The European Commission wants to harmonise the rules for central securities depositaries (CSDs) and has published a proposal for a regulation to that effect. The regulation amends the Finality Directive (98/28/EC). The key provisions are:
- Securities transactions must be settled within 2 days after the transaction date.
- Market participants that do not deliver securities on the agreed settlement date are subject to penalties and will have to buy these securities on the market and deliver them to their counterparties.
- Issuing institutions and investors will have to hold virtually all securities in book-entry form, and record them in a CSD in order to trade the securities on regulated markets.
- CSDs will have to comply with strict organisational and prudential requirements aimed at sustainability and protection of their users.
- Licensed CSDs will receive a passport enabling them to offer their services in other member states.
- Users will be able to choose from all 30 CSDs in Europe.
- CSDs in the EU, wherever they are located, will have access to all other CSDs.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
