Activities of Georgios KYRTSOS related to 2022/0074(COD)
Shadow reports (1)
REPORT on the proposal for a regulation of the European Parliament and of the Council amending Regulation (EU) No 909/2014 as regards settlement discipline, cross-border provision of services, supervisory cooperation, provision of banking-type ancillary services and requirements for third-country central securities depositories
Amendments (25)
Amendment 94 #
Proposal for a regulation
Recital 5
Recital 5
(5) Regulation (EU) No 909/2014 has introduced rules on settlement discipline to prevent and address failures in the settlement of securities transactions and therefore ensure the safety of transaction settlement. Such rules include in particular reporting requirements, a cash penalties regime and mandatory buy-ins. Despite the absence of experience in applying those rules, the development and specification of the framework in Commission Delegated Regulation (EU) 2018/122940 has allowed all interested parties to better understand the regime and the challenges its application could give rise to. In this regard, the scope of cash penalties and mandatory buy-ins set out in Article 7 of Regulation (EU) No 909/2014 should be clarified, in particular by specifying which categories of transactions are excluded. Such exclusions should cover in particular transactions that failed for reasons not attributable to the participants and transactions that do not involve two trading parties, for which the application of cash penalties or mandatory buy-ins would not be practicable or could lead to detrimental consequences for the market, such as certain transactions from the primary market, corporate actions, reorganisations, creation and redemption of fund units, realignments and frealignmentse-of-payment securities transfers made in the context of the (de)mobilisation of collateral. The Commission should be empowered to supplement Regulation (EU) No 909/2014 by further specifying the details of such exclusions by means of a delegated act. __________________ 40 Commission Delegated Regulation (EU) 2018/1229 of 25 May 2018 supplementing Regulation (EU) No 909/2014 of the European Parliament and of the Council with regard to regulatory technical standards on settlement discipline (OJ L 230, 13.9.2018, p. 1).–
Amendment 98 #
Proposal for a regulation
Recital 6
Recital 6
(6) The overarching objective of the settlement discipline regime is to improve settlement efficiency within the Union. However, the market volatility in 2020 amplified concerns about the potential negative effects of mandatory buy-in rules, both in normal and stressed market conditions. The application of those rules should therefore be subject to an assessment by the Commission as to its appropriateness in the light ofexistence of such rules is a disproportionate interference in the evolxecution of settlement efficiency in the Union. Cash penalties and reporting requirements should however continue to apply in order to assess their impact on improving settlement efficiency in the Union. Considering the potential impacts of mandatory buy-in rules, such rules should apply only where certain conditions are met, namely wherecurities transactions and the functioning of securities markets, poses significant risks for market liquidity and financial stability in the Union, and could jeopardise the global competitiveness of the Union. Because of the implications that the deployment of mandatory buy-ins might have, the possibility of their application of cash penalties has not resulted in a long-term, continuous reduction of settlement fails in the Union, where settlement efficiency in the Union has not reached appropriate levels considering the situation in third-country capital markets that are comparable in terms of size, liquidity as well as instruments traded and types of transactions executed on such markets, or where theshould be discarded. Cash penalties and reporting requirements should however continue to apply in order to improve settlement efficiency in the Union. ESMA, in close cooperation with the ESCB, should be given the possibility of developing draft regulatory technical standards to specify the target levels of settlement fails in the Union has or is likely to have a negative effect on the financial stability of the Union. Where the Commission considers that any of those conditions is met and that the application of mandatory buy-ins is proportionate to address level of settlement fails in the Union, the Commission should be empowered to adopt an implementing act determining for which financial instruments or categories of transactions the mandatory buy-in rules should start to applyefficiency, taking into account factors such as the liquidity of financial instruments, the cross-border or domestic nature of transactions, and the currencies in which transactions are settled. The cash penalties referred to in the third subparagraph of Article 7(2) of Regulation (EU) No 909/2014 should be calculated on a daily basis for each business day that a transaction fails to be settled until the end of the buy-in process actual settlement day or until the transaction has been cancelled bilaterally. In order to support the actual settlement day, whichever is the earlierprovision of accurate, timely and complete information on penalties, all information necessary for the calculation of cash penalties should be centralised in the European Single Access Point.
