EUROPE: ESMA Updates Q&A’s for Implementing CSDR

Friday September 28 2018

The European Securities and Markets Authority (ESMA) has recently updated its Questions and Answers (Q&As) regarding the implementation of the Central Securities Depository Regulation (CSDR). The updated Q&A provides answers to questions regarding practical issues on the implementation of the new CSDR regime. The latest batch of CSDR Q&As covers the following topics:

• Book-entry form requirements: the Q&A specifies the scope and timing of application of the requirement in Article 3(2) of CSDR to dematerialise certain transferable securities when they are transferred as collateral;
• Organisational requirements: the Q&A concerns the scope of the services and activities of a CSD covered by the requirements set out in Article 30 of CSDR on Outsourcing;
• Settlement Discipline: ESMA publishes the first set of Q&As relating to settlement discipline issues following the publication of Commission Delegated Regulation (EU) 2018/1229 on settlement discipline. The updated Q&A covers four issues in this area:
  • the frequency of the update of the exchange rate
  • the scope of the joint management of the penalty mechanism for CSDs
  • clarification that the use of a common framework or rulebook is not sufficient to comply with the requirement for joint management of the penalty mechanism by CSDs using a common settlement infrastructure;
  • the possibility for CSDs to perform bilateral netting of cash penalties

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.

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