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The European Commission adopted a package of six legislative acts to implement specific provisions of the Central Securities Depositories Regulation (CSDR), an important piece of legislation introduced in the wake of the financial crisis to enhance the safety and soundness of the financial system.
Together with the Regulation on over-the-counter derivatives, central counterparties and trade repositories (EMIR) and the Markets in Financial Instruments Directive (MiFID), this framework sets out a series of rules for systemically important securities infrastructures (trading venues, central counterparties, trade repositories and central securities depositories).
In particular, the CSDR regulates the timing and conduct of securities settlement, i.e. the process that happens after securities are traded, and ensures that the securities are delivered to the buyer and the cash is sent to the seller of securities. It also regulates central securities depositories, the specialist financial organisations that perform securities settlement, by establishing a common authorisation, supervision and regulatory framework for them.
The package lays down specific requirements to ensure that central securities depositories are prudentially sound, have high-quality risk management and corporate governance standards and meet appropriate capital requirements. It also clarifies the framework under which supervisors should cooperate and exchange information. The package also sets penalties for settlement failures as well as measures to ensure the transparency of internalised settlements which take place outside central securities depositories. Today's package consists of a Commission Delegated Act, three Regulatory Technical Standards (RTS) and two Implementing Technical Standards (ITS), which should enable central securities depositories to provide their services throughout the EU in a safe and efficient manner.