Securities Depository Ratings

Purpose of Depository Ratings

Key Criteria

The Rating Process

Current Ratings

Custodian Bank Ratings
Bank:
Rating:
Outlook:
Capital Market Infrastructure Risk Ratings
Market:
Rating:
Outlook:
Depository Ratings
Depository:
Rating:
Outlook:

The Rating Process

Determining the CSD Rating

The CSD Rating is derived from individual Depository Risk and Evaluation Assessments (REAs).

The overall REA for each of the risks is aggregated and a weighting applied to each risk to produce the resulting CSD Rating. Some of the individual REAs may be adjusted to take account of the quality of management expertise prior to aggregation.

The Thomas Murray Rating Policy Board reviews individual criteria and CSD and REA ratings as part of the rating approval process.

The Rating Process

The process involves assigning a 'proprietary' CSD Rating initially to all depositories. CSD Ratings are assigned to CSDs by the Thomas Murray Rating Board on the basis of the information available from various sources, which will have been confirmed with the depository wherever possible. The CSD public rating uses the proprietary rating as a starting point and involves a full due diligence review. It is commissioned by a CSD. The process of deriving a 'proprietary' CSD Rating is as follows:

Ongoing assessments of individual REAs (i.e. asset commitment, liquidity, counterparty, financial, operational and assets servicing risks) are maintained by Thomas Murray for some 140 depositories. The REAs are updated when changes to arrangements, rules, procedures and controls that affect the CSD are received from multiple local market sources on a daily basis.
Market changes likely to affect individual REAs in CSDs are identified, validated and the risk impact assessed by Thomas Murray analysts against the assessment criteria.
Where a market change is immediate the individual REA is updated and a bulletin issued.
Where a market change is a future event the outlook for an individual REA is updated and a bulletin issued setting out the likely rating impact once the change is implemented.
The CSD Rating and outlook are only updated to reflect the changes affecting individual REAs that impact the CSD Rating after the Thomas Murray Rating Policy Board has affirmed the changes. The associated CSD Rating report is updated, as required, to reflect material changes.
Validation of the market change and its risk impact is made via relevant entities (includes support banks and depositories). Rating changes arising from validation routines are issued as required.
The Thomas Murray Rating Policy Board meets to affirm all CSD Ratings and REA changes on a monthly basis.
A change bulletin on the outlook or CSD Rating is issued following a rating change or following an annual review of the CSD.
Informal on-site due diligence takes place periodically through a rolling program of local market visits carried out by Thomas Murray's staff.

The process of assigning a public rating builds from the assessment process described above, follows a formal request from a CSD for a rating, and is as follows:

The CSD reviews and updates both its current depository questionnaire and assessment report.
Thomas Murray's staff conduct a full due diligence visit to the CSD and relevant market organisations (the regulator, the external auditor, the central bank, and selected participants) to provide verification for the information supplied and held and to obtain more detailed information on the processes and controls established by the CSD. The due diligence review will involve discussions with management and staff of the CSD including the internal auditors.
A rating report is prepared that describes the CSD and gives a confirmation of the CSD rating. A separate management report (not for publication) will be prepared, which includes perceived areas of strengths and weaknesses.
A meeting is arranged with the management of the CSD to present the report.
Following the meeting the rating and report will be finalised.
Public release of the CSD rating report will be undertaken in association with the CSD