ESMA looks for guidance on CSD technical standards
The European Commission will accept or reject ESMA’s draft technical standards for CSDs
The European Securities Market Authority has published a discussion paper asking for public feedback on the technical standards that should be used for Central Securities Depositaries, including registration, settlement discipline, confirmation rules, acceptance or rejection of terms, as well as access to CSDs by other CSDs and market participants. CSDs play a key role in the infrastructure of capital markets, where they provide a centre where securities can be held and ownership transferred easily between counterparties. CSDs have historically been associated with national stock exchanges, but in recent years international CSDs such as Clearstream and Euroclear have emerged, offering post-trade and collateral management services across national borders. ESMA is responsible for implementing and enforcing the rules for investment and trading firms across the 28 member states of the European Union. The regulator has a mandate to draft technical standards on more than 30 points under the Central Securities Depository Regulation introduced by the European Commission. According to the European Central Bank, the CSDR will “strongly improve the legal environment in which CSDs will operate, fostering harmonisation and improving the competitive environment for CSDs.” For example, the draft CSDR proposal includes harmonisation provisions regarding the single settlement period, a single settlement discipline regime, the legal issues on CSDs’ outsourcing of settlement services to public entities, and market access rules and free choice regarding the place of issuance of securities. Once the discussion paper has received all responses, ESMA will finalise its proposed draft technical standards, which will then be included in a consultation paper. A full public consultation will then follow, although the date for this remains uncertain since it depends on the date of publication of the CSDR in the Official Journal and the final deadline for ESMA to deliver the draft RTS and ITS to the EC. Once the consultation has been completed, the draft technical standards will be submitted to the European Commission. A public hearing will take place on 14 April at ESMA in Paris, from 13.30 to 17.00. The closing date for comments is 22 May. The ESMA discussion paper can be seen here.
