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ECSDA Welcomes the Commission Proposal for Simpler Withholding Tax procedures

The European Central Securities Depositories Association (ECSDA) welcomes the European Commission Proposal for a new EU system for the avoidance of double taxation and prevention of tax abuse in the field of withholding tax. The proposal aims to simplify procedures for claiming cross-border withholding tax relief and eliminate tax barriers. These barriers have been highlighted in a variety of post-trade industry reports as a major impediment to the proper functioning of the CMU, free movement of capital and prevention of tax abuse faced by financial investors and intermediaries.

In the context of fair taxation in the EU and the fight against tax fraud, inefficient and burdensome withholding tax relief procedures are a barrier to cross-border investments and limit the EU’s efforts in removing barriers to completing a Capital Markets Union (CMU).

ECSDA salutes the intentions of:

Enhancing EU competitiveness by a better functioning Single Market, thereby attracting investors;
Reducing antiquated paper-based processes due to the digitalisation of withholding tax relief procedures;
Reducing regulatory costs for investors as well as intermediaries thanks to the harmonisation of relief procedures; and
Eliminating tax abuse by simplifying cumbersome, lengthy and resource-intensive processes that aim to avoid double taxation.

As one of the main barriers that deters investment across borders and deepening integration of the EU CMU, ECSDA looks forward to engaging with public and private stakeholders in sharing insights from CSDs.

Legal text of the Proposal for Council Directive
Annex to the Proposal for Council Directive

European CSDs set a timeline for ISO 20022

Today, 26 May 2023, ECSDA publishes its considerations on ISO messages for financial transactions and recommendations on their use. The basis for CSD engagement with local communities and relevant stakeholders and further preparations. The messages for General meetings should be solely in ISO 20022 as from 2026, and Corporate actions and market claims should only rely on ISO 20022 as from 2030.

The standardisation of messages has been a key enabler to improve the level of Straight Through Processing (STP) of (I)CSDs services over the past decades. The way (I)CSDs communicate with their participants is in constant evolution.
The main standard used today in the post-trade industry is ISO 15022, but in the last few years, the usage of a more sophisticated version of ISO standard, ISO 20022, has increased.
The evolution of the ISO standard has been driven by the following key factors:
i) Creation of market infrastructures (e.g., T2S),
ii) EU legislation requirements (e.g., SRDII),
iii) Modernisation of (I)CSDs’ own IT systems, and
iv) Definition of new market standards (e.g., SCoRE).

European CSDs aim at further increasing the standardisation and efficiency of post- and pre-trade processes. The emergence of the new ISO 20022 standard for messaging is in line with this objective. Although along with the benefits, it also brought challenges for (I) CSDs and their participants; a coexistence period between the existing formats (ISO 15022 and/or proprietary messages) and new formats (ISO 20022) is needed to ensure a smooth transition to a new message format.
The ECSDA Board agreed to set up a dedicated Messaging Task Force to assess the current state of use of the different messaging standards and plans related to the migration to ISO 20022, as well as provide recommendations on the way forward.

Besides some background information and the expected evolution of the ISO standards in the European CSDs community, this paper provides recommendations on:
– The rules to put in place to ensure a smooth transition during the co-existence of the two ISO standards;
– The timeline for the discontinuation of ISO 15022 for some business domains;
– The usage of ISO 20022 data dictionary as a way to structure the information beyond the message formats.

Please note that these are recommendations and ECSDA intends to discuss them with the relevant market stakeholders, where needed.
While this paper was in preparation, ISSA, and ECSDA have also been working together on a survey addressed to the key financial industry actors about ISO 20022. The conclusions of the present paper should not be in contradiction with the analysis of the joint ISSA – ECSDA survey.

Read the full document.

ECSDA issues its updated CSDR Penalties Framework

Today, 28 April 2023 ECSDA issued the update of the ECSDA CSDR Settlement fails Penalties Framework.
The change takes into account the postponement of the collection of payment by CSD participants giving them an additional day to collect the payment from the underlying customers:

PFoDs Trade Date (TD) – from 15th to 16th Day
Payment Date – from 17th to 18th Day

ECSDA CSDR Penalties Framework last updated 28/04/2023

ECSDA & ISSA Survey on ISO20022

On 10 January, the European Central Securities Depository Association (ECSDA) and International Securities Services Association (ISSA) launched a joint survey on ISO 20022.

The two Associations ask to respond to a short survey on the present and future adoption of ISO 20022 within the Securities Industry.

The survey touches on some key aspects such as usage and readiness, change drivers, transitional models, Corporate Actions & APIs and ISO 20022.

You can find a printable copy of the survey questions to help with syndication within your firm here.

The survey results will serve as the basis for further analysis and industry debate.

The survey results will be published on a fully anonymous basis i.e. no firm will be identifiable.

However, if respondents choose to leave their email addresses then the secretariats of ISSA and ECSDA will be able to provide you with comparative feedback if you would like. The output from this survey will be used to inform the next phase of the activity within ECSDA and ISSA.

A new path to support rebuilding the Ukrainian economy is being opened!

Congratulations to Grupa KDPW, the CSD group of Poland, and the National Depository of Ukraine, for establishing a direct link!

The link will allow Ukrainian municipal bonds issued by the regional governments to be available to foreign investors through KDPW.

After the disaster created by the war, this collaboration is a new example of support for Ukrainian capital markets and, through that, its economy and people. ECSDA is also pleased to see the deepening of the connection between the Ukrainian and EU capital markets led by the CSDs.

Please read the releases of KDPW and NDU.

ECSDA issues 2023 penalties calendar

The European Central Securities Depositories Association (ECSDA) issues the 2023 calendar, which can be found below.

In the calendar, you will find highlighted the key dates of the penalties life cycle as follows:

End of appeal period – 10th PBD
Monthly report – 14th PBD
Payment date:
a. 17th PBD until February penalties, e.g., March payment
b. 18th PBD from March penalties, e.g., April payment

The payment date will be postponed by 1 PBD, from March penalties, e.g., April payment, as a result of the activity in the Calendar TF with industry associations.

We take the opportunity to thank AFME, EACH, AGC, EFAMA, IA Members, and other associations participating in the Industry Settlement Fails Penalties Calendar task force and look forward to working with you in the future.

We wish you a happy year-end holiday!

The ECSDA team

WFC2023 conference in Prague – Registrations are open!

From 24 to 26 May 2023, the World Forum of Central Securities Depositories (WFC), currently led by the European Central Securities Depositories Association (ECSDA), will meet in Prague on the invitation of CSD Prague.

The WFC gathers five regional associations of Central Securities Depositories (CSDs) globally:ACG, ACSDA, AECSD, AMEDA, ECSDA. This conference is an exceptional event for the CSD industry.

Over the 3 days the participants will be exploring a wide range of topics through keynote speeches, panel discussions, and fireside chats.

The key themes for this year’s conference are:

Facilitating cross-border investment flows
FMI DLT pilots: lessons learned and challenges ahead
Settlement efficiency
Vision for the Global Post-trade
Systemic risk in Post-trade

Find more on the WFC2023 website

ECSDA Board drew lessons from the experience of the Ukrainian CSD (NDU)

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!