CHAPTER IV

PARTICIPATION OF CSDs IN CERTAIN ENTITIES

(Article 18(3) of Regulation (EU) No 909/2014)

Criteria for participation of a CSD
Article 39
In granting the approval for a CSD's participation in a legal person which does not provide the services set out in Sections A and B of the Annex to Regulation (EU) No 909/2014, the competent authority shall take into account the following criteria:
1. the extent of the financial liabilities assumed by the CSD as a result of that participation;
2. whether the CSD holds sufficient financial resources that fulfil the criteria referred to in Article 46 of Regulation (EU) No 909/2014 to cover the risks resulting from the following:
  1. the guarantees given by the CSD to that legal person;
  2. any contingent obligations undertaken by the CSD in favour of that legal person;
  3. any loss sharing agreements or recovery mechanism of that legal person;
3. whether the legal person in which the CSD holds a participation provides services that are complementary to the core services offered by the CSD, as referred to in Article 18(4) of Regulation (EU) No 909/2014, such as:
  1. a CCP authorised or recognised under Regulation (EU) No 648/2012; or
  2. a trading venue as defined in point (42) of Article 2(1) of Regulation (EU) No 909/2014;
4. whether the participation of the CSD results in the control by the CSD over the legal person as defined in point (21) of Article 2(1) of Regulation (EU) No 909/2014;
5. the CSD's analysis of the risks arising from that participation, including any analysis approved by an internal or external auditor, demonstrating that all risks resulting from the participation are adequately managed. Competent authorities shall take into account, in particular, the following aspects of the CSD's analysis:
  1. the strategic justification for the participation, which takes into account the interests of the users of the CSD, including issuers, participants and their clients;
  2. the financial risks and liabilities resulting from a participation of the CSD.