CSDR: Central Securities Depositories Regulation

Reference texts

• Level 1 regulation of 23 July 2014

• Level 2 acts (except Settlement Disciplines Regime) of 11 November 2016

• Level 2 acts (Settlement Disciplines Regime) of 25 May 2018 with a compliance date on 13 Sep 2020

Entry into force

17 September 2014

What is the CSD Regulation?

CSDR, following MIFID II/MIFIR (covering Trading Venues) and EMIR (focused on CCPs), addresses the CSD’s topic in Europe by giving the latter a regulatory framework in which they can exercise their function meanwhile requiring several measures to improve the settlement and to reinforce the investor protection.

What are the pillars of CSDR?

1. Infrastructure, by laying down a unified and harmonised framework for all European CSDs

• Defining a CSD, its role and its responsibilities
• Establishing a set of common requirements for CSDs operating securities settlement systems
• Freeing the choice of an issuer CSD for issuers
• Requiring CSDs to have a recovery plan

2. Strengthening the Investor Protection

• Dematerialisation or immobilisation of securities, book-entry form for transferable securities
• Segregation of investors’ assets (read the terms and conditions)

3.Improvement of the settlement

• Reduction of the settlement cycle
• Reinforcement of the obligation to settle transactions in transferable securities, money-market instruments, units in collective investment undertakings or emission allowances on the date agreed between the parties (also called: ISD for Intended Settlement Date)
• Imposition of a settlement disciplines regime: set of several measures aiming to prevent and address settlement fails and thus have a transaction be fully settled on ISD

4. Transparency

• Setting obligations of reporting to national competent authorities and ESMA
• Identification of the issuing entities via the use of LEI (Legal Entity Identifier)