On behalf the European Banking Federation (EBF), the Association for Financial Markets in Europe (AFME), the International Securities Lending Association (ISLA), the Association of Global Custodians (AGC), the European Central Securities Depositories Association (ECSDA), the Securities Market Practice Group (SMPG), the European Savings and Retail Banking Group (ESBG), the Associazione Intermediari Mercati Finanziari (ASSOSIM), the Association française des Professionnels des Titres (AFTI) and the European Association of Co-operative Banks (EACB):
There is sufficient information in the public domain for us to be certain that as of 3 September not all SRD II operational processes will be effected in an SRD II manner and that many parties, who themselves have the technical ability to process in a compliant manner, will be forced to exchange information in a non-compliant manner because one or more of their clients, counterparties or service providers will not be able to issue or to accept fully SRD II-compliant messaging.
We believe that the critical drivers behind these cases of non-compliance are (i) differences in national transposition and national applicability of SRD II rules, and (ii) timing of national transpositions, so that market infrastructure entities and market participants have had insufficient time to build fully SRD II-compliant processes. The impacts of the differences in national transpositions, and of the timing of national transpositions, have been exacerbated by the effects of the COVID-19 pandemic. We believe that the effects of COVID-19 on the delivery date of major public and private sector infrastructure and IT projects are well-recognised, and we are not aware of any reasons as to why, uniquely, the delivery of the SRD II project would remain unaffected. We believe that the risks inherent in different national transpositions were well-known, and were articulated in a presentation on SRD II that was given in a meeting on 20 September 2018 of the Consultative Working Group of ESMA’s Post-Trading Standing Committee. It has, of course, been necessary to wait for the national transpositions in order to see if these risks would materialise.
The full industry associations’ letter is available at https://www.isla.co.uk/wp-content/uploads/2019/03/Joint_Associations_Response_Letter_SRDII_COVID-19.pdf