Skip to main content
Home

ESMA

Extranet

Search form

Settlement

Settlement

Settlement

Central Securities Depositories Regulation (CSDR)

Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012 (CSDR) was published in the Official Journal on 28 August 2014, and entered into force on 17 September 2014.

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. CSDR plays a pivotal role for post-trade harmonisation efforts in Europe, as it will enhance the legal and operational conditions for cross-border settlement in the EU.

Key elements

The main objective of CSDR is to increase the safety and efficiency of securities settlement and settlement infrastructures (CSDs) in the EU by providing, among others, for the following:

  • Shorter settlement periods;
  • settlement discipline measures (mandatory cash penalties and ‘buy-ins’ for settlement fails);
  • An obligation regarding dematerialisation for most securities;
  • Strict prudential and conduct of business rules for CSDs;
  • Strict access rights to CSD services; and
  • Increased prudential and supervisory requirements for CSDs and other institutions providing banking services ancillary to securities settlement.

Links to the European Commission website and FAQs

Level 2 measures implementing CSDR

All Level 2 measures (except for the technical standards on settlement discipline) have now been published in the Official Journal of the European Union (OJ) on 10 March 2017:

Please see below for information on their elaboration.

ESMA Draft Technical Standards

CSDR requires ESMA, in close cooperation with the members of the ESCB, to elaborate  draft regulatory technical standards (RTS) and draft implementing technical standards (ITS) covering:

  • the authorisation, recognition, supervision of CSDs, organisational and prudential requirements for CSDs, access requirements (see CSD Requirements in the chart below for the status regarding their elaboration and adoption),
  • internalised settlement reporting requirements (for securities transactions settled outside a securities settlement system) (see Internalised Settlement in the chart below for the status regarding their elaboration and adoption), and
  • settlement discipline measures (see Settlement Discipline in the chart below for the status regarding their elaboration and adoption).

The status of ESMA's work on the CSDR Level 2 measures:

Measures

Consultations

Public

Hearings

Final Report delivered by ESMA to EC

Status of the Technical Standards

Date of application

CSD Requirements

20 Mar 2014 discussion paper

 

18 Dec 2014  consultation paper

14 Apr 2014

 

 

13 Jan 2015

28 Sep 2015

Endorsed without modification by the EC on 11 Nov 2016

Published in the OJ on 10 March 2017

 

 

30 March 2017 (except for settlement discipline-related obligations)

Internalised Settlement

10 March 2019

Settlement Discipline

20 Mar 2014  discussion paper

 

18 Dec 2014 consultation paper

 

29 Jun 2015  consultation paper on buy-in

14 Apr 2014

 

 

13 Jan 2015

1 Feb 2016

Under review by the EC Proposal: 2-year phase-in after publication in the OJ

ESMA Technical Advice on the level of penalties for settlement fails and on the substantial importance of a CSD for a host Member State

ESMA also received a mandate in a letter from the European Commission to provide technical advice under CSDR on the level of penalties for settlement fails, and on the substantial importance of a CSD for the functioning of the securities markets and the protection of the investors in a host Member State. This mandate was confirmed by a second letter dated 2 October 2014.

On 18 December 2014, ESMA published a consultation paper on the draft technical advice on the level of penalties for settlement fails and the substantial importance of a CSD for the functioning of the securities markets and the protection of the investors in a host Member State.

On 4 August 2015 ESMA delivered the technical advice and related impact assessment, to the European Commission.

On 11 November 2016, the EC adopted the Commission Delegated Act (along with its Annex) for the calculation of cash penalties for settlement fails and the operations of central securities depositories in host Member States without modification.

EBA Draft Technical Standards

On 16 December 2015, EBA delivered to the European Commission the final report on the draft RTS on CSD prudential requirements with the related impact assessment.

On 11 November 2016, the EC endorsed the RTS (along with its Annex) on prudential requirements for CSDs and designated credit institutions offering banking-type ancillary services without modification.

Link to the EBA website.

 

Level 3 measures – Supervisory convergence by ESMA

In order to contribute to the objective of ensuring supervisory convergence, and a level playing field with regard to the implementation of CSDR and of the related Level 2 measures, ESMA might issue Guidelines, recommendations, opinions and questions and answers (Q&As).

 

CSDR Guidelines

On 18 December 2014, ESMA published a consultation paper on draft guidelines on the access to the trading feeds of CCPs or trading venues by a CSD. The final report including the guidelines has been published on 23 March 2017. The guidelines will enter into force two months after the publication of their translations into all official languages of the EU on ESMA website.

On 31 May 2016, ESMA published a consultation paper on draft guidelines on CSD participants default rules and procedures. The final report including the guidelines has been published on 23 March 2017. The guidelines will enter into force two months after the publication of their translations into all official languages of the EU on ESMA website.

On 1 June 2017, ESMA published two sets of guidelines on the process for the collection, processing and aggregation of the data and information necessary for the calculation of the indicators to determine:

Both guidelines are accompanied by reporting templates in order to facilitate the reporting of data by CSDs to the competent authorities, and subsequently by the competent authorities to ESMA.

