ESMA updates the CSDR Q&As
The European Securities and Markets Authority (ESMA) has today updated its Questions and Answers (Q&As) regarding the implementation of the Central Securities Depository Regulation (CSDR).
The updated Q&As provide answers to questions regarding practical issues on the implementation of the new CSDR regime. The latest batch of CSDR Q&As clarify two aspects of the settlement discipline regime in relation to cash penalties:
- Calculation of cash penalties: the first Q&A confirms that cash penalties amounts should be calculated per settlement currency (and do not need to be converted into euros).
- Cases of non-application of cash penalties: The second Q&A lists situations where cash penalties should not be applied either because an insolvency proceeding has been opened against a failing participant or because settlement cannot be performed for reasons independent from any of the involved participants. This latter category covers: suspensions of ISINs from settlement or from trading, closure of a relevant payment system for settlement and certain technical impossibilities at CSD level.
Q&As are an important tool to promote common supervisory approaches and practices in the application of CSDR. This document is aimed at national competent authorities under the Regulation to ensure that, in their supervisory activities, their actions are converging along the lines of the responses adopted by ESMA. It should also help investors and other market participants by providing clarity on CSDR requirements.
The aim of CSDR is to harmonise certain aspects of the settlement cycle and settlement discipline and to provide a set of common requirements for CSDs operating securities settlement systems across the EU. ESMA will continue to develop Q&As on the CSDR in the coming months and will review and update them where required.