How to Organize Central Securities Depositories in Developing Markets: Key Considerations

IMF How To Notes, February 4, 2019

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Canonical URL: How to Organize Central Securities Depositories in Developing Markets: Key Considerations

Key objective: support authorities in decision making about the optimal organization of central securities depositories (CSDs) in their country.
Definition used: a CSD is an entity that provides securities accounts, a securities settlement system, and central safekeeping services to market participants, which can be banks and other financial institutions.
Two central questions for authorities in developing markets, in particular central banks:
- Whether to pursue a single CSD to increase market efficiencies and benefit from economies of scale and scope.
- Whether to partake in the governance of the CSD as owner or operator.
The note presents seven considerations for authorities to take into account when answering these questions and determining the best model for their country.

Trade-offs between a single CSD and multiple CSDs:
- Single CSD: potential to increase market efficiencies and benefit from economies of scale and scope.
- Multiple CSDs: implicit trade-offs not detailed on the landing page but framed as alternatives authorities must weigh.
Governance and ownership choices:
- Whether authorities should partake in governance as owner or operator is a central decision point.
Operational scope and services:
- A CSD’s core services include securities accounts, securities settlement systems, and central safekeeping.

Intended readers: authorities in developing markets, in particular central banks and other public sector bodies involved in market infrastructure decisions.
Purpose: provide guidance and structured considerations to determine the best organizational model for a country’s CSD(s).