Abstract
This chapter discusses the critical role that central securities depositories (CSDs) play in fostering financial stability and operational efficiency in the financial system. CSDs were established for the purpose of reducing risk and increasing efficiency by immobilising securities certificates. They were initially created to serve domestic markets but, in the 1970s, CSDs designed to cater for the international securities markets (ICSDs) began to emerge. The chapter unpacks the 'widely unseen and poorly understood' role CSDs play in the markets, describes the major CSDs operating in the European Union, and analyses the risks associated with CSDs and how CSDs address and mitigate them. It also analyses how the CSDs' governance, business model, and recovery and resolution regimes differ from those of central counterparties (CCPs).
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