The European Securities and Markets Authority (ESMA) has released updated guidance on the implementation of the Central Securities Depository Regulation (CSDR) for national regulators.
The first update of ESMA’s CSDR offers direction on the introduction of additional national requirements, as well as organisational and record keeping requirements.
Other targeted areas include the protection of securities of participants and those of their clients, and the provision of banking-type ancillary services.
Having received approval in 2014, CSDR is designed to harmonise the timing and conduct of settlements across Europe as well as provide a set of common requirements for CSDs operating securities settlement systems.
Specific questions in the guidance include whether member states can set additional requirements for CSDs to those set out in CSDR under national legislation.
ESMA’s response to this is that member states should not set additional requirements in respect of the aspects harmonised by the CSDR unless otherwise provided by the CSDR itself.
It does specify that there may be cases in which it is not clear whether a certain aspect has been harmonised which may warrant a case-by-case analysis.
In addition the new guidance states that all clients, both new and existing, should be offered the choice between omnibus client segregation and individual clients segregation.
According to the guidance clients should also be informed of the costs and risks associated with each option.
Industry participants previously expressed concern that asset segregation rules under CSDR could lead to market confusion due to inconsistencies with other regulations including MiFID, EMIR, AIFMD and UCITS V.