CSD Default Protection Bond: A Shield Against Geopolitical and Systemic Risks in Securities Custody

 

Mana Bond Ltd Announces Innovative CSD Default Protection Bond: A Shield Against Geopolitical and Systemic Risks in Securities Custody

London, December 6, 2025 – In an era of heightened geopolitical tensions and financial uncertainties, Mana Bond Ltd, a leading London-based structured finance issuer, today announced the development of a groundbreaking financial instrument: the CSD Default Protection Bond (CDPB). This insurance-linked security (ILS) is designed to function as a specialized policy, safeguarding institutional investors and corporations holding substantial securities portfolios from the catastrophic risks associated with central securities depository (CSD) failures.

The CDPB emerges at a critical juncture, inspired by real-world vulnerabilities exposed in the global financial system. Notably, the 2022 freezing of approximately €180 billion in Russian Central Bank assets and €25 billion in private assets held by Euroclear has underscored the potential for CSDs to become entangled in international conflicts, leading to asset immobilization, legal disputes, and broader market disruptions. This event, stemming from sanctions related to the Ukraine war, has prompted warnings from Euroclear itself about the risks to Europe's investment climate, including potential increases in government borrowing costs and destabilization of bond markets if frozen assets are repurposed for reparations loans. Such scenarios highlight the "hazard awareness" imperative for portfolio managers: the need to proactively mitigate tail risks that could cascade through interconnected CSD networks like Euroclear, Clearstream, and DTCC.

"Global events have demonstrated that CSDs, while robust, are not immune to geopolitical shocks or operational failures," said Marco Saba, Director of Mana Bond Ltd. "The CDPB addresses this gap by providing a targeted hedge, ensuring that major investors—such as pension funds, sovereign wealth funds, and conglomerates akin to Berkshire Hathaway—can protect their multi-billion-euro portfolios without relying solely on traditional diversification or regulatory safeguards."

How the CDPB Works: A Robust Insurance Wrapper for Portfolio Resilience

Structured as a €100 million pilot tranche (scalable to €500 million), the CDPB operates on a neutral European CSD platform, such as Monte Titoli or Euronext Securities, with cross-border linkages to disjoint systems like T2S for EU assets and DTCC/CHIPS for US holdings. This innovative cross-CSD setup ensures asset segregation and mobility, preventing commingling or confiscation in the event of a default—drawing from BIS models for collateral fluidity.

Proceeds from the bond will capitalize a dedicated syndicate at Lloyd's of London, underwriting policies against CSD insolvency events. Triggers are parametric and indemnity-based, verified through ECB, Federal Reserve, or national protocols, enabling payouts within 30 days. Investors benefit from attractive yields of 5-7% net, while enjoying principal protection rated A- to AA under Solvency UK/II frameworks—qualifying for low capital charges and making it an ideal "wrap-around" for liability matching.

In the context of the Euroclear-Russian assets saga, where Belgium and the ECB have raised alarms over potential fiscal repercussions and legal claims from Russia, the CDPB serves as a proactive tool. It mitigates risks akin to those where frozen assets could lead to higher EU borrowing costs or even retaliatory actions, as warned by Russian officials. By isolating exposures across independent CSD circuits, the bond reduces tail-risk by up to 80-90%, based on Monte Carlo simulations incorporating historical proxies like the 2008 Lehman collapse.

Targeting High-Stakes Investors: A Call to Hazard Awareness

The CDPB is tailored for entities managing significant securities portfolios, where even remote CSD disruptions could erode billions in value. Pension schemes, insurance companies, and large corporate treasuries stand to gain the most, transforming latent hazards into manageable, insured positions. As the European Commission debates unlocking €105 billion from frozen Russian cash for Ukraine, Mana Bond Ltd emphasizes the urgency of "hazard awareness"—educating the market on these systemic vulnerabilities and offering a tangible solution.

Mana Bond Ltd is open to leading placement agents and underwriters to bring the CDPB to market in Q2 2026. Interested parties are invited to contact Mana Bond Ltd for preliminary discussions or to receive the high-level term sheet.

This initiative not only bolsters financial resilience but also contributes to a more stable global securities ecosystem, proving that innovation can turn geopolitical hazards into opportunities for protection.

About Mana Bond Ltd Mana Bond Ltd is a 2015 London-based firm specializing in structured financial products that address emerging risks in capital markets. With a focus on institutional-grade solutions, we pioneered instruments that blend insurance principles with bond mechanics to safeguard investor assets.

For inquiries, please contact: manabondlimitedco@gmail.com