or the beneficial owner),
  - block securities entitlements,
  - disclose to CBF’s regulators, foreign authorities or CBF’s sub-depositories or paying agents,
  - transfer securities to a separate securities account opened for such client.
- For CBF’s credit business, CBF does not permit assets deposited on client (as opposed to proprietary) accounts to be pledged as collateral to secure credit facilities enjoyed by direct participants.

### Monitoring and operational response
- CBF continuously monitors all participant transactions, including underlying client transactions, with an IT-based compliance monitoring tool supplemented by manual checks in justified individual cases.
- If reviews identify irregularities, CBF may cease or temporarily suspend execution of a client's instructions or provision of other services, without notifying the client in advance.

### Identification and oversight of key participants and material dependencies (Principle 19)
- CBF is obliged to identify on an on-going basis material dependencies between CBF’s participants and their clients that might affect it (Article 67 of CSDR).
- Clearstream has established a Key Participant procedure applicable to the CBF to fulfil CSDR key participant requirements.
- Criteria and process for identifying CBF key participants:
  - Underlying clients driven by volumes and values of their transactional trades settled in the CBF SSS, corresponding to 10 percent or more of their settlement transaction activity.
  - Once identified as a CBF key participant this status is reviewed on annual basis.
  - CBF key participants are requested to disclose their underlying clients who constitute 10 percent or more of their overall settlement transaction activity.
- Clearstream Risk Management runs an ongoing process to identify CBF key participants and related material dependencies, analysing settled volumes and values for all participants.
- Upon identification, Clearstream notifies the participant of their new CBF key participant status and requests disclosure of underlying participants representing at least 10 percent or more of overall volume/value processed by the legal entity.
- Enhanced key participant due diligence reviews are carried out; CBF can determine material dependencies between key participants and their clients.
- Assessment and conclusion under Principle 19:
  - Indirect participants are underlying clients that only benefit from CBF services through their appointed direct participant.
  - CBF is reliant on direct participants to identify and manage activities of indirect clients significant relative to the direct participant’s business.
  - No identification of indirect participants is based on activity with respect to total CBF activity.
  - Although value/volume thresholds are set relative to direct participant settlement activity, CBF is unable to independently monitor adherence to these and is beholden to its direct participants to identify such underlying clients.
- Recommendation: "CBF should develop capacity for increasing the transparency with respect to the business of its direct participants’ clients and broaden its explicit identification criteria for clients of direct participants to include system-level thresholds."
- Assessment of Principle 19: Observed

### Review cycles for participant/client risk (tiered participation arrangements)
- No tiered participation arrangements are permissible at CBF.
- Review periodicity for participants maintaining client segregated or omnibus accounts depends on risk classification:
  - High Risk → Review Cycle: one year
  - Medium Risk → Review Cycle: two years
  - Low Risk → Review Cycle: three years
- Key Participants are reviewed on a quarterly basis; ad-hoc reviews and mitigating measures are applied where appropriate.

