Tuesday May 31 2016

News Source: Fund Regulation

Focus: Other

Type: General

Country: European Union




The European Securities and Markets Authority (ESMA) has launched a consultation on ‘Guidelines on participant default rules and procedures under CSDR’.

CSDR is Regulation (EU) No 909/2014 on improving securities settlement in the European Union and on central securities depositories.

The purpose of the proposed ESMA Guidelines is to specify the steps a central securities depository (CSD) should set up in its rules and follow in case insolvency proceedings are opened with respect to one or more of its participants. The proposed Guidelines are based on the 2012 CPMI-IOSCO Principles for financial markets infrastructures (PFMIs).

The mandate for the Guidelines under CSDR is limited to the subject-matter and scope of Article 41 of CSDR, which relates to rules and procedures for the management of the default of one or more of its participants.

ESMA is seeking input and responses from stakeholders, including CSDs and supervisory authorities, in order to finalise the Guidelines before CSDs start applying for authorisation.

The consultation closes on 30 June 2016.

Background

Article 41 of CSDR on participant default rules and procedures provides that:

  1. For each securities settlement system it operates, a CSD shall have effective and clearly defined rules and procedures to manage the default of one or more of its participants ensuring that the CSD can take timely action to contain losses and liquidity pressures and continue to meet its obligations.
  2. A CSD shall make its default rules and relevant procedures available to the public.
  3. A CSD shall undertake with its participants and other relevant stakeholders periodic testing and review of its default procedures to ensure that they are practical and effective.

Please click on the link above for further details.