The European Commission Services has launched a consultation on central securities depositories in the European Union with the aim of developing a set of standard regulations for CSDs. The commission is accepting feedback on the initiative until March 1, and plans to have a set of standards for CSDs ready by June.
CSDs now assume a critical role to guarantee a safe and efficient transfer of securities that exist to a large extent only in book entry form, the European Commission says, and are a central point of reference for an entire market. Thus, it adds, CSDs require appropriate regulatory framework.
The commission says the CSD initiative is an important part of its agenda to enhance the safety and soundness of the financial system. Together with the proposal for a regulation on OTC derivatives, central counterparties and trade repositories (EMIR) adopted by the European Commission on September 15, 2010, and the Markets in Financial Instruments Directive (MiFID, currently under review), the commission says the CSD initiative will form a framework in which systemically important securities infrastructures (trading venues, central counterparties, trade repositories and central securities depositories) are subject to common rules on a European level.
The Financial Stability Board in October called for updated standards for market infrastructures and asked for the revision and enhancement of existing standards.
Due to an increase in cross border investment over the last years, the European Commission considers that the time has come to install a common and binding regulatory framework for CSDs on a European level, the commission said in a statement.
Oversight of CSDs was key to the tenets proposed by the Giovannini Group in November 2001 and in the Code of Conduct for Clearing and Settlement agreed upon in November 2006.
More information about the initiative may be found at the European Commissions Web site.