### Links with other FMIs (Principle 20)
- New link assessment and governance:
  - Clearstream Material Change Working Group (MCWG) conducts a general assessment; if material, file presented to Clearstream Risk Committee (CRC).
  - If CRC supports setup, Network Management coordinates a full risk assessment with inputs from Legal, Credit, Treasury and Operations; CBF’s EB is responsible for approval.
  - Assessment covers securities registration, ownership restrictions, reporting obligations, disclosure requirements, AML and operational readiness of agents, market legal/tax/regulatory issues and risks related to market infrastructure and operational risks (use of SWIFT, business continuity).
  - If major risks cannot be mitigated or no agent meets CBF’s criteria, no link will be established.
- Ongoing monitoring of existing links:
  - Continuous oversight of market developments, annual Due Diligence visits, and ad-hoc site visits as needed.
  - Ongoing monitoring of creditworthiness of Clearstream's network of agent banks by Clearstream’s Credit department.
  - Ongoing review of link risk profiles, with special focus on operational, legal, creditworthiness or regulatory changes affecting appointed agents.
  - Relevant CPMI-IOSCO standards are used in assessments.
- Legal and contractual framework:
  - Link Agreement: For direct links, terms set out in CSD rules; for links operated by a local agent, contractual framework composed by the CSD rules and the account operator agreement.
  - Legal opinion: requested from external counsel on an annual basis to confirm ability of the CSD and depository to perform as required under the Link Agreement and SLA.
  - SLA: specifies operational procedures, authorized instructions and deadlines, contingency plans, reporting structures, and notification of market information related to custody operations.
- Credit and liquidity risk management between linked CSDs:
  - CBF performs annual full credit assessment of any depository and agent it has appointed and establishes an internal rating based on annual accounts, management structure, liquidity, external credit rating and asset quality.
  - Clearstream’s Credit Department monitors the nostro balances of all CCBs for CBF activity on a daily basis and sets thresholds for every nostro account; if a threshold is reached it triggers reporting to management and actions.
- Provisional transfers:
  - CBF does not, ordinarily, allow provisional transfers of securities and cash.
  - Provisional transfers are possible under certain market-practice conditions but will be documented and participants informed via market documentation.
- Use of intermediaries:
  - CBF reviews intermediaries supporting links on an annual basis covering creditworthiness, AFME questionnaire analysis via a fixed evaluation grid, contractual framework, at least annual performance reviews against SLA, and at least annual or more frequent Service Reviews if needed.
- Key conclusions for Principle 20:
  - All link arrangements are contractually documented; CBF EB is ultimately responsible for approval of new Link requests.
  - A comprehensive assessment process exists to assess technical, operational, legal and credit risks for new links, and continuous monitoring is implemented with at least annual legal framework review.
  - Operational performance of each link is monitored on an ongoing basis.
- Assessment of Principle 20: Observed
- Recommendations and Comments: None

### Efficiency and effectiveness (Principle 21)
- Participant engagement and service design:
  - CBF uses industry surveys, senior executive sessions, participant validation during product/service development, and one-to-one sessions during due diligence visits.
  - CBF works closely with the CSDR user committee which advises the EB on arrangements impacting members.
- Performance measurement and strategy:
  - Strategic goals encapsulated by “Clearstream PRIME” with five key strategic actions: strengthening products, ensuring regulatory compliance, mobilization of growth potential, promote innovation and operational excellence, fostering effectiveness in sales and client services.
  - CBF defines and documents operational performance objectives and committed service-level targets for SSS activities; reports provided on a quarterly basis to participants via the website.
  - CBF measures KPIs including operational and service level indicators; KPIs are regularly reported to the CBF EB and significant ones to the User Committee.
- Risk appetite and controls include:
  - Claims due to operational issues should be avoided.
  - Credit is only given to counterparties with a high credit rating.
  - Risk concentrations must be monitored and adequately limited.
  - Treasury placements must be secured against collateral where possible.
- Tools for reviewing efficiency and effectiveness:
  - Forum for structured solution identification, post-claim analysis.
  - KPIs and a KPI engine (Data warehouse) providing standard and ad-hoc reporting and detailed data analysis.
  - KPIs quantify quality, degree of automation, turnaround times, error rates, capacity utilization; KPIs form the basis for KRIs monitored monthly by Risk Management.
  - Target reviews at least yearly to adapt to market or participant changes.
- Business resilience and incident management:
  - Incident and crisis management process in place with prompt activation of business continuity plans.
  - In 2020, the average system availability was 100 percent.
  - The last systems unavailability test, based on the scenario of the full loss of one data center, was conducted in October 2020; availability of business critical applications was validated within the RTO period and infrastructure security was maintained at all times.
- Key conclusions for Principle 21:
  - Mechanisms (working groups and client relationship management) ensure CBF can meet participant and market needs.
  - Working Committees provide channels for interaction; Relationship Management personnel provide single points of contact for smaller clients.
- Assessment of Principle 21: Observed
- Recommendations and Comments: None

