European Securities and Markets Authority (ESMA)’s Post

On July 9, 2024, the European Securities and Markets Authority (ESMA) launched new consultations on various aspects of the Central Securities Depositories Regulation (CSDR) Refit. The proposed rules focus on the information requirements for European CSDs, notifications by third-country CSDs, and the scope of settlement discipline. Key Points: - Review and Evaluation Process: Harmonization of information shared by EU CSDs on cross-border activities and risks to assist competent authorities in their overall assessments. - Third-Country CSDs: Streamlining information notifications to ESMA for accurate understanding of notary, central maintenance, and settlement services, while reducing the reporting burden. - Settlement Discipline: Clarifying the causes of settlement fails not attributable to transaction participants and defining operations not considered as trading. Objective: The CSDR Refit aims to fine-tune and further clarify the CSDR framework, enhancing the effectiveness of the regulation. Next Steps: - Consultation Deadline: ESMA invites responses from EU CSDs, third-country CSDs, CSD participants, and other stakeholders by 9 September 2024. - Post-Consultation: Responses will be assessed to finalize the proposals before submission to the European Commission in Q1 2025. Additional consultations on other aspects of CSDR will follow in the coming months. Follow Global Regulatory Insights for more updates on the latest regulatory developments. #ESMA #CSDRRefit #FinancialRegulation #PostTrading #RegulatoryUpdates #GRI

It is also important to note that ESMA has stated that "settlement efficiency remains a top priority for ESMA", which is of course a common goal with CSDs and other industry players. The key element is to manage all issues with due proportionality.

📣 The European Securities and Markets Authority (ESMA) published today the report on the feedback received to its #CallForEvidence on shortening the settlement cycle. Respondents highlighted:  ❗️Operational impacts of the reduction of the securities settlement cycle on the operations of market players. ‼️Wide range of both potential costs and benefits of a shortened cycle, with a support for a thorough impact assessment before deciding. Respondents provided suggestions around how and when a shorter settlement cycle could be achieved, with a strong demand for a clear signal from the regulatory front at the start of the work and clear coordination between regulators and the industry. On the international developments on settlement cycles and their impact on the Union’s capital market, stakeholders made clear the need for a proactive approach to adapt their own processes to the transition to T+1 in other jurisdictions.

What is CSDR? CSDR stands for Central Securities Depository Regulation, a European Union (EU) regulation that aims to harmonize the settlement and depositary landscape across the EU. It applies to investment banks, broker-dealers, and other financial institutions that provide securities settlement and depositary services. CSDR seeks to: 1. Improve the safety and efficiency of securities settlement and depositary operations. 2. Enhance the protection of investors and the stability of the financial system. 3. Reduce the risk of the late matching & settlement failures and improve the resolution of failed settlements. 4. Increase transparency and reporting requirements. Key aspects of CSDR include: 1. Mandatory dematerialization of securities. 2. Settlement discipline regime (including fines for Late Matching & Settlement Fails). 3. Central securities depositories (CSDs) oversight and regulation. 4. Improved investor protection and asset segregation. 5. Enhanced reporting and transparency requirements. CSDR aims to create a more robust and efficient EU settlement landscape, reducing risks and protecting investors. Investment banks and broker-dealers must comply with CSDR to ensure seamless securities settlement and depositary services within the EU.

CSDR stands for Central Securities Depository Regulation, a regulation of the European Parliament and the Council of the European Union that aims to improve the efficiency and safety of securities settlement in the EU. CSDR regulates the legal aspects of securities settlement, such as the book-entry form, the settlement periods, the settlement discipline, and the internalised settlement. CSDR also harmonises the requirements and supervision of all central securities depositories (CSDs) in the EU, such as the organisational, conduct of business, prudential, and third-country requirements. Some of the key aspects of CSDR are: - It introduces a settlement discipline regime that imposes measures to prevent and address settlement fails, such as trade matching, confirmation, allocation, penalties, and buy-ins. - It establishes a common authorisation and supervision framework for CSDs, which requires CSDs to obtain authorisation from their competent authorities and to comply with certain organisational, conduct of business, and prudential rules. - It enables CSDs to provide their services across the EU through a passport mechanism, which allows CSDs to offer their services in another member state without setting up a branch, subject to certain notification and cooperation procedures. - It sets out the conditions for CSDs from third countries to provide their services in the EU, which include recognition by the European Securities and Markets Authority (ESMA) and equivalence decisions by the European Commission. CSDR is part of the EU's efforts to establish a single market for capital and to enhance the resilience of the financial system. CSDR is also aligned with the global standards and recommendations of the Committee on Payment and Settlement Systems (CPSS) and the International Organization of Securities Commissions (IOSCO) for financial market infrastructures . #CollateralManagement #CollateralGyan #CSDR

In November, one year and a half after the implementation of the Settlement Discipline Regime, the European Central Securities Depositories Association (ECSDA) #Settlement Working Group is releasing its discussion paper to share its preliminary analysis about the main root causes of #settlement fails in Europe, as far as visible at the level of CSDs and reported through a survey by their participants. The intention is to share some initial recommendations to improve the settlement efficiency in Europe. #settlement https://lnkd.in/enreFJh3

It has been an honor to chair the #Settlement WG in European Central Securities Depositories Association (ECSDA), which, after a collaborative work of all colleagues, including with our communities and with very interesting debates within the WG, has issued this discussion paper about a first analysis on the failings root causes and with some initial proposals to improve the settlement efficiency rates. More to come! #efficiency #CSD

Published by the Journal of Financial Compliance, Financial Markets and Funds lawyers Carolyn Jackson, partner, and Ciara McBrien, associate, authored an in-depth look at EMIR REFIT reporting requirements for derivatives trading firms in the EU and UK in advance of implementation in 2024. Getting ahead of determining which obligations are required and if there are implementation gaps in existing reporting systems will be critical to achieving regulatory compliance. #Derivatives #FinancialMarkets #FinancialServices #Compliance

What is CSDR? CSDR stands for Central Securities Depository Regulation, a European Union (EU) regulation that aims to harmonize the settlement and depositary landscape across the EU. It applies to investment banks, broker-dealers, and other financial institutions that provide securities settlement and depositary services. CSDR seeks to: 1. Improve the safety and efficiency of securities settlement and depositary operations. 2. Enhance the protection of investors and the stability of the financial system. 3. Reduce the risk of the late matching & settlement failures and improve the resolution of failed settlements. 4. Increase transparency and reporting requirements. Key aspects of CSDR include: 1. Mandatory dematerialization of securities. 2. Settlement discipline regime (including fines for Late Matching & Settlement Fails). 3. Central securities depositories (CSDs) oversight and regulation. 4. Improved investor protection and asset segregation. 5. Enhanced reporting and transparency requirements. CSDR aims to create a more robust and efficient EU settlement landscape, reducing risks and protecting investors. Investment banks and broker-dealers must comply with CSDR to ensure seamless securities settlement and depositary services within the EU.

Published by the Journal of Financial Compliance, Financial Markets and Funds lawyers Carolyn Jackson, partner, and Ciara McBrien, associate, authored an in-depth look at EMIR REFIT reporting requirements for derivatives trading firms in the EU and UK in advance of implementation in 2024. Getting ahead of determining which obligations are required and if there are implementation gaps in existing reporting systems will be critical to achieving regulatory compliance. #Derivatives #FinancialMarkets #FinancialServices #Compliance