When, in the financial world, a transaction such as the buying and selling of shares goes from agreement between two counterparties to its final completion, a whole infrastructure comes into play, little known to the uninitiated, which guarantees execution, security and traceability. This path is divided into two major phases: trade, i.e. the matching of buy and sell orders, andpost-trade, which includes clearing, settlement, custody, asset servicing and reporting.

Let us imagine, for example, that party X buys 10 shares from counterparty Y: the central securities depository ensures that within two days of the trade date (T+2) X actually receives the securities and Y the payment, thus reducing the risks associated with the exchange(Figure 1). It is in the post-trade chain thatCentral Securities Depositories (CSDs)play a key role: they ensure the settlement, legal transfer of ownership and custody of securities. Behind a simple transaction, in short, operates a sophisticated infrastructure that makes financial markets safe, integrated and efficient.

From fragmentation to integration: the role of the CSDR

The European post-trade architecture was not always so integrated. In the early 2000s, each country used its own rules, systems and procedures for securities settlement. For an investor buying securities issued in another Member State, transactions became slower, more complex and above all more expensive than a domestic transaction. According to an initial report by the European Commission’s advisory committee, the costs of cross-border transactions could be up to ten times higher than domestic transactions, due to regulatory, tax and technical differences. This was a clear obstacle to the free movement of capital and required a process of far-reaching harmonisation.

The CSDR

Regulation (EU) 909/2014, known as CSDR, was created precisely with the aim of improving securities settlement mechanisms, regulating the activities of CSDs and fostering European market integration. It is one of the three pillars of post-2008 financial regulation, along with EMIR for derivatives and MiFID II on investor protection, and aims to stimulate competition, enforce the use of securities in electronic form, and set shorter settlement times.

One particularly relevant aspect is the provision of different types of accounts(segregated or omnibusaccounts ) to protect investors, ensuring a clear separation of their securities from those of other clients or the intermediary and thus reducing risks in the event of operational or financial problems. This model often includes an additional key player: the clearing member (e.g. BNP Paribas or ABN AMRO Clearing). End-clients do not access the CSD directly, but operate through the clearing member, which holds accounts at the CSD on behalf of clients and operationally manages their positions.

The use of clearing members responds to a logic of efficiency: as the technical, capital, operational and regulatory requirements for direct access to a CSD are high and complex, many financial institutions, especially smaller ones, prefer to avoid this burden and delegate the entire post-trade cycle to specialised intermediaries. The clearing member thus takes care not only of settlement and custody, but also of operational management, position reconciliation and regulatory reporting obligations, effectively acting as an interface between the client and the central infrastructure.

Individual segregation and omnibus accounts

Within the framework outlined by the CSDR, the distinction between omnibus and individual segregated accounts assumes a central role in investor protection and system transparency. With omnibus segregation, the positions of multiple clients merge into a single account held by the clearing member at the CSD. This solution has undoubted advantages in terms of operational simplicity and cost efficiency, but also entails significant criticalities. In particular, account sharing exposes clients to the risk of default by other participants in the pool and the risk that the clearing member does not have the necessary assets in a timely manner to honour a transfer or complete a settlement transaction, with possible delays or failure to settle on time.

Segregated accounts

Individual segregation, on the other hand, involves opening a dedicated account for each end-customer. This model guarantees clearer asset segregation, greater transparency and a higher level of protection in the event of the intermediary’s insolvency or operational problems, but at higher operating and administrative costs. The choice between the two models thus reflects a structural trade-off between economic efficiency and the degree of investor protection.

As pointed out by Olena Havrylchyk in her paper Central Securities Depositories and Geopolitical Risks: Challenges for European Policy (IFRI, 2025), the debate between segregated and omnibus accounts revolves around two fundamental aspects. On the one hand, segregated accounts increase the transparency and identifiability of the final beneficiaries, while omnibus accounts tend to reduce it, creating grey areas that may facilitate circumvention or avoidance of sanctions regimes. On the other hand, although individual segregation is often perceived as more burdensome, the experience of countries such as Sweden, Denmark and Finland shows that it does not compromise either liquidity or the development of capital markets.

Omnibus accounts

In the omnibus model, in fact, when a security is deposited with the CSD, the latter is able to identify the clearing member as the account holder, but not the entity that originally sold or transferred the asset to the clearing member. Layering across multiple intermediary layers thus generates a loss of information transparency, with significant implications not only in terms of investor protection, but also in terms of supervision and political security.

Finally, it is worth noting that, unlike in the United States, where equity transactions are handled by a single CSD, more than twenty CSDs operate in Europe, each with different operating standards, custody practices and account models(Figure 2).

From a technical issue to a political node: CSDs at the centre of the EU-Russia confrontation

These rules and infrastructure choices, often perceived as purely technical, have now taken on strategic significance. In fact, frozen Russian securities are kept precisely within these CSD account structures. The combination of infrastructural fragmentation, heterogeneous account models and national legal differences makes the management, traceability and eventual use of these assets more complex, turning a post-trading issue into a central issue of European economic and political policy.

