Activities of Sharon BOWLES related to 2012/0029(COD)

Proposal for a regulation
Recital 5

(5) It is necessary to lay down in a Regulation a number of uniform obligations to be imposed on market participants regarding certain aspects of the settlement cycle and discipline and to provide a set of common requirements for CSDs operating securities settlement systems. The directly applicable rules of a Regulation should ensure that all market operators and CSDs are subject to identical directly applicable obligations and rules. A Regulation should increase the safety and efficiency of settlement in the Union by preventing any diverging national rules as a result of the transposition of a directive. A Regulation should reduce the regulatory complexity for market operators and CSDs resulting from different national rules and should allow CSDs to provide their services on a cross-border basis without having to comply with different sets of national requirements such as those concerning the authorisation, supervision, organisation or risks of CSDs. A Regulation imposing identical requirements on CSDs should also contribute to eliminating competitive distortions. This Regulation should therefore be applied symmetrically in the event that a CSD acquires a banking licence or a bank acquires authorisation to operate a CSD. A CSD might be established in any Member State. No Member State or group of Member States should be discriminated against directly or indirectly, as a venue for CSD and settlement services. Nothing in this Regulation should attempt to restrict or impede a CSD in one jurisdiction from settling a product denominated in the currency of another Member State or in the currency of a third country.

2012/11/12
Committee: ECON

Proposal for a regulation
Recital 5

(5) It is necessary to lay down in a Regulation a number of uniform obligations to be imposed on market participants regarding certain aspects of the settlement cycle and discipline and to provide a set of common requirements for CSDs operating securities settlement systems. The directly applicable rules of a Regulation should ensure that all market operators and CSDs are subject to identical directly applicable obligations and rules. A Regulation should increase the safety and efficiency of settlement in the Union by preventing any diverging national rules as a result of the transposition of a directive. A Regulation should reduce the regulatory complexity for market operators and CSDs resulting from different national rules and should allow CSDs to provide their services on a cross-border basis without having to comply with different sets of national requirements such as those concerning the authorisation, supervision, organisation or risks of CSDs. A Regulation imposing identical requirements on CSDs should also contribute to eliminating competitive distortions. A CSD may be established in accordance with this Regulation in any Member State. No Member State or group of Member States should be discriminated against, directly or indirectly, as a location for CSD and settlement services. Nothing in this Regulation should attempt to restrict or impede a CSD in one jurisdiction from settling a product denominated in the currency of another Member State or in the currency of a third country.

2012/11/12
Committee: ECON

Proposal for a regulation
Recital 5 a (new)

(5 a) This Regulation should recognise and support the existing CSD models of all Member States and the services they provide, which have developed to meet the specific needs of their national financial markets, their national economy and companies, and to comply with their Member State's national laws. This Regulation should not make changes to existing CSD models or services unless they cannot meet the objectives of the Regulation or they pose undue risks.

2012/11/12
Committee: ECON

Proposal for a regulation
Recital 6

(6) The Financial Stability Board (FSB) called, on 20 October 2010, for more robust core market infrastructures and asked for the revision and enhancement of the existing standards. The Committee on Payments and Settlement Systems (CPSS) of the Bank of International Settlements (BIS) and the International Organisation of Securities Commissions (IOSCO) arhave finalis~~ing draft~~ed global standards. These ~~are to~~have replaced the BIS recommendations from 2001, which were adapted through non- binding guidelines at European level in 2009 by the European System of Central Banks (ESCB) and the Committee of European Securities Regulators (CESR). This Regulation should complement these new principles of global standards.

2012/11/12
Committee: ECON

Proposal for a regulation
Recital 10 a (new)

(10 a) CSDs are systemically relevant and for that reason where a function or service performed by a CSD is regulated in other legislation, then it is appropriate for the strictest legislation to apply. Nevertheless there should not be multiple application, for example, of reporting of capital requirements. ESMA and the EBA should provide an opinion on the legislation applied by the competent authority.

2012/11/12
Committee: ECON

Proposal for a regulation
Recital 13

(13) Longer settlement periods of transactions in transferable securities cause uncertainty and increased risk for securities settlement systems participants. Different durations of settlement periods across Member States hamper reconciliation and are sources of errors for issuers, investors and intermediaries. It is therefore necessary to provide a common settlement period which would facilitate the identification of the intended settlement date and facilitate the implementation of settlement discipline measures. The intended settlement date of transactions in transferable securities which are admitted to trading on trading venues regulated by Directive 2004/39/EC should be no later than on the second business day after the trading takes place. Certain transferable securities may require longer settlement periods due to the illiquidity of those transferable securities and/or the specific trading characteristics surrounding them.

