Category: Public

CSDs stand ready to contribute to the new Capital Markets Union action plan

CSDs stand ready to contribute to the new Capital Markets Union action plan

ECSDA welcomes the publication of the New Capital Markets Union Action plan. CSDs stand ready to contribute to the CMU discussions in the areas related to CSDs. We believe that the CMU should have a positive impact on future and existing legislation.

Over the last decades, the European CSDs have been contributing to the creation of a deeper single capital market in the EEA through cross-border connections and further harmonisation in the EU, EEA and beyond. The CMU proposal marks an important milestone in the right direction.

The announcement of the EU CMU Action Plan can be found here

Joint Associations letter on a transition period towards full compliance with SRD II

Joint Associations letter on a transition period towards full compliance with SRD II

Ahead of the compliance deadline with the reviewed Shareholder Rights Directive on 3 September 2020, ECSDA and 9 other European associations reiterated the importance for the authorities to support smooth compliance with its requirements. On 1 September,  the Associations sent a joint letter to the European Commission Directorate-General for Justice and Consumers (DG JUST) and ESMA.

In June, the European Commission dismissed a call from the European financial services sector for a twelve-month delay that was needed in view of the status of market readiness, further impacted by the COVID-19 outbreak. In the view of the DG JUST, the pandemic made it even more important for shareholders to communicate electronically and to vote remotely at annual general meetings. The Associations are fully committed to supporting the market. In this new letter to the Commission and ESMA, they shed light on the operational aspects of compliance with SRD II in further detail and kindly asked, amongst others, to enable a smooth adoption with a transition period towards full implementation.

Read the full letter

For more information on how to comply with SRD II, visit the ECSDA SRD II website.

ECSDA Response to ESMA on Outsourcing to Cloud Services Providers

ECSDA Response to ESMA on Outsourcing to Cloud Services Providers

On 31 August 2020, ECSDA responds to the ESMA Consultation Paper on Outsourcing to Cloud Services Providers.

The European Central Securities Depositories Association (ECSDA) welcomes the consultation paper on Draft Guidelines on Outsourcing to Cloud Service Providers.

ECSDA believes that some elements in this consultation would benefit from alignment with the EBA Outsourcing Guidelines, while others would benefit from clarification, given the specific context of CSDs as FMI. The association considers that a single set of guidelines that would apply to all outsourcing relationships and thus integrate both cloud and non-cloud outsourcing would be the ideal methodology to follow if it is taken into account that only some CSDs are subject to the EBA Guidelines. Careful consideration needs to be given to the interaction between the European Authorities guidelines on outsourcing to CSPs and eventual related legislative developments. Those legislative efforts of enhancing coherence would gather our support, as they would alleviate the industry from some significant concerns related to contract management.

Read the full response

 

 

ESMA suggests to postpone Settlement Discipline Standards until 1 February 2022

ESMA suggests to postpone Settlement Discipline Standards until 1 February 2022

On 26 August 2020, ESMA released its Final Report CSDR RTS on Settlement Discipline that provides explanations for the proposal to postpone the entry into force of the RTS on settlement discipline until 1 February 2022.

It is sent to the European Commission, and ESMA is submitting the draft RTS presented in Annex IV for endorsement in the form of a Commission Delegated Regulation, i.e. a legally binding instrument applicable in all Member States of the European Union. Following the endorsement of the draft RTS by the European Commission, the Commission Delegated Regulation will then be subject to the non-objection of the European Parliament and of the Council.

Read the full report.

Nasdaq CSD finalises migration of securities settlement platform to Icelandic securities market

Nasdaq CSD finalises migration of securities settlement platform to Icelandic securities market

On 24 August 2020, Nasdaq announced that the final step in the merger of Nasdaq CSD Iceland with Nasdaq CSD SE (Nasdaq CSD) took place with the successful technical migration of the Icelandic securities market to the Nasdaq CSD SE (Nasdaq CSD) securities settlement platform. The Icelandic branch is now be positioned to leverage the full potential of Nasdaq CSDs securities settlement platform and links to create new opportunities for domestic and international clients. Nasdaq CSD announced the merger with Nasdaq CSD Iceland on 25 May.

Please read the full release.

 

ESMA is preparing a new RTS to further postpone CSDR Settlement Discipline

ESMA is preparing a new RTS to further postpone CSDR Settlement Discipline

On 28 July, ESMA announced that it is preparing the new RTS to delay the entry into force of CSDR Settlement Discipline until 1 February 2022.

The delay is due to the impact of the COVID-19 pandemic on the implementation of regulatory projects and IT deliveries by CSDs.

ESMA aims to publish the final report on further postponing the date of entry into force of the RTS on settlement discipline by September. Following the endorsement of the RTS by the European Commission, the Commission Delegated Regulation will then be subject to the non-objection of the European Parliament and of the Council.