Amendment 99 #
Proposal for a regulation
Recital 6 a (new)
Recital 6 a (new)
(6 a) The removal of the central counterparty buy-in provisions from Regulation (EU) No 236/2012 by Regulation (EU) No 909/2014 was justified at the time because those provisions would be covered by the mandatory buy-in provisions of the latter Regulation. The buy-in provisions for cleared share trades should now be reintroduced in Regulation (EU) No 236/2012 in parallel with the removal of the mandatory buy-in provisions from Regulation (EU) No 909/2014.
Amendment 100 #
Proposal for a regulation
Recital 8
Recital 8
Amendment 101 #
Proposal for a regulation
Recital 10
Recital 10
Amendment 104 #
Proposal for a regulation
Recital 19
Recital 19
(19) Regulation (EU) No 909/2014 requires the cooperation of authorities that have an interest in the operations of CSDs that offer services in relation to financial instruments issued under the law of more than one Member States. Nonetheless, the supervisory arrangements remain fragmented and can lead to differences in the allocation and nature of supervisory powers depending on the CSD concerned. This in turn creates barriers to the cross- border provision of CSD services in the Union, perpetuates the remaining inefficiencies in the Union settlement market and has negative impacts on the stability of Union financial markets. Despite the possibility to set up colleges in accordance with Article 24(4) of that Regulation (, that option has barely been used. In order to ensure an effective and efficient coordination of the supervision by competent authorities, the requirement to set up mandatory colleges should apply in two cases. Firstly, for CSDs that offer notary and cebe based on a single existing and reliable criterion, namely, the substantrial maintenance services in relation to financial instruments issued under the law of mimportance of a CSD for a jurisdiction other than the one where it is established. The threshold fore than one Member States (the passpe mandatory establishment by competent authoritinges of a colleges) and secondly for CSDs that belong of supervisory authorities should be met where a CSD is of substantial importance in at least two the same group (the “group-level colleges”). To reduce the administrative burden on the authorities participating to colleges, where a CSD offering services cross-border is also part of a group of CSDs, the chair of the college should be able to decide that only host Member States. Such colleges should ensure the sharing of information pertaining to the CSDs concerned. Members of a college should have the possibility of requesting the adoption by the college of a binding opinione college is established for that CSD. Where the other CSDs ncerning issues identified during the review and evaluation process of CSDs, or during the group also offer services cross-border, the chair of the college should be able to make that decision only where the competent authorities of those oreview and evaluation of providers of banking-type ancillary services, or that relate to the extension or outsourcing of activities and services provided by ther CSDs consent. In that case,, or concerning any potential breach of the re would be only one college for all CSDs within the group that would exercise the tasks assigned to passportquirements of Regulation (EU) No 909/2014 arising from the provision of services ing and group-level colleges. Such colleges should ensure the sharing of information pertaining to the CSDs concerned host Member State. The process for the adoption of such an opinion should rely on a simple majority vote.
Amendment 109 #
Proposal for a regulation
Recital 26
Recital 26
(26) In order to avoid settlement risks due to the insolvency of the settlement agent, a CSD should settle, whenever practical and available, the cash leg of the securities transaction in central bank money through accounts opened with a central bank. Where that option is not practical and available, including where a CSD does not meet the conditions to access a payment system operated by a central bank other than that of its home Member State, that CSD should be able to settle the cash leg of transactions in foreign currenciesthird-country currencies in commercial bank money through accounts opened with institutions authorised to provide banking services under the conditions provided in Regulation (EU) No 909/2014. The efficiency of the settlement market would be better served by enhancing the possibilities for CSDs to provide settlement in foreign currencies through the use of accounts opened with institutions authorised to provide banking services, within appropriate risk limits, with a view to deepen capital markets and enhance cross-border settlement. For that purpose, CSDs authorised to provide banking-type ancillary services in accordance with Regulation (EU) No 909/2014, and for which the relevant risks are already monitored, should be able to offer such services pertaining to the settlement of the cash leg of securities transactions, where that cash is a third-country currency to other CSDs that do not hold such license irrespective if the latter are part of the same group of companies.