2012/11/12
Committee: ECON

Proposal for a regulation
Recital 18

(18) Within a borderless Union settlement market, it is necessary to define the competences of the different authorities involved in the application of this Regulation. Member States should specifically designate the competent authorities responsible for the application of this Regulation, which should be afforded the supervisory and investigatory powers necessary for the exercise of their functions. A CSD should be subject to the authorisation and supervision of the competent authority of its place of establishment, which is well placed and should be empowered to examine how CSDs operate on a daily basis, to carry out regular reviews and to take appropriate action when necessary. That authority should however consult at the earliest stage and cooperate with other relevant authorities, which include the authorities responsible for the oversight of each securities settlement system operated by the CSD and, where applicable, the relevant central banks that act as settlement agent for each securities settlement system, and, also, where applicable, the competent authorities of other group entities. This cooperation also implies immediate information of the authorities involved in case of emergency situations affecting the liquidity and stability of the financial system in any of the Member States where the CSD or its participants are established. Whenever a CSD provides its services in another Member State than where it is established either by the establishment of a branch or by way of direct provision of services the competent authority of its place of establishment is mainly responsible for the supervision of that CSD. In accordance with Articles 8, 16 and 30 of Regulation (EU) No 1095/2010, ESMA should be involved in coordinating the activities of competent authorities, to further strengthen consistency in supervisory outcomes. ESMA should also, where appropriate, request opinions or advice from the Securities and Markets Stakeholder Group referred to in Article 37 of Regulation (EU) No 1095/2010 and periodically organise and conduct peer reviews on specific questions concerning the supervision of CSDs with cross-border activities and interoperability links.

2012/11/12
Committee: ECON

Proposal for a regulation
Recital 19 a (new)

(19 a) Settlement internalisers, although not defined as a CSD in this Regulation, should also be required to report their settlement activities to their competent authority. Furthermore, ESMA should monitor internalised settlement, particularly after the introduction of Target2Securities. If systemic risk prevalence does increase, ESMA should be able to issue guidelines requiring more detailed reporting.

2012/11/12
Committee: ECON

Proposal for a regulation
Recital 23 a (new)

(23 a) The direct holding systems in several Member States involve a particular tripartite relationship in which the investor has a direct account on the CSD level, but rights and obligations vis- à-vis the investor are shared between the CSD and the account operator. This sharing of functions should not be considered to be outsourcing as defined in Article 28.

2012/11/12
Committee: ECON

Proposal for a regulation
Recital 27

(27) Transparent governance rules should ensure that the interests of the shareholders, the management and staff of the CSD, on the one hand, and the interests of their users, on the other, are taken into account. These governance principles should apply without prejudice to the ownership model adopted by the CSD. Nonetheless, user owned CSDs should be encouraged. User committees should be established for each securities settlement system operated by the CSD to advise the board of the CSD on the key issues that impact its members.

2012/11/12
Committee: ECON

Kay SWINBURNE, Olle SCHMIDT, Sharon BOWLES, Gunnar HÖKMARK

Proposal for a regulation
Recital 28 a (new)

(28 a) Account operators, as defined in some direct holding systems, record entries into securities accounts maintained by the CSD without necessarily being account providers themselves. In view of the need for legal certainty on the entries made into accounts at the CSD level, the specific role played by account operators should be recognised by this Regulation. It should therefore be possible, under specific circumstances and subject to strict rules laid down by law, to share the responsibility for maintaining securities accounts at the top tier level with another person that is subject to appropriate regulation and supervision.

2012/11/12
Committee: ECON

Proposal for a regulation
Recital 28 a (new)

(28 a) Account operators, as defined in some direct holding systems, record entries into owner accounts maintained by the CSD without necessarily being account providers themselves. In view of the need for legal certainty on the entries made into accounts at the CSD level, the specific role played by account operators should be recognised. It should therefore be possible, under specific circumstances and subject to strict rules laid down by law, to share the responsibility for certain core CSD services with another person that is subject to appropriate regulation and supervision.

2012/11/12
Committee: ECON

Proposal for a regulation
Recital 34

(34) In order to provide a sufficient degree of safety and continuity of the services provided by the CSDs, the CSD should be subject to specific uniform and directly applicable prudential and capital requirements which do mitigate their legal, operational and investment risks. In the case of a CSD authorised to perform banking-type ancillary services specified in this Regulation, it should comply with the specific capital requirements legislation in the Union, any subsequent prudential supervision of credit institution legislation as well as to recovery and resolution legislation.

