COBS 10.4.1

A CSD must not establish any link with another CSD (a "CSD link") unless it:

(a) has, prior to establishing the CSD link, identified and assessed potential risks, for itself and its members and other participants using its facilities, arising from establishing such a link;
(b) has adequate systems and controls effectively to monitor and manage, on an on-going basis, the following risks:
(i) the link arrangement between the CSD and all linked CSDs adequately mitigates against possible risks taken by the relevant CSDs, including credit, concentration and liquidity risks, as a result of the link arrangement;
(ii) each linked CSD has robust daily reconciliation procedures to ensure that its records are accurate;
(iii) if it or another linked CSD uses an intermediary to operate a link with another CSD, the CSD or the linked CSD has adequate systems and controls to measure, monitor, and manage the risks arising from the use of the intermediary;
(iv) to the extent practicable and feasible, linked CSDs provide for Delivery Versus Payment (DVP) settlement of transactions between participants in linked CSDs and, where such settlement is not practicable or feasible, reasons for non-DVP settlement are notified to the Regulator; and
(v) where interoperable securities settlement systems and CSDs use a common settlement infrastructure, there are times specified for the entry, irrevocability, finality and settlement of transfer orders into the system; and
(c) is able to demonstrate to the Regulator, prior to the establishment of the CSD link, that the CSD link satisfies the requirements referred to in Rule 10.4.1(b).