Amendment 110 #
Proposal for a regulation
Recital 27
Recital 27
(27) Within an appropriately set risk limits, CSDs that are not authorised to provide banking-type ancillary services should be able to offer a sufficient amount of foreign currency settlementarrange payments in third-country currency through accounts opened with credit institutions orand through its own accountaccounts opened with CSDs authorised to provide banking-type ancillary services. The thresholds below which a CSD mayshould be able to designate either a credit institution as a separate legal entity or a CSD authorised to provide any banking- type ancillary services from within a separate legal entity without being required to comply with the conditions set out in Title IV of Regulation (EU) No 909/2014 should consist of a maximum amount for those arranged payments. That threshold should be calibrated in a way that promotes efficiency of settlement and the use of banking ancillary services while ensuring financial stability. It is possible that different thresholds are set with regard to different third-country currencies especially for the most liquid ones like G4, while setting appropriate limit that would be applicable to the institution as whole. As a body with specialised expertise regarding banking and credit risk matters, EBA should be entrusted with the development of draft regulatory technical standards to set the appropriate thresholds and, where necessary, any risk mitigating requirements. EBA should also closely cooperate with the members of the ESCB and with ESMA. The Commission should be empowered to adopt regulatory technical standards in accordance with Article 290 of the Treaty on the Functioning of the European Union (TFEU) with regard to the detailed elements of the determining for the provisioning of banking type ancillary services, the accompanying details of the risk management and capital requirements for CSDs and the prudential requirements on credit and liquidity risks for CSDs and designated credit institutions that are authorised to provided banking-type ancillary services.
Amendment 113 #
Proposal for a regulation
Recital 30
Recital 30
(30) In order to provide CSDs established in the Union or in third countries with sufficient time to apply for authorisation and recognition of their activities, the date of application of the authorisation and recognition requirements of Regulation (EU) No 909/2014 was initially deferred until an authorisation or recognition decision was made pursuant to that Regulation. Sufficient time has elapsed since the entry into force of that Regulation. , Therefore, those requirements should now start to apply to ensure, on the one hand, a level-playing field amongst all CSDs offering services in relation to financial instruments constituted under the law of a Member State, and, on the other hand, that authorities at national and Union level have the necessary information to ensure investor protection and monitor financial stability. The third-country CSDs providing core services referred to in Section A, points (1)and (2), of the Annex of Regulation (EU) No 909/2014 should be subject to the procedure as set out in that Regulation. However, the third- country CSDs already providing core services in Section A, points (1) and (2), of the Annex of Regulation (EU) No 909/2014 should benefit from a simplified notification procedure as set out in this Regulation.
Amendment 114 #
Proposal for a regulation
Recital 34
Recital 34
(34) To ensure uniform conditions for the implementation of this Regulation, and in particular with regard to the application and the suspension of mandatory buy-in requirements where those apply, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council43 . __________________ 43 Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by the Member States of the Commission's exercise of implementing powers (OJ L 55, 28.2.2011, p. 13).
