The new rules on the central securities depositories adopted with 56 votes to 3 introduce number of measures including settlement regime, the recognition regime for CSDs established in a third-country and closer monitoring to target settlement fails, to encourage timely settlement, when securities transactions are being completed.

Measures to prevent settlement fails

In order to address settlement fails, when a party of a transaction does not deliver a security or funds on time MEPs proposed to apply deterrent and proportionate cash penalties. They agreed that mandatory buy-in rules (when non-delivered securities are purchased in the market and made available for settlement) should apply only as a last resort measure. MEPs also want to exclude transactions that failed for reasons not attributable to the participants, transactions that do not involve two trading parties, or when it could lead to detrimental consequences for the market. The Commission should have the power to suspend mandatory buy-ins where necessary.

Minimising administrative burden and third-country CSDs

MEPs agreed to minimising cross-border obstacles and administrative burden for CSDs so that they can operate across the EU with one single licence.

They also want the recognition regime for CSDs established in a third-country expanded to cover securities settlement services, which should contribute to a more level playing field between CSDs established in a member state and CSDs established in a third-country and mitigate the risks.

Additionally, MEPs voted to substantially simplify the Commission's proposal on the establishment of colleges of supervisors and proposed a stronger role for the European Securities and Markets Authority (ESMA) in those colleges. Colleges should be established whenever a CSD is of substantial importance in more than one host Member State.

Banking-type ancillary services

CSDs would be able access banking services so they could offer settlement services for a broader range of currencies and obtain financing from cross-border investors. In order to ensure a level playing field among CSDs, with and without authorisation to provide banking-type ancillary services, CSDs non-authorised as banks should be able to offer a sufficient amount of arrange foreign currency settlement through a bank account. However the principle of ‘same activity, same risk, same rules’ would have to be respected and the European Banking Authority (EBA) should be tasked with drafting risk mitigating requirements.