Alignment with EU market practices regarding the account management structure

Zagrebacka Banka d.d.
Fri, 15/12/2023

Status report after Croatian CSD imposed safekeeping fee

Further to the amendments to the Operational Rules related to the project of adjusting the model of central account management, which came into force on the 1st of June 2023, with the Central Depository & Clearing Company's (hereafter CDCC) Management Board decision on 26th of June 2023, amendments to the CDCC Fee Schedule were introduced.

The adaptation of the model of central account management represents a gradual alignment with the EU market practices regarding the account management structure. With these changes, the CDCC is getting closer to the operating regime of other European central depositories, striving to provide members with the highest level of services, especially in the context of the migration to T2S.

Amendments to the CDCC Fee Schedule entered into force partially on the 1st of July 2023, except for the amendments to the CDCC Fee Schedule that entered into force on the 1st of September 2023. Those amendments introduced a fee for Securities position maintenance on Transactional accounts for Custodians, Brokers, and Money Market Participants, a fee for Securities position maintenance on Investor accounts, and a fee for the Account Maintenance Service.

Fees for Securities position maintenance are diversified into ordinary and transactional custody accounts.

Fees for Securities position maintenance are as follows:

Ordinary accounts (total value of all assets held on all investor’s accounts in SKDD except the issuer’s treasury shares):

  • EUR 5 million – 15 million: 0,03%
  • EUR 15 million – 500 million: 0,024%
  • EUR 500 million – 3 billion: 0,02%
  • EUR 3 billion – 5 billion: 0,012%
  • over EUR 5 billion: 0,002%

Transactional custody accounts:

  • 0,006%: for equities and ETFs
  • 0,004%: for debt securities

The difference between the pricing applicable to ordinary accounts and transactional custody accounts is driven by CDCC’s goal to encourage individuals and legal entities currently holding their assets on the ordinary accounts to transfer their securities to CDCC member accounts, and gradually abandon the ordinary accounts within CDCC, which is in line with the market practices and the account management model in T2S.

By transferring assets to an intermediary (investment company and/or credit institution), assets are no longer stored in accounts opened directly in the CDCC, in which case the client as the investor is not obligated to pay the Fee to the CDCC for maintaining securities positions on the investor accounts. Every investor has the opportunity to check with investment companies and/or credit institutions that act as intermediaries on the capital market in the Republic of Croatia, and which are also CDCC members, the market conditions under which they offer services for opening and maintaining securities accounts for an investor.

Through the phased approach of transitioning to the new account structure model, the investors who did not transfer their assets (securities) to the intermediaries (investment companies and/or credit institutions) but left them in accounts opened directly at the CDCC, are charged a “fee for maintaining securities positions on investor accounts”.

The phased transition approach implies that in the first phase the Fee was introduced only for the investors whose total assets in the CDCC accounts are EUR 5 million or more, while in the following phases, this asset threshold will be lowered.

On the 31st of October 2023, 58,5% of investors who held assets directly with the CDCC transferred their assets from investor accounts to transactional accounts opened in the name of the investment company or credit institution.

The next CDCC Fee Schedule revision is planned for 2024, but the date is not announced yet.