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European Central Securities Depositories Association

ECSDA

ECSDA represents 39 national and international central securities depositories (CSDs) across 35 European countries.

Lobbying Activity

Response to Central securities depositories – review of EU rules

25 May 2022

ECSDA welcomes the review of the CSDR. We thank the European Commission for the opportunity to provide our contribution on behalf of our Members. Please find enclosed the ECSDA Response to the Commission Call for Feedback on the CSDR REFIT.
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Response to Alternative Investment Fund Managers – review of EU rules

24 Mar 2022

ECSDA Feedback to Commission on AIFMD Review In December 2021, the European Commission published a proposal to review AIMF, UCITS and ELTIF legislative acts as part of the Capital Markets Union (CMU) Package. The proposed amendment on the regulatory treatment of custodians of AIF and UCITS assets integrates an ESMA opinion from 2017 which carves out the Investor Central Securities Depository (CSD) from the Securities Settlement Services exemption. ECSDA understands from the impact assessment, as well the explanatory note, that these amendments are deemed necessary based on (i) lack of information flows from CSDs (acting as Investor CSDs) and fund depositories and (ii) the need to keep the level playing field. In this feedback, ECSDA aims to briefly address these justifications. ECSDA would also like to express its concerns around the need for consistency between the mentioned legislative acts with CSD Regulation (Regulation (EU) 909/2014, CSDR). Information Flows The current CSDR framework already establishes dedicated and harmonised requirements relating to reconciliation measures and information flows, both between CSDs and their participants (including from the funds industry) and between CSDs. This framework covers CSD links between Issuer and Investor CSDs, notably under Articles 48 and 86 CSDR. Information flows are further supplemented in the terms and conditions adopted by each CSD and made public to investors. In addition, CSDR requires the publication of a description of the rules related to asset segregation as well as related risk and costs under Article 38(6) CSDR. Level Playing Field We believe that it is imperative to account for the differences between CSDs and other third parties to which fund depositary custody functions are delegated: 1. CSDs are Financial Market Infrastructures (FMIs) subject to prudential requirements ensuring a low-risk profile and are not meant to take the same risks as other fund custody delegates. 2. CSDs do not perform custody functions on a stand-alone basis but in tight connection with their settlement function in the context of links, governed by the dedicated CSDR framework. 3. CSDs are subject to their prime and dedicated framework, i.e. the CSDR. Should other legislation aim to regulate CSDs – as is the case of the current AIFMD proposal – this should be done in harmony with and respecting the provisions of CSDR. The primacy of CSDR is key to maintaining solid EU infrastructures and respecting the integrity of CSDR, in line with international principles (CPMI-IOSCO Principles for FMIs) and supporting the goals of the CMU. The amendments of mentioned acts miss the fact that the CSD links (issuer- and investor-CSD relations) are covered by CSDR already and that results in a double regulation. ECSDA remains available to further detail our response to the call for feedback and welcome the opportunity to share a possible way forward that would help ensure consistency between CSDR and AIFMD.
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Response to Public consultation on minimum requirements in the transmission of information for the exercise of shareholders rights

9 May 2018

PLEASE READ THE FULL RESPONSE ATTACHED 1. ECSDA appreciates the draft regulation to be broadly supportive of the market standards. We would ask to make an explicit reference to the CSD Regulation (CSDR, (EU) 909/2014). 2. We encourage the Commission to collaborate with other authorities globally to ensure further global harmonisation. As the Shareholder Rights Directive (the Directive) articles 3a, 3b and 3c have extra territorial effect (resulting from Article 3e), we use the opportunity to ask the EU Commission to explain their expectations of the implementation of cross-border processes involving third country intermediaries.It is also unclear (a) how the regulation applies to the dually-listed securities (within and out-side of the EU), and (b) a holding of a depository receipt (DR) shall be subject to the same processes. 3. European CSDs are fully in support of the Straight Through Processing (STP) and machine-readability. Such tools will significantly reduce operational complexities and operational risks. However ensuring full automation will require additional time. CSDs would encourage the Commission to positively respond to the market request for a longer implementation period. 4. We appreciate the alignment of flows for transmission of the shareholder identification, meeting notice and exercise of rights with those used in most European markets. 5. CSDs would ask the Commission to consider the benefits of harmonising the record date across the EU. Definitions (1) For the sake of clarity and coherence of the EU legislative acquis, European CSDs suggest aligning the definition of the 'issuer ' with the existent EU legislation using the concept (such as the Prospectus or the Market Abuse Regulations). CSDs also propose to refer to the MiFID definition of a regulated market. (2) and (9) European CSDs propose to use the term ‘CSD’ which is defined in the Regulation 909/2014 instead of ‘issuer CSD’. The latter CSD role is already specified in the term ‘first intermediary’. A separate definition of an ‘issuer CSD’ is hence redundant. (3) As the notion of the 'corporate event' is introduced in the implementing regulation, it is not clear to us how it fits and interacts with the concepts used in the Directive (see art 3b, 1), which uses different terms. Articles Art 2 (2) If Intermediaries are required to transmit the information in the language of international finance and the issuer language (i.e. two different languages), then the information should be initially provided in the two languages, to avoid the risk of errors in translation by the intermediaries and multiplication of translation costs. Art 5 CSDs would appreciate more clarity on the flow of information back up the chain of intermediaries. Art 8 CSDs note that the co-ownership of shares could occur. we suggest transmitting before the record date only the changes in the end of day position and not the intraday movements. Art 9(2) CSDs suggest transmitting before the record date only the changes in the end of day position and not the intraday movements. Art 9 (4) Given the lack of clarity and the provision of intermediaries’ services across different global time zones, we kindly ask: (1) changing the notion of ‘same business day’ to read ‘next business day for the receiving intermediary’, (2) clarifying the information flow from the intermediaries to the issuer, and (3) allow the issuer to receive instructions on an aggregated basis (bulk instruction) or on a daily basis, if this is his preference. Article 9 (6) For the interest of all stakeholders, we would ask the Commission to clarify the exact calendar for the processes described, for all actors of the holding chain. Article 10 (1) We suggest specifying what means “shall ensure the security, integrity and authentication” by rather stating “shall implement appropriate technical and organisational measures aiming at ensuring” a level of security appropriate to the risk.
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