2012/11/12
Committee: ECON

Proposal for a regulation
Recital 36 a (new)

(36 a) It is necessary for supervisors to have knowledge of the level, at least in aggregate terms, of institutions' repurchase agreements, securities lending and all forms of encumbrance or claw back arrangements in order for supervisors to have a full picture and understanding of these markets. CSDs should, therefore, store all data on such transactions which they process and where applicable provide services for, and allow access, inter alia, by EBA, ESMA, relevant competent authorities, the ESRB and relevant central banks and the ESCB to such information.

2012/11/12
Committee: ECON

Proposal for a regulation
Recital 36 b (new)

(36 b) Following the development of a Legal Entity Identifier (LEI), and building on its usefulness, CSDs should work together with regulators to develop similar common standards with relation to repurchase agreements and securities reporting to cover principle, interest rate, collateral, haircuts, tenor, counterparties and other aspects, which help the formation of aggregates. Further, it should be an objective to achieve real time transaction mapping in all financial services and for this to be aided and automated via standardised messaging and data identifiers. CSDs should play a key role in advancing that objective.

2012/11/12
Committee: ECON

Proposal for a regulation
Recital 39

(39) CSDs should also have access to transaction feeds from a CCP or a trading venue and those market infrastructures should have access to the securities settlement systems operated by the CSDs, unless such access endangers the operation of their activities. A quick and appropriate remedy should be made available to competent authorities to address any unjustified refusal of CSDs or market infrastructures to provide access to their services. This Regulation completes the access arrangements in Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories and Regulation (EU) No .../... on markets in financial instruments [MiFIR] between trading venues, CCPs, and CSDs necessary to establish a competitive internal market in post-trade services. Noting that there are areas in financial services where commercial and intellectual property rights may also exist, where these relate to products or services which have become or impact upon industry standards, such as benchmarks and trade feeds, these shall be made available on fair reasonable and non-discriminatory (FRAND) terms. ESMA and the Commission should continue to closely monitor the evolution of post-trade infrastructure and should, where necessary, intervene in order to prevent competitive distortions from occurring in the internal market.

2012/11/12
Committee: ECON

Proposal for a regulation
Recital 47

(47) European Securities and Markets Authority (ESMA), established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (ESMA), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC, should play a central role in the application of this Regulation by ensuring consistent application of Union rules by national competent authorities and by settling disagreements between them. When preparing drafts of technical standards and delegated acts, ESMA should follow the principle of an open market economy with free competition in accordance with Article 119(1) and (2) TFEU.

2012/11/12
Committee: ECON

Proposal for a regulation
Recital 47 a (new)

(47 a) ESMA should closely monitor and annually report to the Commission on access to financial market infrastructure licensing arrangements and any negative impacts on the establishment of a competitive internal market in post-trade financial services, in particular where the use of such licences may be used to prevent competition from other trading venues and CCPs. Where these reports demonstrate ongoing barriers to competition in post-trade financial services in such a way that poses systemic risk and an implicit taxpayer guarantee to financial market infrastructure the Commission should come forward with legislative proposals.

2012/11/12
Committee: ECON

Proposal for a regulation
Recital 52

(52) In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission to take decisions on the assessment of rules from third countries for the purposes of recognition of third country CSDs ~~and derogations from the obligation to separate banking services ancillary to settlement from core CSD services~~. Those powers should be exercised in accordance with 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.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1 a (new)

1 a. Where a CSD provides functions or services covered by any other legislative act, it shall comply with that act or the strictest legal norm, if more than one apply. There should be no multiple application. In the event of any dispute, ESMA and the EBA, as appropriate, shall provide an opinion.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 2 – paragraph 1 – point 3 a (new)

(3 a) 'Settlement internaliser' means a credit institution or investment firm or third-party firm authorised in accordance with Directive 2006/48/EC or with Directive.../.../EU (New MiFID) which executes transfer orders on behalf of clients or on its own account other than through a securities settlement system;

2012/11/12
Committee: ECON

Proposal for a regulation
Article 2 – paragraph 1 – point 21 a (new)

(21 a) 'international open communication procedures and standards' means open and transparent communicating procedures and formats which are non- profit and freely available to all industry participants;

2012/11/12
Committee: ECON

Proposal for a regulation
Article 2 – paragraph 1 – point 31

(31) ‘settlement agent’ means settlement agent as defined in point (d) of Article 2 of Directive 98/26/EC, and, where the settlement agent belongs to the same group as a CSD, a limited purpose credit institution as described in Article 52, 2a of this Regulation.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 7 – paragraph 2

