At its last meeting, European Central Securities Depositories Association (ECSDA) Board drew lessons from the experience of the Ukrainian CSD (National Depository of Ukraine) about their operation during the war. Oleksii Yudin, Chairman of the NDU Management Board, shared their experience and discussed with the other ECSDA Members how they coordinated orderly market cloture at the beginning of the war and its restart of CSD operations at the market re-opening in August, also how they ensured the resilience of the CSD data and reviewed their projects in line with the changing needs of the market participants.
ECSDA Members expressed their profound sadness on the circumstances which required such a stress testing of business continuity measures of the Ukrainian CSD. However, this NDU crisis management experience and the conclusions drawn from it were ever so valuable for the reason of being lived.
ECSDA Secretariat is grateful for the experience shared by our member, the National Depository of Ukraine, and wishes for the restoration of Ukraine and its capital market!
ECSDA welcomes the Single Central Depository of Securities from Moldova as its new Member.
It is honoured to support the integration of the financial infrastructure of Moldova into the international capital markets ecosystem by sharing the best practices and standards of European Central Securities Depositories.
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.
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.
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.
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).
On 21 January 2020, BaFin granted Clearstream Banking AG, as German Central Securities Depository, the licence according to Article 16 Central Securities Depository Regulation (Regulation (EU) No 909/2014) – CSDR. The licence authorises the company to provide core services and non-banking-type ancillary services under the CSDR.