CSDR substantial importance indicators - template

esma70-708036281-73_csdr_substantial_importance_indicators_templates.xlsx

CSDR relevant currencies indicators - template

esma70-708036281-72_csdr_relevant_currencies_indicators_templates.xls

On 11 July 2017, ESMA published guidelines regarding the cooperation between authorities under CSDR. The purpose of the guidelines is to ensure consistent, efficient and effective supervisory practices within the EU in respect of cooperation arrangements between supervisory authorities for:

  • the consultation of authorities involved in the procedure for authorising central securities depositories (CSD) under the CSDR; and
  • the communication between the home and host authorities in relation to a CSD wishing to provide cross-border services.

CSDR Q&As

ESMA publishes and periodically updates Q&As on the CSDR.

Additional questions relating to the implementation of CSDR should be sent to ESMA following the procedure described here, using ESMA Q&A tool.

 

Related information

List of competent authorities responsible for the authorisation and supervision of CSDs

Pursuant to Article 11(1) of CSDR, each Member State shall designate the competent authority responsible for carrying out the duties under CSDR for the authorisation and supervision of CSDs established in its territory and shall inform ESMA thereof.

Updates to this list should be sent to CSDR.Notifications@esma.europa.eu using this template:

Template - CSDR Competent Authorities

List of key relevant provisions of the corporate or similar law of Member States

In accordance with Article 49(1) of CSDR, Member States shall communicate to ESMA a list of the key relevant provisions of their corporate or similar law , under which securities are constituted.

Updates to this list should be sent to CSDR.Notifications@esma.europa.eu using this template:

Template - Key Provisions of Corporate Law

Other notifications to be made by competent authorities to ESMA under CSDR:

  • Entities operating as CSDs (Article 69 of CSDR)
  • Entities providing banking-type ancillary services according to national law requirements (Article 58(3) of CSDR)
  • Securities settlement systems operated by national central banks (Article 21(2) of CSDR)
  • National sanctions (Article 61 of CSDR)

Notifications should be sent to CSDR.Notifications@esma.europa.eu.

 

Recognition of third-country (non-EU) CSDs by ESMA

Third-country CSDs need to be recognised by ESMA to offer services to EU participants and issuers, fulfilling certain requirements. Main applicable provisions are Article 25 of CSDR, Article 46 of the RTS on CSD Requirements and Annex 1 thereto. Information requests in this regard may be sent in English to ESMA at CSDR.Notifications@esma.europa.eu.

Equivalence decision by the EC. Prior to recognition, the EC must adopt an implementing act determining, amongst other issues, that the legal and supervisory arrangements of the relevant third country imposes legally binding requirements which are equivalent to those contained in CSDR.

Cooperation arrangements between ESMA and third-country authorities. Some cooperation arrangements must also be in place between ESMA and the relevant third-country authorities whose legal and supervisory frameworks have been recognised as equivalent.

ESMA will not actively supervise third-country CSDs, but following recognition defers to the third-country CSD’s home supervisor to undertake the day-to-day supervision of that CSD.

Settlement Finality Directive (SFD)

The Settlement Finality Directive (Directive No 98/26/EC or SFD) aims at reducing the systemic risk associated with participation in payment and securities settlement systems, and in particular the risk linked to the insolvency of a participant in such a system.

The SFD applies to payment and securities settlement systems duly notified as well as any participant in such a system, and to collateral security provided in connection with the participation in a system, or operations of the central banks of the Member States in their functions as central banks.

 

Related information

List of designated payment and securities settlement systems

Pursuant to Article 10(1) of the SFD, in order for payment and securities settlement systems to be included in the scope of the SFD, Member States shall notify the relevant systems and system operators to ESMA. Updates to this list should be addressed to SFD_insolvency@esma.europa.eu using this template:

Template - Designated payment and securities settlement systems

 

List of authorities designated to notify opening of insolvency proceedings

Member States shall also inform ESMA of the authorities chosen for receiving immediate notification from the relevant judicial or administrative authority when insolvency proceedings are opened in accordance with the SFD.

Updates to this list should be sent to SFD_insolvency@esma.europa.eu using this template:

Template - Designated authority to notify opening of insolvency proceedings

 

Notifications by Member States regarding the opening of insolvency proceedings

Under Article 6(3) of the SFD, when insolvency proceedings are opened against a system operator or a participant, the Member State shall inform the other Member States, ESMA and the ESRB.

Notifications to ESMA should be sent to SFD_insolvency@esma.europa.eu.

TARGET2-Securities (T2S)

T2S is the European platform for securities settlement in central bank money.

For additional information on T2S, please see the ECB website.

ESMA’s role

In its role of coordinator of competent authorities for the supervision of CSDs, ESMA cooperates with the Eurosystem, in which the ECB having primary responsibility vis-à-vis T2S, leads and coordinates the oversight activities related to T2S, overseers of CSDs participating in T2S, central banks of issue for currencies settled in T2S, competent authorities for the supervision of those CSDs which have signed the T2S Framework Agreement.