Central Securities Depositories Regulation (CSDR)
The European Central Securities Depositories Regulation (CSDR) is one of the key regulations adopted in the aftermath of the 2008 financial crisis. The CSDR will ensure that settlement is carried out in a safer and more efficient manner in Europe.
A central securities depository (CSD) is a post-trade infrastructure which provides a central point for depositing financial instruments, e.g. shares and bonds. CSDs enable securities transactions to be processed and settled by book entry, provide custodial services (e.g. the administration of corporate actions and redemptions) and play an active role in ensuring the integrity of securities issues.
CSDs are already highly regulated entities on the national level. However, this is not the case on the European level. Given this lack of harmonised regulation and the fact that trading facilities and central counterparties (CCPs) are already regulated under MiFID, (and soon MiFIR) under EMIR, respectively – the European Commission prepared a regulatory framework for CSDs – the CSDR.
Deutsche Börse Group supports the harmonising of securities settlement and prudential rules for CSDs across Europe in order to enhance market safety and create a level playing field.
On 7 March 2012, the European Commission released its legislative proposal (CSDR) to the European Council and Parliament with the aim to reform the European settlement landscape and create new harmonised rules for CSDs. The proposed regulation (CSDR) covers a) settlement discipline measures and sanctions for the overall market, and b) measures to allow for the harmonisation and improvement of CSD services in the EU.
The CSDR is set out in a number of EU texts. The CSDR Level 1 text is the main body of regulation; it was published as Regulation (EU) No 909/2014 in the Official Journal of the European Union on 28 August 2014.
The official regulatory technical standards (RTS) were published in the Official Journal on 10 March 2017. CDS license application files are expected to be submitted to the local regulators for approval by the end of September 2017 with authorisation expected to be granted in mid-May 2018.
We currently expect that CSDs and CSD customers will need to comply with the new CSDR requirements by mid-May 2018, followed by those relating to the settlement discipline regime during the course of 2019.
CSDR: the highlighted parts of the value chain are affected