Self-assessment and continuous performance measurement are standard practices applied by Euroclear to ensure the effective settlement and servicing of the assets entrusted to us by our clients. They also demonstrate a risk-managed approach towards the delivery of new operational services.
The questions answered in these reports originate from a detailed questionnaire on risks assessment and transparency, based on:
- the 24 recommendations published in April 2012 by the Committee on Payment and Settlement Systems (CPSS) and International Organisation of Securities Commissions (IOSCO)
- the methodology for Disclosure Framework and Self-Assessment published on 21 December 2012
Euroclear’s Pillar 3 report outlines the group’s risk management strategy, governance and policies. It summarises the risks run by the group’s entities, and in particular by Euroclear Bank. This is a compulsory disclosure under Basel II.
Euroclear Bank and at all consolidated levels, above, as well as Euroclear Belgium and Euroclear SA/NV (stand-alone), comply with the requirements formulated in the transposition of the Basel II Accord into European and Belgian regulation.
Basel II differentiates between three so-called pillars, which are expected to be mutually reinforcing:
- Pillar 1 is centred on the capital requirements related to the credit, market and operational risks that banks run
- Under Pillar 2, banks are expected to produce their own assessment of capital adequacy, based on the risks they face in their activities, including additional risk types such as market risk in their banking book. Pillar 2 also lays out the interaction between the banks’ own assessment and the banking supervisors’ response
- Pillar 3 aims to promote market discipline through the disclosure of information by institutions
The Association of Global Custodians (AGC) is a group of global banks that primarily seeks to address regulatory issues which are of common interest to global custody banks.
The AGC Questionnaire was conceived as the Securities and Exchange Commission (SEC) imposes obligations (Rule 17f-7) on US investment companies holding securities in foreign depositories. The companies are, inter alia, obliged to make a risk analysis of CSDs.