New report finds VP's systems secure and effective / VP Securities
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New report finds VP's systems secure and effective

25.02.2016

Danmarks Nationalbank and the Danish Financial Supervisory Authority have concluded in a report that VP's systems for custody and settlement of securities are secure and effective. Today, VP SECURITIES publishes the report, which has been prepared in accordance with an international standard for central securities depositories and includes 24 principles concerning various aspects of VP's activities. The report confirms that VP's customers can have their trades settled and their securities held on a secure and effective basis.

As CSDs are considered to be systemically important for a well-functioning financial system, since the beginning of the 2000s they have been subject to oversight by central banks and financial supervisory authorities.

In the report, the Danish FSA and Danmarks Nationalbank assess that VP's systems are both secure and effective. The assessment was made on the basis of 24 principles from CPMI-IOSCO (the global cooperation between central banks and the International Organization of Securities Commissions), which together comprise the international standard for CSDs.

For each principle, there are a number of key considerations, which are formulated in a series of questions that VP has responded to and documented. After the review, VP is given a score for each principle. Of the 24 principles, the Danish FSA and Danmarks Nationalbank have found 18 to be relevant for VP, of which 14 have received the highest score, and 4 the second-highest score. For the 4 principles with the second-highest score, the Danish FSA and Danmarks Nationalbank have made a number of recommendations. During 2016 VP will work on implementing these recommendations.

Besides the Danish FSA and Danmarks Nationalbank's overall conclusion, which is published on Danmarks Nationalbank's website, VP has prepared a report in which the individual principles are reviewed in detail. This report first presents an overall review of VP.

The 24 principles can be divided into 10 main categories:

  • Overall organisation 
  • Credit and liquidity risk 
  • Settlement 
  • CSDs and principal risk 
  • Handling of defaulting participants 
  • General business risks 
  • Operational risk 
  • Access 
  • Effectiveness 
  • Transparency

VP's CEO Niels Olsen comments: "We are very pleased with our assessment by the Danish FSA and Danmarks Nationalbank. This has been a good process and we look forward to finalising the outstanding aspects, in line with the recommendations given."

Read the full CPMI-IOSCO report here.

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