### Communication procedures and standards (Principle 22)
- Standards and connectivity:
  - All connectivity channels are fully ISO15022 (and ISO20022 for Investment Funds) compliant.
  - Reference data standards adopted: ISO 4217, ISO 6166, ISO 8109, ISO 9362, ISO 10962.
  - Multiple secure connectivity channels offered: public internet, Virtual Private Network, SWIFT, web portal.
- Messaging and settlement:
  - Settlement systems available via SWIFT; processing is fully straight through processing (STP).
  - File transfer options include bi-directional high-volume data transfer, ISO 15022 and ISO 20022 messages, and human readable messages.
  - CASCADE system is based on ISO 15022 and ISO 20022 message terminology.
- CBF’s role in standards bodies:
  - CBF is a liaison institution to the Securities Evaluation Group and the Registration Management Group; participates in Maintenance Working Group for ISO15022 and helped develop and implement ISO15022 since inception.
- Communication channels by participant mode:
  - For ICP or DCP: CASCADE-Host, CASCADE-PC/HOB RD VPN; Xact File Transfer (ISO 15022/20022); SWIFT ISO 15022 via SWIFT network; ISO 15022 via MQ; Xact Web Portal (ISO20022); Xact via SWIFTNet FINplus (supports seev.045 and seev.046 in ISO 20022).
  - Additionally for DCP: online via web-based T2S GUI via SWIFT or SIA-Colt; ISO 20022 messages to T2S via SWIFT or SIA-Colt.
- Key conclusions for Principle 22:
  - CBF is fully compliant with ISO 15022 and ISO 20022 standards and IP-based and EPTF communication protocols; all settlement services are fully STP compliant.
- Assessment of Principle 22: Observed
- Recommendations and comments: None

### Disclosure of rules, procedures and market data (Principle 23)
- Rules, procedures and public disclosure:
  - CBF’s rules and procedures are documented across multiple public documents (Participant Handbook, Market Link Guides, Connectivity Manuals, Fee Schedule, GTC and Special Conditions).
  - Documents clarify fees, system design and operations, participants’ rights and obligations, and risks of participation.
  - Documents are publicly available via Clearstream’s website.
- Measures of clarity and comprehensiveness:
  - Training offers for new products/major changes via Relationship Managers; operational information review at least twice per year or upon major IT release.
  - CBF publishes webinars and videos and provides announcements for custody, clearing/settlement, taxation, fees and product/service changes.
- Default management and business continuity disclosures:
  - CBF has published an overview of its default rules and related procedures (default management process) and discloses general information on its Business Continuity Framework in the CPMI IOSCO Disclosure Framework and the Association of Global Custodians questionnaire.
- Participant documentation and training:
  - Client Services provides continuous information via announcements, email alerts, 24-hour client service via global offices, due diligence visits, annual Relationship Manager meetings, and ad-hoc or technical training.
- Fee disclosure:
  - Fees are published at individual service level in the Fee Schedule in accordance with Art. 34 of the CSDR.
- CPMI-IOSCO Disclosure and market data:
  - CBF publishes its reply to CPMI-IOSCO disclosure framework every second year.
  - CBF publishes monthly figures.
- Key conclusions for Principle 23:
  - CBF extensively uses its website and secure portal for communication and has completed the CPSS-IOSCO Disclosure framework for FMIs.
  - Customers have raised concerns about the complexity of Fee schedules and difficulties reconciling invoices.
- Assessment of Principle 23: Observed
- Recommendation: "It is recommended that CBF work more closely with its customer base to decrease the burden of invoice reconciliation."

### Trade Repositories (Principle 24)
- Key Consideration 1–3: Not applicable.
- Key Conclusions for Principle 24: Not applicable.
- Assessment of Principle 24: Not applicable.
- Recommendations and Comments: Not applicable.

*Source: 1deuea2022004 - 3. Client – Omnibus*

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_Source: https://www.imf.org/-/media/files/publications/cr/2022/english/1deuea2022004.pdf_