ECSDA response to the NFRD consultation
On 11 June, ECSDA responded to the European Commission consultation on the review of the Non-Financial Reporting Directive.
Please see the full response
CMU HLF published its final report
On 10 June, the High-Level Forum on the Capital Markets Union organised under the hospices of the European Commission published its final report.
The report consists in 17 recommendations put forward with the intent of addressing relevant issues related to corporate access to finance, pan-European market architecture, retail investment and cross-border investment.
Recommendation on CSDR
The European Commission is invited to conduct a targeted review of Central Securities Depositories Regulation (CSDR) to strengthen the CSD passport and facilitate the servicing of domestic issuance in non-national currencies. This should be accompanied by measures to strengthen the supervisory convergence among National Competent Authorities (NCAs). These measures, taken jointly, should enhance the cross-border provision of settlement services in the EU.
Justification
A targeted review could usefully tackle the following issues:
- CSD passporting and links
While the objective of CSDR is to create a “common CSD market” free of regulatory barriers and to offer CSDs a European passport, divergent application by NCAs of the rules according to which (I)CSDs should meet CSD links framework requirements and provide services in another Member State creates procedural and regulatory hurdles, fragmenting the post-trade landscape along national lines. - Cross-border payments and access to Central Bank and commercial liquidity
The CSDR has unintendedly limited access to global liquidity pools for CSDs without a “limited purpose banking license”. Consequently, these CSDs cannot service domestic issuance in other currencies, including sovereign debt. The CSDR foresees the possibility for CSDs without a banking licence to appoint a “designated credit institution”. However, such liquidity providers have not emerged yet. National Central Banks (NCBs) should facilitate non-domestic (I)CSDs to process settlement in Central Bank Money in other currencies (including those frequently used for issuance and settlement: GBP, CHF, USD), after taking due account of the implications of such access. Alternatively, the CSDR restrictions that prohibit CSDs holding a banking license to provide such services to other CSDs could be amended. - Supervision of CSDs
Divergence in national supervisory approaches is still an important fragmentation factor in the provision of settlement services that generates costs and limits the cross-border offer. Given that securities laws are not harmonised across EU 27, NCAs still have a role to play. Therefore, ESMA’s work within the current scope of its mandate in terms of convergence should be continued and strengthened. The aim should be to ensure convergence in supervisory approaches across the Member States to reduce administrative burdens on CSDs and to generate the value added for the EU financial markets in terms of the CSDR objectives.
Please read the full report
ECSDA requests postponement of Settlement Discipline
On 8 June 2020, the European Central Securities Depositories Association (ECSDA) writes to request a postponement in the implementation of Settlement Discipline Regime (SDR), and Settlement penalties in particular, possibly by one year beyond the date of 1 February 2021.
We acknowledge that the European Commission recently adopted a decision to amend the date of entry into force of the Central Securities Depositories Delegated Regulation on Settlement Discipline (Regulation 2018/1229). In this letter, we aim to alert you about a set of new elements which affect the SDR timeline and might not yet have been considered by the Commission. We hope these elements will be taken into account during the scrutiny period of the amendment.
The letter calls for a holistic approach on the implementation timeline of the regulatory and mandatory projects. The approach may lead to the postponement of the mentioned projects by one year.
Nasdaq CSD Iceland merges with Nasdaq CSD SE
On 25 May 2020, Nasdaq announced the merger of Nasdaq CSD Iceland with Nasdaq CSD SE (Nasdaq CSD). The combined company, Nasdaq CSD SE, will operate in Latvia, Estonia, Lithuania and Iceland, supervised by Baltic and Icelandic regulatory institutions cooperating in accordance with the CSDR. Nasdaq CSD operates four securities settlement systems (the Estonian SSS, the Icelandic SSS, the Latvian SSS and the Lithuanian SSS), with national jurisdiction in each country. The legal name of the company remains Nasdaq CSD SE.
Please see the full release.
Euronext purchases majority stake in VP Securities
On 23 April 2020, Euronext N.V. announced that they have entered an agreement to acquire 70% of the share capital in VP Securities.
As a result of this transaction, VP will become a part of a leading, pan-European market infrastructure company with extensive expertise within the financial infrastructure value chain, as well as exchanges, Central Securities Depositories (CSDs), corporate actions and other investor services. Euronext already has a presence in the European CSD market through Euronext VPS in Norway and Interbolsa in Portugal.
LuxCSD receives the CSDR licence
On 15 April, LuxCSD, the Luxembourg central securities depository (CSD) member of ECSDA obtained a licence to operate under the Central Securities Depositories Regulation (CSDR).
Please see the release.
The list of CSDs authorised under the CSDR is provided on the CSD Facts page of the website.
ECSDA welcomes KACD as associate member
ECSDA (European Central Securities Depositories Association) is pleased to welcome KACD (Central Securities Depository Joint-stock Company) based in Almaty, Kazakhstan, as its new associate member.
On that occasion, Anna Kulik, Secretary-General of ECSDA stated: “ECSDA is a major harmonisation force of post-trade practices in Europe and globally. While doing so, we stand for high level of investor protection, regional and global financial stability and innovation. We are pleased to see KACD joining us and being able to share our and consider their best practices.”
About KACD
KACD is a non-profit organization established in 1997 carrying the following types of the activities for the securities market:
- depository activity;
- activity on maintenance of the System of Securities Holders Registers;
- activity on organization of securities and other financial instruments trading;
- clearing activity on the financial instruments transactions.
- opening and maintaining bank accounts of legal entities;
- opening and maintaining bank accounts of the individuals;
- opening and maintaining correspondent accounts of banks and organizations implementing certain types of banking operations;
- transfer operations: execution of payment and transfer orders of legal entities
KACD has links with the following foreign depositories:
- Clearstream Banking, Frankfurt
- Euroclear Bank
- Central Securities Depository of Kyrgyz Republic
- Central Securities Depository of Belarus
- National Settlement Depository, Russia
Joint trade association letter on the impact of Covid-19 on the implementation of the SRD II
Thursday 14 April 2020 – The European Banking Federation (EBF), the Association for Financial Markets in Europe (AFME), the International Securities Lending Association (ISLA), the Association of Global Custodians (AGC), the European Central Securities Depositories Association (ECSDA), the Securities Market Practice Group (SMPG), the European Savings and Retail Banking Group (ESBG), the Associazione Intermediari Mercati Finanziari (ASSOSIM), the Association française des Professionnels des Titres (AFTI), the European Association of Co-operative Banks (EACB) and EuropeanIssuers (EI) (together, the “Associations”) appreciate the efforts of regulators to ensure deeper shareholder engagement in corporate governance, however we would like to highlight our deep considerations of the legislative intentions behind the review of the Shareholder Rights Directive (SRD II).