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Commissioner for Internal Market and Services, Michel Barnier, said: "I am committed to ensuring that all financial markets are properly regulated and supervised. Settlement is a crucial process for the securities markets and the financing of our economy, and as such its safety and efficiency needs to be ensured. The numbers speak for themselves: in the European Union, transactions worth over one quadrillion euro were settled by CSDs in the last two years. Today's proposal will introduce, in line with our international partners, common standards across the Union for securities settlement and CSDs to ensure a true single market for the services provided by national CSDs."
The proposal contains the following key elements:
The proposal now passes to the European Parliament and the Council (Member States) for negotiation and adoption.
Background
Settlement is an important process, which ensures the exchange of securities against cash following a securities transaction (for instance an acquisition or a sale of securities). CSDs are systemically important institutions for the financial markets because they operate the infrastructures (so-called securities settlement systems) that enable the settlement of virtually all securities transactions. CSDs also track how many securities have been issued, by whom, and each change in the holding of such securities. Finally, they play a crucial role for the financing of the economy, as almost all the collateral posted by banks to raise funds flows through securities settlement systems operated by CSDs.
However, CSDs are still regulated only at national level, and cross-border settlement is less safe (failure for cross-border transactions can reach up to 10 per cent in certain markets) and efficient than domestic settlement: costs are up to four times higher.