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  • European Commission Consults on Central Securities Depositories Regulation

    The European Commission has launched a consultation on proposals to improve securities settlement in the EU and on central securities depositories. The EU Central Securities Depositaries Regulation provides a harmonized regulatory and prudential regime for CSDs and increases the robustness and resilience of securities settlement arrangements. There is a single market for CSD services across the EU and a third-country equivalence regime for CSDs. Responses to the consultation can be submitted until February 2, 2021.

    CSDR mandates the European Commission to prepare a report reviewing its implementation and to submit the report, together with any proposals, to the European Parliament and Council of the European Union. The consultation seeks feedback on several aspects of CSDR that will assist the Commission in preparing its report. The consultation covers the following areas although respondents are also asked if other topics should be considered in the review:
    • the scope in relation to financial instruments and the settlement discipline regime;
    • CSD authorization and review and evaluation processes;
    • CSD authorization to provide banking-type ancillary services;
    • cross-border provision of services in the EU;
    • internalized settlement;
    • whether, and to what extent, CSDR may hamper technological innovation;
    • settlement discipline; and
    • the framework for third-country CSDs.

    The settlement discipline regime is set out in EU Regulatory Technical Standards. The RTS cover measures for preventing settlement fails through automated matching, a hold and release mechanism and partial settlement. The RTS also provide measures for monitoring and addressing settlement fails, such as a mechanism for cash penalties and a buy-in process. The application date of the settlement discipline rules was postponed during 2020, first from September 13, 2020, to February 1, 2021, to allow time for industry to establish systems and processes for implementation. Then, in October 2020, the Commission adopted legislation to further delay the application date to February 1, 2022, as a result of the impact of the coronavirus pandemic. The latest delay has not yet been published in the Official Journal of the European Union.

    View the consultation paper on the review of EU CSDR.

    View the consultation website.

    View details of ESMA's report on internalized settlement and cross-border services.

    View details of the RTS on settlement discipline.

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