The oversight of securities settlement is required to promote smooth operation of payment systems. Majority of payments are executed using securities collateral and other financial collateral in securities settlement and clearing systems. Problems in these systems could cause disruptions in operation of payment systems and complicate the implementation of the Eurosystem's monetary policy.
The Eurosystem has:
– 21 securities settlement system (operated by securities depositaries or central banks);
– 17 financial instrument clearing systems (operated by central counterparties).
Nasdaq CSD SE, which operates the securities settlement system in Latvia, started its work in September 2017, merging the three Baltic depositories and joining TARGET2-Securities, the single Eurosystem platform for securities settlement.
Latvijas Banka together with other central banks of the Baltic States has overseen this merger project for three years (2015–2017) and will continue to oversee the Nasdaq CSD SE system by assessing its compliance with international oversight principles. When conducting system evaluations, overseers, if necessary, cooperate with the FCMC, which supervises Nasdaq CSD SE operations.
The creation of Nasdaq CSD SE and its joining TARGET2-Securities, the platform for securities settlement, is a benefit to the Baltic States, as investors and issuers have a single gateway to the Baltic and European securities markets, a single platform and uniform payment procedures, all of which increase the competitiveness of Baltic securities markets in the European Union.