Amendment 117 #
Proposal for a regulation
Article 1 – paragraph 1 – point 2 – point a
Article 1 – paragraph 1 – point 2 – point a
Regulation (EU) No 909/2014
Article 7 – paragraph 2 – subparagraph 3
Article 7 – paragraph 2 – subparagraph 3
The penalty mechanism referred to in the first subparagraph shall include cash penalties for participants that cause settlement fails (‘failing participants’) except where those settlement fails are caused by factors not attributable to the participants to the transaction or for operations that do not involve two trading parties. Cash penalties shall be calculated on a daily basis for each business day that a transaction fails to be settled after its intended settlement date until the end of the buy-in process referred to in paragraphs 3 to 8 that is to be applied pursuant to paragraph 2a, or the actual settlement day, whichever is the earlieractual settlement day or until the transaction has been cancelled bilaterally. The cash penalties shall not be configured as a revenue source for the CSD.;
Amendment 124 #
Proposal for a regulation
Article 1 – paragraph 1 – point 2 – point c
Article 1 – paragraph 1 – point 2 – point c
Regulation (EU) No 909/2014
Article 7 – paragraph 3 – subaragraph 1
Article 7 – paragraph 3 – subaragraph 1
Where the Commission has adopted an implementing act pursuant to paragraph 2a and where a failing participant has not delivered financial instruments covered by that implementing act to the receiving participant within a period after the intended settlement date (‘extension period’) equal to 4 business days, a buy-in process shall be initiated whereby those instruments shall be available for settlement and delivered to the receiving participant within an appropriate timeframe.
Amendment 125 #
Proposal for a regulation
Article 1 – paragraph 1 – point 2 – point c
Article 1 – paragraph 1 – point 2 – point c
Regulation (EU) No 909/2014
Article 7 – paragraph 3 – subaragraph 2
Article 7 – paragraph 3 – subaragraph 2
Where the transaction relates to a financial instrument traded on an SME growth market, the extension period shall be 15 calendarbusiness days unless the SME growth market decides to apply a shorter period. Those instruments shall be available for settlement and delivered to the receiving participant within an appropriate timeframe.
Amendment 139 #
Proposal for a regulation
Article 1 – paragraph 1 – point 7
Article 1 – paragraph 1 – point 7
Regulation (EU) No 909/2014
Article 23 – paragraph 4 – subaragraph 1
Article 23 – paragraph 4 – subaragraph 1
Within 1 month from the receipt of the information referred to in paragraph 3, the competent authority of the home Member State shall communicate that information to the competent authority of the host Member State unless, by taking into account the provision of services envisaged, it has reasons to doubt the adequacy of the administrative structure or the financial situation of the CSD wishing to provide its services in the host Member State. Where the CSD already provides services to other host Member States, the competent authority of the home Member State shall also inform the passporting college referred to in Article 24a.
Amendment 140 #
Proposal for a regulation
Article 1 – paragraph 1 – point 7
Article 1 – paragraph 1 – point 7
Regulation (EU) No 909/2014
Article 23 – paragraph 5
Article 23 – paragraph 5
5. Where the competent authority of the home Member State decides in accordance with paragraph 4 not to communicate all the information referred to in paragraph 3 to the competent authority of the host Member State, it shall give reasons for its refusal to the CSD concerned within 3 months of receiving all the information and inform the competent authority of the host Member State and the passporting college referred to in Article 24a of its decision.
Amendment 141 #
Proposal for a regulation
Article 1 – paragraph 1 – point 7
Article 1 – paragraph 1 – point 7
Regulation (EU) No 909/2014
Article 23 – paragraph 7
Article 23 – paragraph 7
7. In the event of a substantive change of the information set out in the documents submitcommunicated in accordance with paragraph 3 or paragraph 3a of this Article, a CSD shall give written notice of that change to the competent authority of the home Member State at least 1 month before implementing the change. The competent authority of the host Member State and the passporting college referred to in Article 24a shall also be informed of that change without delay by the competent authority of the home Member State.;
Amendment 142 #
Proposal for a regulation
Article 1 – paragraph 1 – point 8 – point a
Article 1 – paragraph 1 – point 8 – point a
Regulation (EU) No 909/2014
Article 24 – paragraph 1 – subparagraph 2
Article 24 – paragraph 1 – subparagraph 2
Amendment 144 #
Proposal for a regulation
Article 1 – paragraph 1 – point 8 – point c
Article 1 – paragraph 1 – point 8 – point c
Regulation (EU) No 909/2014
Article 24 – paragraph 5 – subparagraph 1
Article 24 – paragraph 5 – subparagraph 1
Where the competent authority of the host Member State has clear and demonstrable grounds for believing that a CSD providing services within its territory in accordance with Article 23 is in breach of the obligations arising from the provisions of this Regulation, it shall inform the competent authority of the home Member State, and ESMA and the passporting. ESMA may inform the college referred to in Article 24a of those findings.
