Patrick Pearson, head of the European Commission’s financial markets infrastructure unit, told an industry conference in Brussels on Wednesday there had been a renewed focus on CSD-R by Ireland, which holds the European presidency until July.
The proposals are currently before the council of ministers in Brussels. The ECB is planning to introduce its own platform for securities settlement across Europe, known as Target2Securities (T2S), in 2015. If agreement can be reached by finance ministers in the council, the process will move to trialogue with the European Commission and Parliament. Although the legislation has yet to be finalised, European regulators are considering whether to have a set start date or stagger the process.
Some market infrastructure operators are looking to exploit the changing landscape. CSDs oversee the settlement of securities, the final part of the trade cycle where the transaction is confirmed as final and the security swapped for cash. The cumulative effect of legislation such as the US Dodd-Frank act, Basel III and the G20 requirements for mandatory central clearing of derivatives contracts, has left the financial services industry fearing a shortage of available collateral to back trades.
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