18 December 2013

Lithuanian Presidency reaches political agreement on the Regulation on central securities depositories

The proposed Regulation will complete the regulatory framework for securities market infrastructures by increasing safety in the financial system, opening the market for CSD services and improving the efficiency of securities settlement.

Both the agreement among the Member States in the Permanent Representatives Committee (Coreper II) and between the Council and the European Parliament have been reached during the Lithuanian Presidency.

The Regulation aims to eliminate differences between domestic and cross-border securities settlements, enhance the safety and efficiency of the cross-border settlement and facilitate easier access to the depositories for the issuers, investors and depositories themselves.

The Regulation also ensures a level playing field across the EU which should increase the overall market transparency and facilitate the movement of capital. It creates a common authorisation, supervision and regulatory framework for CSDs and improves the securities settlement process by introducing the dematerialisation requirement, harmonising the settlement period, and determining the settlement discipline measures.

Press release

Commissioner Barnier said: "I welcome the provisional agreement reached this morning between the European Parliament and the EU Member States on new rules on securities settlement and central securities depositaries (CSDs) in the EU. Settlement is a very important process for securities markets and for the financing of our economy. The numbers speak for themselves: in the European Union, transactions worth over one quadrillion euro were settled by CSDs in last two years. This agreement will ensure that settlement is carried out in a safer and more efficient manner...

I hope that the remaining technical work can be finalised as soon as possible under the Greek Presidency so that these new rules can be formally adopted by the co-legislators."

Key elements of the agreement

These new rules will introduce safeguards to address the risks resulting from the provision of banking services ancillary to settlement such as:

• an additional capital surcharge for CSDs and banks providing these banking services to CSD users;
• cooperation of supervisors in authorising and supervising the provision of these banking services to CSD users.

On settlement discipline, it preserves the principle of a mandatory solution (buy-in) for settlement fails with a certain degree of flexibility tailored for the needs of SMEs and specific transactions such as repurchase agreements.

Full speech

© Lithuanian Presidency