Treasury is consulting on changes it needs to make to UK law to ensure the Central Securities Depository Regulation (CSDR) can operate properly. Although CSDR is a Regulation, Treasury needs to amend UK law (using two separate instruments to take account of different legislative processes) to ensure that provisions of domestic law overlapping with CSDR are disapplied, powers for enforcement are provided for, and changes are made to acknowledge the requirements of CSDR. Treasury will not consult on the CSDR Article 3(1) requirements relating to the book-entry form recording of transferable securities admitted to trading. DBIS will consult on how to exercise the UK’s options for dematerialisation and whether it is appropriate to advance the UK timetable so it meets requirements ahead of the CSDR deadline. Among the changes Treasury is consulting on are:

  • competent authorities: Treasury proposes FCA should be designated as the competent authority for supervising investment firms for CSDR purposes, to the extent that investment firms have functions under CSDR, and BoE be designated as the competent authority for enforcing the relevant requirements of CSDR related to settlement internalisers, and central counterparties (CCPs);
  • powers for BoE in relation to discipline, investigation and enforcement actions against systematic internalises in relation to CSDR requirements;
  • creating a new recognised body under the Financial Services and Markets Act 2000, a recognised central securities depository (RCSD). The consultation sets out the process for recognition and seeks views on which activities an RCSD should be exempt in relation to;
  • changes to remove requirements on existing recognised bodies and requirements relating to dematerialised securities where these are covered by the CSDR and other consequential changes;
  • how CSDs should seek approval for regulated activities for which they are not exempt;
  • enforcement powers and sanctions, including in relation to CSDs from elsewhere in the European Economic Area (EEA);
  • change of control of CSDs;
  • the requirement to ensure access;
  • reporting of infringements;
  • amendments to company law, in particular whether protections available to Recognised Clearing Houses under the Companies Act 1989 should also be available to CSDs;
  • freedom to issue; and
  • transitional provisions.

Treasury asks for comment by 4 February 2016. (Source: Treasury Consults on Implementing CSDR)