Also on 13 January 2011, the European Commission published a consultation on central securities depositories (“CSDs”) and the harmonisation of certain aspects of securities settlement in the EU.

The consultation explains that CSDs (i.e., institutions which hold accounts for securities, so that trades between securities holders can be effected by book entry) have become systemically important post-trading infrastructures. They perform services that allow the registration, safekeeping, settlement and efficient processing of securities transaction in the financial markets. As a result of this systemic importance, the Commission takes the position that there is now a need for a regulatory framework for CSDs.

Accordingly, in the consultation, the Commission seeks views on issues which include:

  • how CSDs should be defined and the scope of the CSD legislation;  
  • rules on authorisation and ongoing supervision of CSDs;  
  • rules on who can access CSDs and whether there should be interoperability between CSDs; and  
  • prudential standards for CSDs.  

The consultation also focuses on the harmonisation of the following aspects of securities settlement in the EU:  

  • settlement discipline, i.e., ensuring that a transaction settles on the intended settlement date;  
  • settlement periods, i.e., the time between the conclusion of a transaction and a settlement; and  
  • what sanctions should apply in the CSD and securities settlement environment.  

Comments are invited on the consultation until 1 March 2011. (The Commission will adopt a legislative proposal in June 2011.)