Central Securities Depositories Regulation (CSDR), Art 38(5) Offer and Art 38(6) Disclosure
The European Union’s CSDR is designed to increase the safety and efficiency of securities settlements and settlement infrastructures as well as to apply high prudential requirements for Central Securities Depositories (‘CSDs’).
Under Article 38(5) of the CSDR, an HSBC Private Banking business unit which is a direct participant of a CSD in the European Economic Area (EEA) must offer its clients whose securities are held through the CSD the choice between an Omnibus Client Segregated Account (OSA) and an Individual Client Segregated Account (ISA). In addition, article 38(6) of the CSDR requires the HSBC Private Banking business unit to publicly disclose the levels of protection and the costs associated with the different levels of segregation that the accounts provide, and to offer those services on reasonable commercial terms.
An ISA is used to hold the securities of a single client and therefore the securities of that client are held separately from the securities of other clients and HSBC’s own proprietary securities. An OSA is used to hold the securities of a number of clients on a collective basis. However, HSBC does not hold its own proprietary securities in Omnibus Accounts.
The article 38(5) CSDR requirement only applies where an HSBC Private Banking business unit is a direct participant of an EEA CSD. For example, an HSBC Private Banking business unit is not required to offer the choice between an ISA and an OSA in respect of securities which it is holding for clients through a sub-custodian who in turn is the CSD participant for the securities.
The article 38(5) and (6) CSDR requirements become effective as of the date of authorization of the relevant CSD under the CSDR. Please click on the links below for combined CSDR offers and disclosures of certain HSBC Private Banking business units that are direct participants of EEA CSDs. Please note that the below disclosures are applicable to the Global Private Banking business. For other lines of business within HSBC please refer to the disclosures on their respective websites.