Central Securities Database

The Centralised Securities Database (CSDB) is a single information technology infrastructure, which is operated jointly by the members of the European System of Central Banks (ESCB), including national central banks (NCBs) of non-euro area Member States where such NCBs voluntarily participate in the operation of the CSDB. The CSDB stores item-by-item data, in particular, data on securities, their issuers and prices.[1][2]

Aims

The aim of the Centralised Securities Database (CSDB) is to hold complete, accurate, consistent and up-to-date information on all individual securities relevant for the statistical purposes of the European System of Central Banks (ESCB). This means securities issued by EU residents; securities likely to be held and transacted in by EU residents; and securities denominated in euro, whoever the issuer is and wherever they are held. The CSDB contains information on over fi ve million debt securities, equities and mutual fund shares/units issued by residents of EU Member States or by others.[3][4][5]

The development of a single reference securities database in the ESCB – the Centralised Securities Database (CSDB) – is the cornerstone of the transition to security-by-security based securities statistics in Europe. Therefore, the project has the highest strategic priority for the ESCB. The CSDB aims to cover all debt securities (including those with a hybrid structure), shares and mutual fund shares issued or held by euro area residents, as well as all instruments denominated in euro. It currently contains around 4 million individual securities, for which the aim is to store up to around 300 attributes related to the instruments and the issuers; holder information may be added at a later development stage. It is currently sourced by five commercial data providers, 14 EU central banks (NCBs) and internal sources of the European Central Bank (ECB), such as the Financial Markets Database.6

Yet the CSDB may not only be seen as the “catalyst” for the euro area wide transition to security-by-security based collection systems but it is also considered superior to local securities reference database solutions once the initial technical and organisational challenges involved with the setup of a system of such complexity have been successfully tackled: • Higher coverage and data quality: The CSDB consolidates micro data from both ESCB-internal and commercial sources for the common use, thus leading to a higher coverage of instruments and attributes, in particular regarding non-resident issues. Furthermore, data quality management work is shared in a network on the basis of comparative advantages.

Efficiency: The common sourcing and quality monitoring provides also for efficiency gains. In addition, the CSDB may obviate the need to update similar databases at national level unless they are needed as a source or for data quality monitoring. • Consistency (cross-border): The CSDB will ensure a consistent classification of the security and issuer features throughout the euro area,8 thereby further increasing the degree of harmonisation of euro area statistics. The CSDB is a pioneer project in many respects. It is unique in terms of its technical setup, in particular the flexible data model in the new (“Phase 2”) system, the large volume of data stored and processed as well as its complex algorithms for the selection of the best out of several “candidate sources”. It is also new in the world of statistics. The CSDB project is the first cooperative project within and even beyond the ESCB statistical function, involving the need to establish, and further develop on an ongoing basis, sound operational business procedures.

History

Since spring 2009 the European System of Central Banks (ESCB) runs the current “Phase 2” of its Centralised Securities Database (CSDB) platform. The CSDB covers debt securities, equity securities as well as investment fund shares where each security is identified by its ISIN code and defined by more than 50 individual attributes. Regarding the geographical coverage, the system includes all of the above securities issued by European Union (EU) residents, all securities potentially held by EU resident investors and all securities issued worldwide which are denominated in euro. In spring 2013 the CSDB covers about 7 million active securities in total [6][7]

The CSDB is a joint project of the ECB and the national central banks in the euro area. Its implementation was a basic prerequisite for the introduction of security-by-security systems throughout the ESCB. The common use of reference data is ultimately intended to ensure the consistency and comparability of securities statistics in the Eurosystem and increase the efficiency of data procurement. The CSDB basically contains information on all securities denominated in euro. Furthermore, all securities which are issued, held or traded by EU residents are also included. Therefore, securities holdings can be calculated by nominal or by market values. For the latter, the CSDB data on the reporting date are used. Securities listed in a foreign currency are available in the original currency and in euro. Currently, the CSDB covers the attributes of over five million debt securities, equities and mutual fund shares. The main data providers for the CSDB are the national central banks of the ESCB as well as some commercial data suppliers. The most important securities attributes for the ESCB statistics system in the CSDB can be classified into the following groups:4

• Issuer information (Issuer domicile country, Issuer ESA 95 sector, …) • Instrument information (ISIN code, Instrument ESA 95 class, …) • Price data information (Nominal currency, Quotation basis, Price value, …)

[8]

