CSDR: internalised settlement reporting

The next major step on the CSDR timeline is approaching – make sure your firm is ready
by Bethan Rees

The Central Securities Depositories Regulation (CSDR) came into force in September 2014 and is one of the key regulations adopted in the aftermath of the 2008 financial crisis, in addition to the European Market Infrastructure Regulation (EMIR) and the Markets in Financial Instruments Directive II (MiFID II).

According to the FCA, a central securities depository (CSD) is “an institution that holds financial instruments, including equities, bonds, money market instruments and mutual funds” and “it allows ownership of those instruments to be transferred in electronic form through updating electronic records which are often known as ‘book-entry records’.” The UK’s CSD is Euroclear UK and Ireland (EUI). The Bank of England is the competent authority for the authorisation, supervision and policy for EUI.  

Despite the political uncertainty surrounding the UK’s exit from the EU at the time of writing (8 April 2019), under the European Union (Withdrawal) Act 2018, the existing EU law will be converted into UK domestic law when the UK leaves the EU. 

The next step in the CSDR implementation timeline is approaching. On 12 July 2019, the first Internalised Settlement report is due to the national competent authority. According to CSDR, the reports on internalised settlement should “provide detailed information on the aggregated volume and value of settlement instructions settled by settlement internalisers outside securities settlement systems”. 

The time period the first report should cover is from April 2019 until the end of June 2019. According to a letter from the Bank of England, an institution is considered to be a settlement internaliser if it settles transfer orders on behalf of clients on its own account, rather than through a CSD. This will apply to firms that have the regulatory permissions to arrange the safeguarding and administration of assets, plus those firms that have permission for the safeguarding and administration of assets (without arranging) – for example, some investment firms and credit institutions.

For more information about what should be included in the internalised settlement report, refer to the Regulation EU 2017/391 and the European Securities and Markets Authority’s final guidelines. For more information on the regulation in general, see The Review’s interview with Michelle McNamara and Jon Butcher, who are both involved in Pershing EMEA’s CSDR programme.
Seen a blog, news story or discussion online that you think might interest CISI members? Email bethan.rees@wardour.co.uk.
Published: 08 Apr 2019
  • Compliance, Regulation & Risk
  • The Review
  • Regulation
  • Mifid II
  • Euroclear
  • CSDR
  • central securities depository

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