The European Securities and Markets Authority (ESMA) has issued final reports on two sets of guidelines regarding the implementation of the Central Securities Depositary Regulation (CSDR). The CSDR harmonises the settlement of securities by providing a set of common requirements for central securities depositories (CSDs) operating securities settlement systems.
SMA’s guidelines, which complement the CSDR and its implementing measures, deal with:
- Access by a CSD to the transaction feeds of a central counterparty (CCP) or of a trading venue; and
- CSD participant default rules and procedures.
CSDs’ access to CCPs or trading venues’ transaction feeds
ESMA guidelines on CSDs’ access to CCPs or trading venues’ transaction feeds specify the conditions under which access could be refused, especially as this type of access between infrastructures is not covered under Markets in Financial Instruments Regulation (MIFIR).
The guidelines specify the legal, financial and operational risks to be taken into account by a CCP or a trading venue when carrying out a comprehensive risk assessment following a CSD’s request for access to their trading feeds.
Rules and procedures for CSD participant default
The CSDR provides that a CSD should define rules and procedures in order to address the insolvency of one or several of its participants. ESMA considers that there is a need to specify further how such rules and procedures should be defined. The guidelines include recommendations on:
- how a CSD should define its default rules and procedures, acknowledge a participant’s default;
- which type of actions a CSD may take in case of default, as well as how the CSD should implement them;
- how the CSD should communicate about the implementation of such rules and procedures; and
- how a CSD should test and periodically review its default rules and procedures.
Next steps – translation and entry into force
The guidelines are currently being translated into all official languages of the European Union (EU). They will enter into force two months after the publication of their translations into all official languages of the EU on ESMA website. National competent authorities will have two months after the publication of these translations to inform ESMA whether or not they intend to comply with the guidelines.