Find here the link to the ESMA release.

Find the request sent to ESMA by the European Commission

ECSDA answer to the FSB consultation on stablecoins

ECSDA answer to the FSB consultation on stablecoins

On 15 July, ECSDA responds to the Financial Stability Board consultation: Addressing the regulatory, surpervisory and oversight challenges raised by “global stabelcoin” arrangements

Introductory remarks

ECSDA welcomes FSB´s on-going efforts to further enhance market stability and market integrity by, among others, addressing the regulatory, supervisory and oversight related challenges raised by global stablecoin arrangements. We also acknowledge FSB´s valuable work within the DLT discussion. As operators of Central Securities Depositories (CSDs), we have a long experience in supporting markets and implementing safeguard mechanisms for these markets.
We favour the approach undertaken by the FSB, especially referring to already existing international standards to deal with global stablecoins (GSC). From our point of view, it is time to raise the crypto-asset ecosystem to the same level of regulation as the rest of the financial system. “Same business, same risks, same rules” should apply as a general principle.

CSDs are primarily looking at GSC as a potential means of settling one of the ‘legs’ of the transactions in securities or digital- assets. We would, therefore, ask regulators not to look at the arrangements in isolation, but as part of the ecosystem in which this new segment will be integrated. Due to the interdependence of different actors and segments of financial markets, regulators should also pay attention to financial stability risks related to GSC. Lessons learned from the previous financial turmoil should be kept in mind: the technology changes should not lead to the creation of a less regulated financial segment that may lead to global systemic consequences. The regulation of the actors using the technology should always be technology-neutral, and the technology should be no justification for different treatment.

Given that the application of the technology in financial markets is still in an early stage, we would ideally favour a close global alignment of regulators when addressing the vulnerabilities of the various activities of GSC arrangements. Therefore, we welcome the opportunity to comment on the FSB´s Consultative document.

Key messages

  1. Financial stability has to be ensured at all times
    We agree with the consultation risks to financial stability which were mentioned. However, we would add:

    A. The need for attention to the value and stability of a fiat currency (or even multiple fiat currencies) and how the respective central bank(s) in charge might be affected (e.g. by inflation), and the need for attention to the value and stability of the securities backing GSCs and the risks linked to those.

    B. GSCs need to evidence the existence and amount/value of reserves they maintain at all times, both reliably and continuously. For this purpose, specific trusted third parties responsible for the ‘notary’ functions should be used.
    There should be mechanisms preventing custodian insolvency impacts, including ensuring the use of dedicated trusted third parties. Maximum protection, which may be desirable in the case of GSC, would be ensured by having reserves in the form of cash held in central banks and reserves in the form of securities held in CSDs.

  2. We would encourage further global and regional cooperation and clarification of GSC arrangements

    A. Clear classification of crypto-currencies and (global) stablecoins is necessary.
    Digital payment assets (payment tokens) or ‘digital money’ in general, have different subcategories, depending on the features we specify below. The risks (including related to the probability of the issuer insolvency) related to the backed assets (‘reserves’ or ‘collateral’) will be a crucial factor for investors, and hence should be taken into account by regulators.

    B. It would also be useful to clarify the distinction between stablecoins and securities-tokens.

    C. Due to their insolvency remoteness and their proven resilience as systemic FMIs, the safety and resilience of a global stablecoin arrangement can be enhanced by having existing CSDs taking roles in the arrangements. For that reason, there may be no need to duplicate the PFMI requirements applicable to these institutions in a framework dedicated to stablecoins.

    D. We see the need for the detailing of the future FSB recommendations at the national or regional level in the near future.

Please read the full response

ECSDA details further the implementation of fails penalties

ECSDA details further the implementation of fails penalties

 

ECSDA makes public the responses to the practical questions on CSDR Cash penalties implementation. Cash penalties are required to be imposed by EU legislators and aim at increasing settlement efficiency rates.

You will see that this document will be updated regularly while some answers to the questions will continue to arrive and CSDs will advance further in their implementation. It represents a centralised view on the CSDs practices. (The advancements of CSDs’ views may be made available even quicker to their direct participants in CSD’s own communication.)

ECSDA response to practical CSDR penalties implementation questions

On 17 April 2020, ECSDA updates the CSDR Settlement Fail Penalties Framework.

It can be used by Central Securities Depositories (CSDs) and their participants as a market practice on how CSDs should develop harmonised settlement fail penalties mechanisms, under the CSD Regulation (EU 909/2014) and its standards. Although the document is meant to be evolving, along with the evolution of the views of the competent authorities on the matters under their review, it can be used by the CSDs and their participants to start developing IT systems to comply with CSDR Settlement Fail penalties-related requirements.

The ECSDA Framework can be found here.