ESMA Guidelines and Recommendations

ESMA updates its CSDR Q&As

ESMA Guidelines and Recommendations

Date: 19 November 2018

On 12 November 2018, the European Securities and Markets Authority (ESMA) updated its Questions and Answers (Q&As) regarding the implementation of the Central Securities Depository Regulation (CSDR).

The updated Q&As provided answers to questions regarding practical issues on the implementation of the new CSDR regime. The latest batch of CSDR Q&As covered the following topics:

  • Provision of services in another Member State:
    • the first Q&A confirms that the “programme of operations” to be provided by the Central Securities Depository (CSD) should cover both the core and ancillary services it intends to provide in the host Member State;
    • the second Q&A clarifies that, where relevant, the CSD should provide an assessment of the measures it intends to take to allow its users to comply with the applicable law at least for each type of financial instruments for which it intends to provide the services. 
  • Settlement Discipline: the new Q&As relate to the calculation of cash penalties:
    • the first Q&A clarifies that the cash rate should be applied if the reason for the settlement fail is applicable to the leg of the transaction which delivers the cash, while the securities rate should be applied in case the reason for the fail is applicable to the leg of the transaction which delivers the securities;
    • the second Q&A confirms that cash penalties should be applied in the case of settlement fails where the instructions are put on hold by the receiving participant;
    • the final Q&A clarifies that the, more lenient, penalty rates for SME growth market instruments should only apply if the particular trade has actually taken place on an SME growth market.