Meeting 1 7 Recent EU Regulatory Recent EU Regulatory Developments Alex Merrim an Head of Market Policy SI X Securities Services Updates extern 16 / 08. December 2010
OUTLI NE OUTLI NE • Securities Services´ Response to CSD Securities Services Response to CSD Consultation: Key Features and W ay Forw ard • Other Current I nitiatives in the post-trading space ( EMI R, Bank exposures to CCPs) • The EU Post-Trading Agenda Mark 2 • ESMA Update Updates extern 15 / ROL / 09. September 2010
KEY ASPECTS OF RESPONSE TO THE CSD CONSULTATI ON KEY ASPECTS OF RESPONSE TO THE CSD CONSULTATI ON ( 1 ) DEFI NI TI ONS • Definition of a CSD • Core Services: Notary, Safekeeping, Settlement • Qualification: 2 out of 3 • Qualification: 2 out of 3 • Ancillary Services: Must be broad, additions • Designation under the SFD Designation under the SFD Updates extern 15 / ROL / 09. September 2010
KEY ASPECTS OF RESPONSE TO THE CSD CONSULTATI ON KEY ASPECTS OF RESPONSE TO THE CSD CONSULTATI ON ( 2 ) AUTHORI SATI ON & SUPERVI SI ON • Treatment of Third Country CSDs • Designation under SFD • Flexibility in capital adequacy regime: CRD for banking license banking license • Full Passporting regime Updates extern 15 / ROL / 09. September 2010
KEY ASPECTS OF RESPONSE TO THE CSD CONSULTATI ON KEY ASPECTS OF RESPONSE TO THE CSD CONSULTATI ON ( 3 ) ACCESS & I NTER-OPERABI LI TY • Access to CSD, subject to Conditions • Removal of Barrier 9: Yes but • Removal of Barrier 9: Yes, but… … • Splitting of Issues • CSD to CSD access: over-engineered; keep links g ; p • Access from Trading Venues, CCPs; to trading feeds: YES Updates extern 15 / ROL / 09. September 2010
KEY ASPECTS OF RESPONSE TO THE CSD CONSULTATI ON KEY ASPECTS OF RESPONSE TO THE CSD CONSULTATI ON ( 4 ) PRUDENTI AL ASPECTS • NO to mandatory securities lending and borrowing function in CSDs • Passing through of securities in Book Entry form • P i th h f iti i B k E t f • Grandfathering of Certificated Securities • Continued use of Commercial Bank Money • Continued use of Commercial Bank Money • Segregation of Assets • Yes to outsourcing, and to exemptions g, p • Collaterisation of Intra-day Credit • Code has not worked Updates extern 15 / ROL / 09. September 2010
KEY ASPECTS OF RESPONSE TO THE CSD CONSULTATI ON KEY ASPECTS OF RESPONSE TO THE CSD CONSULTATI ON ( 5 ) CERTAI N HARMONI SATI ON ASPECTS • Settlement Discipline itself should not be harmonised • Remove Public Barriers (e g Tax) • Remove Public Barriers (e.g. Tax) • Common Definition of Settlement Fails • Harmonisation of Settlement Cycles: YES to move y to T+ 2, but need for CBA and business case • Timing: December 2013 (HSCWG R Recommendation) d ti ) • NO to Harmonised Financial Sanctions Updates extern 15 / ROL / 09. September 2010
LEGI SLATI ON ON CSDS NEXT STEPS LEGI SLATI ON ON CSDS: NEXT STEPS • Consultation closed on 1 March • • Commission Meetings Commission Meetings with Member States on 15 March and 8 ith Membe States on 15 Ma ch and 8 April • May be some further Consultation with ECSDA • Legislative Proposal Expected June/ July • Hopefully, the Legislation is not “controversial” • Will Need the Support of Stakeholders to achieve a good pp g outcome Updates extern 15 / ROL / 09. September 2010
OTHER CURRENT I NI TI ATI VES I N POST TRADI NG OTHER CURRENT I NI TI ATI VES I N POST-TRADI NG • EMIR: Langan (EP) Report Will inter-operability for cash and OTC clearing survive? Also longer list of exemptions • BCBS & EC Consultations on Bank exposures to CCPs 2% risk weight proposed: scope unclear Punitive 1450% Risk weight for Default Fund contributions • EC CP EC CP on Crisis Management Arrangements for Banks C i i M t A t f B k Proposals on Close-out Netting (48 hour Rule) Safeguarding provisions in SFD and FCD • • On the Horizon: CPSS-IOSCO Revision of Infrastructure O th H i CPSS IOSCO R i i f I f t t Standards Core Principles for Systemically important payment systems Recommendations for SSSs and CCPs Recommendations for SSSs and CCPs Updates extern 15 / ROL / 09. September 2010
Th EU P The EU Post-Trading Agenda Mark 2 t T di A d M k 2 Subject Purpose Affecting Netting Netting Tidying up conflicting EU Measures Tidying up conflicting EU Measures CCPs CCPs Crisis Management Dealing with a failing market Infrastructure CCPs, CSDs Resolution R l ti Living Wills Regime Li i Will R i CCP CCPs, CSDs CSD Insolvency Dealing with a failed market infrastructure CCPs, CSDs CESR-ESCB Revision of Risk Management Standards CCPs, CSDs Recommendations Recommendations Corporate Actions Harmonising Processing CSDs, Custodians Tax Removing tax barriers such as Stamp Duty CSDs Tax Use of Withholding Agents: follow-up to CSDs, Recommendation Custodians General Meetings Efficient processing of info requests, investor CSDs, participation Custodians Updates extern 15 / ROL / 09. September 2010
UPDATE UPDATE on ESMA ESMA • Operational on 1 January 2011 • New Chairman: Stephen Maijoor (Dutch AFM) • New Executive Director ( New Executive Director (= CEO): Verena Ross (UK FSA) CEO): Verena Ross (UK FSA) • Post-Trading Department: headed up by Fabrizio Planta • Vast 2011 Work Plan 17 sets of technical advice on EMIR (recent questionnaire 17 t f t h i l d i EMIR ( t ti i to CCPs) 8 Other Post-trading tasks • Council Legal Opinion says ESMA cannot designate standardised OTC contracts Updates extern 15 / ROL / 09. September 2010
THANK YOU FOR LI STENI NG QUESTI ONS? Alexander.Merriman@six-group.com Updates extern 15 / ROL / 09. September 2010
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