ECSDA response to the consultation on Shareholder Rights Standards

European Central Securities Depositories Association (ECSDA) represents 38 national and international Central Securities Depositories (CSDs) across 35 European countries. The association aims at promoting a constructive dialogue between the CSD community, European public authorities and other stakeholders looking to contribute to an efficient and risk-averse infrastructure for European financial markets.

ECSDA welcomes the European Commission consultation on the draft implementing regulation. CSDs also thank the European Commission for the opportunity to provide views during the meetings of the Corporate governance expert group and the quality of the resulting draft Implementing Regulation (the Regulation).

Main points:

1. ECSDA appreciates the draft regulation to be broadly supportive of the market standards, ensuring that their provisions are based on the harmonised and enforceable legal grounds within the EU. We would kindly ask to make an explicit reference to the CSD Regulation (CSDR, (EU) 909/2014). This, to clarify that this Regulation ensures continuity and does not exempt CSD participants holding shares from the CSDR and its standards.
2. We encourage the Commission to collaborate with other authorities globally to ensure further global harmonisation. As the Shareholder Rights Directive (the Directive) articles 3a, 3b and 3c have extra territorial effect (resulting from Article 3e), we use the opportunity to ask the EU Commission to explain their expectations of the implementation of cross-border processes involving third country intermediaries. The national law of a third country may prohibit the disclosure of beneficial owner, particularly for bearer shares. Hence, this can delay or prevent the transmission of information in line with the Directive and the Regulation. It is also unclear (a) how the regulation applies to the dually-listed securities (within and out-side of the EU), and (b) a holding of a depository receipt (DR) shall be subject to the same processes. The latter are generally deemed an “indirect shareholding” subject to terms and condition established by the DR agent.
3. European CSDs are fully in support of the Straight Through Processing (STP) and machine-readability of the transmission of data for the purposes of the processes defined in the Regulation. Such tools will significantly reduce operational complexities and operational risks. They may also increase the efficiency of the intermediary network. As the intermediary chain will need to put some efforts (in addition to the numerous ongoing projects) to ensure a fully efficient flow through the chain, automation will require additional time. CSDs would encourage the Commission to positively respond to the market request for a longer implementation period.
4. We appreciate the alignment of flows for transmission of the shareholder identification, meeting notice and exercise of rights with those used in most European markets.

CSDs would ask the Commission to consider the benefits of harmonising the record date across the EU.

Read the full response.