The European Union has vowed to make securities settlement “more efficient” by updating the Central Securities Depositories Regulation (CSDR).
This Tuesday the EU member states settled their negotiating position on a proposed update of the rules including simplifying requirements and clarifying authorisation processes.
Zbyněk Stanjura, the Czech minister of finance, said: “Capital markets are the backbone of our economies. A real Capital Markets Union depends on safe and efficient settlement of transactions in securities. The Council wants to simplify the rules underpinning these settlements while preserving financial stability. This will make central securities depositories more efficient and competitive.”
Stanjura says CSDs play a “crucial role” in their registration and safekeeping, as well as, following a trade in securities, in ensuring its proper settlement.
According to European Commission figures, transactions settled by EU central securities depositories in 2019 reached around €1,120 trillion.
Yet because passporting requirements are burdensome, Stanjura says, they hinder cross-border settlement, “thus minimising competition and reducing choice”. Passporting allows a financial firm to operate across the EU with one single licence. This regulation aims to increase the provision of cross-border settlement by CSDs.
If the proposed new rules are adopted, they will clarify that the home member state – where the CSD is authorised – will decide on the CSD’s application to provide cross-border services.
Where the CSD’s activities in at least two other member states are considered of “substantial importance for the functioning of the securities markets and the protection of investors”, a college of supervisors will be set up.
This will facilitate the exchange of information between supervisors and ease the cooperation between member state authorities. The timeframe of the passporting process will also be clarified and shortened, in order to facilitate the provision of a broader scope of services across the member states.
©Markets Media Europe 2022