Almost four years after the invasion of Ukraine, and more than fifteen since the start of the conflict, the issue is no longer just about sending weapons or logistical support. The conflict has shifted to suchvaluable infrastructure that holds trillions of euros in global financial instruments.

This includes€180 billion belonging to the Russian Central Bank, now frozen in the accounts of Euroclear, Europe’s largest CSD, part of the approximately €210 billion frozen in the entire EU.

Figure 3: Out of a total of about EUR 300 billion of frozen assets, EUR 210 billion are under EU jurisdiction, with EUR 180 billion held by Euroclear in Belgium; the rest is distributed among the US, Japan, the UK, Switzerland and Canada. See: https://www.dw.com/en/russias-frozen-assets-everything-you-need-to-know/a-75180873

Euroclear, the silent giant at the centre of a geopolitical earthquake

As mentioned, although many CSDs operate in the European Union, the market is in fact dominated by three major players –Euroclear, Clearstream and Euronext Securities– which have consolidated services along the entire trading, clearing and settlement chain.Euroclearis the central player: it custodies some€42.5 trillion in assets, oraround 50 per cent of the European market, through Euroclear Bank and the national CSDs of several European countries.

Euroclear and Clearstream are pillars of the European financial system. As mentioned above, they guard assets, regulate them, certify them. Without them, the European capital market would be paralysed. It is precisely this infrastructural centrality that has transformed the presence of frozen Russian assetsfrom a technical fact to a political issue.

Invested in short-term instruments, these assets generated€6.9bn in interest in 2024, against an estimated annual requirement of Ukraine of €70bn. Against this backdrop, the European Commission had proposed ajoint loan of€210bn, secured by the immobilised Russian assets, with a realistic activation around €90bn for 2026-27. This, it should be pointed out, would not have represented a confiscation, but a strategic use of the collateral.

Why Belgium and especially Euroclear fear a systemic shock

Belgium’s reservations about the European proposal are not ideological, but structural. Euroclear, is exposed to risks that go far beyond the Russian case.

The first is legal. The use of frozen sovereign assets in the absence of an international judgment raises questions about the violation of the principle of state immunity. Yukos‘s precedent, while not directly affecting Euroclear, showed how high the legal and reputational costs can be.

The second is financial. A move perceived as arbitrary could push non-NATO aligned countries to reduce their exposure to Europe, undermining confidence in the euro and increasing the cost of public debt.

Then there is the risk ofRussian retaliation, still relevant both legally and symbolically, as well as an internal political risk. The latter is now partially mitigated by the possibility of obtaining an extension of the asset freeze through a qualified majority, rather than unanimity, under the EU’s Common Foreign and Security Policy, (CFSP), but cannot be said to have been completely eliminated.

Finally, for Euroclear, a reputational risk emerges that is difficult to ignore: aninfrastructure that bases its credibility on neutrality is unlikely to take on a role perceived as political. It is no coincidence that the rating agency Fitch has placed Euroclear’s ratings on Rating Watch Negative due to the potential increased legal and liquidity risks associated with the EU’s plans to use immobilised Russian assets for a repair loan to Ukraine.

Why, despite these risks, the proposal remains economically and politically viable

Counterbalancing these concerns, however, are non-negligible elements. The transaction would be structured asreversible, hence not configurable as a confiscation. Russian assets represent a tiny fraction of the trillions held in European CSDs, reducing systemic risk. Most European companies have already left the Russian market, limiting their exposure to economic retaliation. Moreover, legal risks would have beenshared at the European level, easing the specific burden on Belgium, while the exit from bilateral investment treaties with Russia would have further reduced potential litigation.

The collapse of the proposal and the real stakes On 18 December, after a long summit in Brussels, the European governments, however, abandoned the plan to use frozen Russian assets, mainly due to the opposition of Belgium, supported in part by other countries, includingItaly. Instead, an emergency plan based on common European debt was approved, promoted by Belgian Prime Minister Bart De Wever and considered unlikely until the very end. The final agreement therefore provides for the EU to issue joint debt to finance a two-year loan to Ukraine (in total €90 billion interest-free), guaranteed by the EU budget.

This was made possible by agreeing to the demands of Hungary, Slovakia and the Czech Republic not to participate in the initiative, and to be excluded from debt repayment responsibility. For Germany and Commission President Ursula von der Leyen, this was a political defeat, as they had counted on the direct use of Russian funds to ‘punish’ Moscow. In order not to lose face, the EU leaders left open the possibility of using frozen Russian assets to repay the loan in the future, but postponed any concrete decision.

