When transferring eligible marketable assets issued in a central securities depository (CSD) or international central securities depository (ICSD), counterparties make use of the securities settlement systems (SSSs) which are regularly assessed by the Eurosystem and deemed eligible.
(Due to their specific characteristics, eligible non-marketable assets cannot be transferred through an SSS).
Eligible assets may be used to collateralise all types of Eurosystem credit operations, not only at domestic level but also across national borders (cross-border mobilisation). The cross-border mobilisation of marketable assets in Eurosystem credit operations may be conducted via the correspondent central banking model (CCBM) or through eligible links between securities settlement systems (SSSs). In addition, collateral may be mobilised on accounts of NCBs with a non-domestic (I)CSD as authorised on an exceptional basis by the Governing Council.
- CCBM: The CCBM enables Eurosystem counterparties to use eligible marketable assets issued (i.e. registered or deposited) or held in other euro area countries as collateral.
- Eligible links: Eligible marketable assets may be mobilised by using links between national SSSs where such links have been positively assessed under the Eurosystem User Assessment Framework. Once the assets have been transferred to another SSS via eligible links, they can be used through local procedures in the same way as domestic collateral.
For the cross-border mobilisation of non-marketable assets in Eurosystem credit operations, distinct CCBM procedures have been established.
For details on domestic mobilisation of eligible marketable assets and eligible non-marketable assets in Eurosystem credit operations, counterparties should consult local NCBs.
The Eurosystem makes use of securities settlement systems (SSSs) and links between SSSs operated by central securities depositories (CSDs) and international central securities depositories (ICSDs) to settle its credit operations based on adequate collateral.
In order to be eligible for use in Eurosystem credit operations, SSSs and links between them must be positively assessed under the Eurosystem’s User Assessment Framework (UAF). Links to non-euro area European Economic Area (EEA) SSSs must also be positively assessed under the UAF to be eligible for use in Eurosystem credit operations.
User assessments are carried out to ensure that Eurosystem credit operations are conducted according to procedures which: i) prevent Eurosystem central banks from assuming inappropriate risks; and ii) ensure the same level of safety for all Eurosystem credit operations, regardless of the settlement method.
To ensure the continuous compliance of SSSs and links under the UAF, the Eurosystem conducts regular assessment reviews and monitors the implementation of its recommendations by CSDs/ICSDs.
The assessment of SSSs and links between SSSs that are to be used in Eurosystem credit operations is conducted under a two-layer approach. For user standards which overlap with oversight requirements, the Eurosystem, in its user capacity, relies on the oversight assessments of CSDs/ICSDs; this constitutes the first layer of the user assessment. For user standards that reflect specific requirements related to the use of the securities market infrastructure for settlement of Eurosystem credit operations and are therefore not covered by oversight standards a dedicated assessment is conducted by the Eurosystem; this constitutes the second layer of the user assessment (see below for further details of second layer).
Eurosystem user standards of the UAF
Standard 1: Legal soundness - All SSSs and the links between such systems must have a sound legal basis, ensuring that the settlement of payment and securities transfers is final, and must provide for adequate protection for the rights of the NCBs and the ECB in respect of securities held in their accounts in such systems.
Standard 2: Settlement in central bank money - SSSs shall enable the use of central bank money for the delivery-versus-payment (DvP) settlement of Eurosystem credit operations. If DvP settlement is not used, collateral shall be pre-deposited on a free-of-payment (FOP) basis.
Standard 3: No undue custody risk - SSSs shall employ adequate measures to protect collateral provided to the Eurosystem by counterparties in credit operations against custody risk.
Standard 4: Intraday Finality of settlement - SSSs shall provide facilities to settle Eurosystem credit operations with intraday finality.
Standard 5: Operating hours and days - The operating hours and opening days of SSSs shall comply with Eurosystem requirements for conducting credit operations.