Amendment 145 #
Proposal for a regulation
Article 1 – paragraph 1 – point 8 – point c
Article 1 – paragraph 1 – point 8 – point c
Regulation (EU) No 909/2014
Article 24 – paragraph 5 – subparagraph 2
Article 24 – paragraph 5 – subparagraph 2
Where, despite measures taken by the competent authority of the home Member State, the CSD persists in acting in infringement of the obligations arising from the provisions of this Regulation, the competent authority of the host Member State shall, after informing the competent authority of the home Member State, take all the appropriate measures needed in order to ensure compliance with the provisions of this Regulation within the territory of the host Member State. ESMA and the passporting college referred to in Article 24a shall be informed of such measures without delayshall be informed of such measures without delay. ESMA may inform the college referred to in Article 24a of those measures.
Amendment 149 #
Proposal for a regulation
Article 1 – paragraph 1 – point 9
Article 1 – paragraph 1 – point 9
Regulation (EU) No 909/2014
Article 24a – paragraph 1 – subparagraph 1 – point a
Article 24a – paragraph 1 – subparagraph 1 – point a
Amendment 154 #
Proposal for a regulation
Article 1 – paragraph 1 – point 9
Article 1 – paragraph 1 – point 9
Regulation (EU) No 909/2014
Article 24a – paragraph 1 – subparagraph 3
Article 24a – paragraph 1 – subparagraph 3
Amendment 162 #
Proposal for a regulation
Article 1 – paragraph 1 – point 9
Article 1 – paragraph 1 – point 9
Regulation (EU) No 909/2014
Article 24a – paragraph 2 – point d
Article 24a – paragraph 2 – point d
(d) in the case of a passporting college, the competent authority of the host Member States;
Amendment 168 #
Proposal for a regulation
Article 1 – paragraph 1 – point 9
Article 1 – paragraph 1 – point 9
Regulation (EU) No 909/2014
Article 24a – paragraph 6 – subparagraph 1 – point d
Article 24a – paragraph 6 – subparagraph 1 – point d
(d) in the case of a passporting college, the cooperation of the home and host Member State pursuant to Article 24 and regarding the measures referred to in Article 23(4), point (e) and on any issues encountered in the provision of services in other Member States;
Amendment 171 #
Proposal for a regulation
Article 1 – paragraph 1 – point 9
Article 1 – paragraph 1 – point 9
Regulation (EU) No 909/2014
Article 24a – paragraph 6 a (new)
Article 24a – paragraph 6 a (new)
6a. At the request of any of its members, and upon adoption by a majority of the college in accordance with paragraph 6b, the college may adopt reasoned opinions with regard to issues identified during the review and evaluation processes pursuant to Article 22 or Article 60, or that relate to any extension or outsourcing of activities and services under Article 19, or concerning any potential breach of the requirements laid down in this Regulation arising from the provision of services in a host Member State as referred to in Article 24(5).
Amendment 172 #
Proposal for a regulation
Article 1 – paragraph 1 – point 9
Article 1 – paragraph 1 – point 9
Regulation (EU) No 909/2014
Article 24a – paragraph 6 b (new)
Article 24a – paragraph 6 b (new)
6b. A reasoned opinion of the college shall be adopted on the basis of a simple majority of its members. Each member of the college shall have one vote. Members of the college that act in more than one capacity, including as competent authority and as relevant authority, shall have one vote for each capacity in which it acts. Where EBA is a member of the college pursuant to paragraph 2 of this Article, its voting member shall have voting rights only on those opinions that relate to issues identified during the review and evaluation process pursuant to Article 60.