The debate, however, goes far beyond financial technique

At stake was the EU’s ability to use its economic weight as an instrument of political power. Supporting the proposal would have meant strengthening European strategic cohesion, reducing dependence on uncertain US support – as confirmed by the recent US National Security Strategy (NSS) – and affirming the principle that Russia should be materially accountable for war damage. Instead, its failure has highlighted the EU’s vulnerability to the veto of a minority of member states, accentuating the image of a Union that is still fragmented, hesitant and unable to translate its economic potential into real geopolitical influence.

Using Russian assets held at Euroclear was an operationally and economically feasible solution

It would have made Russia concretely responsible for the costs of the war it has been waging on Ukrainian territory for over fourteen years and would have sent a clear signal of the EU’s economic strength and political determination.

The fact that these assets are concentrated within the European Central Securities Depositories, and Euroclear in particular, demonstrates that post-trade infrastructures are no longer mere technical hubs, but strategic elements whose functioning mechanisms should be understood by European policy.

Instead, the decision to resort to new common debt has ended up favouring free-rider dynamics, allowing high-debt countries like Italy and Spain – which are at the bottom of the league table in terms of financial support to Ukraine – to continue this behaviour without addressing their internal structural spending and taxation issues. As Robin Brooks notes, such an approach risks perpetuating a combination of broken governance and bad fiscal policy, weakening the EU’s economic and political credibility in the long run, if it has not already done so.

Read also:

• Mastropasqua, Cristina, Alessandro Intonti, Michael Jennings, Clara Mandolini, Massimo Maniero, Stefano Vespucci, and Diego Toma. 2021.T2S – TARGET2-Securities: The pan-European platform for securities settlement on a monetary basis. Markets, Infrastructures, Payment Systems – Institutional Issues No. 4. Bank of Italy.https://www. bancaditalia.it/pubblicazioni/mercati-infrastrutture-e-sistemi-di-pagamento/questioni-istituzionali/2021-004/N.4-MISP.pdf
• Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012, Official Journal of the European Union L 257/1 (28 August 2014). https://eur-lex.europa.eu/legal-content/IT/TXT/PDF/?uri=CELEX:32014R0909(CSDR Regulation)
• Choubey, Priya. 2024. “Euroclear.” WallStreetMojo, June 7, 2024. https://www.wallstreetmojo.com/euroclear/. WallStreetMojo.
• Gloy, Alex. 2025. “The Battle Over Euroclear and Russia’s Frozen Billions.” Fair Observer, December 17, 2025 . https://www.fairobserver.com/economics/the-battle-over-euroclear-and-russias-frozen-billions/.
• Deutsche Welle. 2025. “Russia’s Frozen Assets – Everything You Need to Know.” DW. https://www.dw.com/en/russias-frozen-assets-everything-you-need-to-know/a-75180873.
• Euractiv. 2025. “Reparations Loan: Where Russia’s Frozen Assets Are Held Across the EU.” Euractiv. https://www.euractiv.com/news/reparations-loan-where-russias-frozen-assets-are-held-across-the-eu/. Euractiv. .
• Daily Observer. 2025. “Ukraine Needs €70 Billion in 2026, EU Says as Funding …” Daily Observer, November 18, 2025 . https://www.observerbd.com/news/554307.
• Euractiv. 2025. “Brussels Says Ukraine Loan ‘Court-Proof’ After Russia Threatens to Sue Euroclear.” Euractiv. December 2025 . https://www.euractiv.com/news/brussels-says-ukraine-loan-court-proof-after-russia-threatens-to-sue-euroclear/.
• Fitch Ratings. 2025. Fitch Places Euroclear Bank on Rating Watch Negative. December 16, 2025. Fitch Ratings . https://www.fitchratings.com/research/banks/fitch-places-euroclear-bank-on-rating-watch-negative-16-12-2025.
• Tobin, Sam. 2025. “UK Court Dismisses Russia’s Appeal in $60 Billion Fight with Ex-Yukos Investors.” Reuters, February 12, 2025 . https://www.reuters.com/business/energy/uk-court-dismisses-russias-appeal-60-bln-fight-with-ex-yukos-investors-2025-02-12/.
• European Council. 2025. European Council, 18 December 2025, Ukraine. 19 December 2025. Consilium – European Council . https://www.consilium.europa.eu/it/press/press-releases/2025/12/19/european-council-18-december-2025-ukraine/.
• Rankin, Jennifer. 2025. “EU Leaders Urged to Use Frozen Russian Assets to Fund Ukraine’s Defence.” The Guardian, December 18, 2025 . https://www.theguardian.com/world/2025/dec/18/eu-frozen-russian-assets-fund-ukraine-defence.
• The White House. 2025. 2025 National Security Strategy of the United States of America. November 2025. U.S. Government . https://www.whitehouse.gov/wp-content/uploads/2025/12/2025-National-Security-Strategy.pdf.
• Brooks, Robin J. 2025. Text of post [X post], date of post. https://x.com/robin_j_brooks/status/2001983863963386120.