Governance structure and operational framework

A certain minimum governance structure is needed in running a supranational securities database of such ambition and complexity. Common agreements are needed on the scope and financial budget of the project; the technical framework, its maintenance and development; as well as on methodological issues. Furthermore, arrangements have to be put in place for the development and regular review of the operational framework and the business procedures (including the tasks, processes and quality benchmarks for the database and the statistics produced on this basis) as well as for the sharing of financial, human and IT resources. In addition, legal clarity is needed as to the possibility of exchanging confidential data and the terms of usage of commercial source data. The former aspect is addressed in Europe by supranational statutes and guidelines. The same goes for many of the arrangements set out above, in particular the mutual financing of the CSDB project by the ECB and the 19 central banks of the euro area. [9][10]

Uses

To provide a single securities database platform with centrally managed access which can serve all uses of a central bank. With the set-up of the CSDB the ESCB has developed a single and consistent securities database platform which even serves all 28 national central banks (NCBs) of the EU [11][12][13][14][15] [16]

Benefits

Reference data (information about prices, ratings, etc.) has often been cited as an area of difficulty for Solvency II asset reporting. Data licensing rules can limit the use and sharing of information with third parties, and data variations across vendors can produce inconsistent figures.

For its asset reporting the ECB only requires a small number of details about each asset. For securities and shares, generally speaking, these include identification and the amount held in the portfolio, which eliminates many of the problems associated with reference data.

The ECB uses a single set of reference data for all the securities information it collects. The Centralised Securities Data Base (CSDB) holds information on almost all of the securities traded in the euro area. It is a proprietary database, which also relies on information from commercial providers.

Mr Ugazio explained how having a single source from the reference data both simplifies the data collection process and improves analytical capabilities. “This basically means that when an entity reports the list of its asset holdings it is sufficient for the national central bank to simply receive the ISIN code and the nominal amount held for each instrument. Then, using the CSDB, the statistical compilers can not only aggregate all sorts of breakdowns from the granular information, but also derive, for example, price changes and from these infer net disposals and acquisitions of the instrument.”

Insurers, of course, are being asked to obtain and report the reference data because Solvency II requires them to have a full understanding of the risk in their portfolio of assets. [17][18] [19] [20] [21] [22] [23] [24]

References

  1. ↑ https://www.ecb.europa.eu/ecb/legal/pdf/l_30720121107en00890103.pdf
  2. ↑ https://www.imf.org/external/pubs/ft/bop/2007/07-25b.pdf
  3. ↑ https://www.ecb.europa.eu/pub/pdf/other/centralisedsecuritiesdatabase201002en.pdf
  4. ↑ http://www.bde.es/f/webbde/Agenda/Eventos/06/Mar/Fic/19.Pronk.pdf
  5. ↑ http://www.statistics.gov.hk/wsc/STS082-P4-S.pdf
  6. ↑ http://www.bis.org/ifc/publ/ifcb37e.pdf
  7. ↑ https://www.bportugal.pt/en-US/Estatisticas/Conferencias/Documents/01%20Mayerlen_D1_M_B.pdf
  8. ↑ http://www.bundesbank.de/Redaktion/EN/Downloads/Bundesbank/Research_Centre/entwurf_microdatabase_securities_holdings_statistics.pdf?__blob=publicationFile
  9. ↑ http://www.bis.org/ifc/publ/ifcb29x.pdf
  10. ↑ http://www.financialinformationsummit.com/digital_assets/317/gerard-salou.pdf
  11. ↑ http://www.bis.org/ifc/publ/ifcb37e.pdf
  12. ↑ http://www.tffs.org/pdf/meet/2009/ecb0309.pdf
  13. ↑ http://www.federalreserve.gov/pubs/feds/2011/201131/201131pap.pdf
  14. ↑ http://www.bankofengland.co.uk/statistics/Documents/ms/articles/art2may14.pdf
  15. ↑ https://www.bundesbank.de/Redaktion/EN/Downloads/Statistics/securities_holdings_statistics_in_germany.pdf?__blob=publicationFile
  16. ↑ http://www.centralbank.ie/publications/documents/measuring%20shadow%20banking%20in%20ireland%20using%20granular%20data.pdf
  17. ↑ http://www.solvencyiiwire.com/what-the-ecb-wants/89097
  18. ↑ http://www.centralbank.ie/polstats/stats/reporting/Documents/Notes%20on%20Compilation%20MMM.pdf
  19. ↑ http://www.bis.org/ifc/publ/ifcb37e.pdf
  20. ↑ http://www.bankofengland.co.uk/research/Pages/conferences/0115.aspx
  21. ↑ http://www.bankofengland.co.uk/research/Documents/pdf/agenda0115.pdf
  22. ↑ http://www.centralbank.ie/publications/documents/measuring%20shadow%20banking%20in%20ireland%20using%20granular%20data.pdf
  23. ↑ http://www.bis.org/publ/bcbs239.pdf
  24. ↑ http://www.treasury.gov/initiatives/ofr/about/Documents/AR2013_Promoting_Data_Standards_ch6.pdf
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