A new Oxera study, commissioned by Euronext Securities, argues that Europe’s post-trade efficiency problem will not be solved by creating a single central securities depository (CSD). Instead, it finds that effective competition between CSDs, supported by existing infrastructure, could deliver lower costs and better outcomes for investors.
The report, “The design and functioning of CSD services in the EU”, published in October this year, responds to growing policy pressure for CSD consolidation, including recommendations from Mario Draghi and Enrico Letta. But according to Oxera’s economic analysis, Europe’s challenge is not the number of CSDs, currently 27, but the lack of competitive dynamics that would allow scale efficiencies to emerge naturally.
Building blocks
The study finds that the EU’s post-trade framework already provides the right building blocks: the TARGET2-Securities (T2S) settlement platform and the EU passporting regime under the Central Securities Depository Regulation (CSDR). Together, these make it technically and legally possible for CSDs to compete across borders and for users to choose their preferred settlement venue.
Euronext’s own CSD strategy, part of its “Innovate for Growth 2027” plan, is highlighted as an example of how competition could take shape in practice. The group plans to consolidate settlement for its Amsterdam, Paris and Brussels markets within Euronext Securities, while also offering issuers the choice of where to locate their securities. The report suggests that such moves could encourage other CSDs to improve efficiency, pricing and service quality.
A shift in the debate
The findings follow up on the debate raised by an AFME report earlier this month — covered by PostTrade360°— which criticised high settlement and custody costs across Europe. While that study focused on the level of fees, Oxera’s analysis reframes the issue: rather than structural consolidation, it sees competition within a connected network as the more sustainable path toward efficiency.