2. For each securities settlement system it operates, a CSD, in consultation with the relevant regulated markets, MTFs, OTFs and CCPs in respect of which it provides settlement services, shall establish procedures that facilitate settlement of transactions in financial instruments referred to in Article 5(1) that are not settled on the intended settlement date. These procedures shall provide for a sufficiently deterrent penalty mechanism for participants, other than the CCP, that cause the settlement fails.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 7 – paragraph 3

3. A participant, other than a CCP, to a securities settlement system that fails to deliver the financial instruments referred to in Article 5(1) to the receiving participant on the intended settlement date shall be subject to a buy-in whereby those instruments shall be bought in the market no later than four days after the intended settlement date and delivered to that receiving participant and other measures in accordance with paragraph 4.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 7 – paragraph 7 – subparagraph 1

Paragraphs 2 to 6 shall apply to all transactions of the instruments referred to in Article 5 (1) which are admitted to trading on regulated markets, traded on MTFs or OTFs or cleared by a CCP or settled within a securities settlement system regardless of where they were executed.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 7 – paragraph 7 – subparagraph 3

For transactions not cleared by a CCP, the measures referred to in paragraph 3 to 5 shall be executed by the regulated markets, MTFs and OTFs and they shall include in their internal rules an obligation on their participants to be subject to the measures referred to in paragraph 3 to 5.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 7 – paragraph 7 a (new)

7a. Financial instruments that are admitted to trading on an SME growth market, or are not liquid as described in Article 22 of Commission Regulation (EC) No 1287/2006 of 10 August 2006 implementing Directive 2004/39/EC of the European Parliament and of the Council as regards recordkeeping obligations for investment firms, transaction reporting, market transparency, admission of financial instruments to trading, and defined terms for the purposes of that Directive, this Article shall not apply until 15 days after the intended settlement date unless the relevant market notifies participants that a shorter settlement period applies. Regardless of the intended settlement date, the buy-in procedure shall not be instigated by the receiving party until 15 business days after the trade date.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 7 – paragraph 7 b (new)

7 b. Where a competent authority determines that such measures are necessary to promote and maintain liquidity in one or more of the markets operating within its jurisdiction, for (a) financial instruments admitted to trading on an SME growth market; and (b) for financial instruments where the average number of trades in that financial instrument is less than 250 as specified in more detail by measures taken in accordance with paragraph 8 (c), the buy-in obligations under paragraph 3 and the daily penalties under paragraph 4(a) shall not apply until 10 days after the intended settlement date, unless the regulated market, MTF, OTF or SME growth market on which the transaction has been executed or to which the transaction has been reported, notifies market participants that a shorter period applies to specified financial instruments.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 7 – paragraph 7 c (new)

7 c. For transactions in financial instruments not cleared by a CCP and not executed on a regulated market, an MTF, on OTF or a SME growth market, the provisions of paragraph 3 shall apply and any such transaction must, as part of its terms, include measures to manage a fail consistent with paragraph 4 and allowing the counterparty of the failing participant to have the right to initiate the buy-in, according to the contract.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 7 – paragraph 8 – subparagraph 1

ESMA shall develop in consultation with the members of the ESCB draft regulatory technical standards to specify: (a) the details of the system monitoring settlement fails and the reports on settlement fails referred to in paragraph 1,; (b) the details of the procedures facilitating settlement of transactions following settlement fails referred to in paragraph 2 ~~and~~; (c) the measures referred to in paragraphs 3 to 5 taking into account the specific characteristics of transactions and the type and liquidity of financial instruments taking into account: (i) average daily number of transactions in that financial instrument; (ii) average frequency and size of trades over a range of market conditions, having regard to the nature and life-cycle of products within the class of financial instrument: (iii) the number and type of market participants, including the ratio of market participants to traded instruments in a given product.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 8 a (new)

Article 8 a Internalised settlement Settlement internalisers shall report to the competent authorities the aggregated volume and value of all transactions settled outside a securities settlement system on a quarterly basis. Competent authorities shall inform ESMA regarding any perceived systemic risk from this activity.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 19 – paragraph 3

3. The name of each CSD operating in compliance with this Regulation and to which authorisation or recognition has been granted under Articles 14, 17 and 23 shall be entered in a list specifying the services and classes of financial instruments for which the CSD has been authorised. The list shall include branches operated by the CSD in other Member ~~States and CSD link~~States, CSD links and Member States where Article 28a on shared services applies. ESMA shall publish the list on its dedicated website and keep it up to date.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 22 – title

Cooperation between home and host authorities and ESMA

2012/11/12
Committee: ECON

Proposal for a regulation
Article 22 – paragraph 5 a (new)

5 a. In accordance with Article 8, Article 16 and Article 30 of Regulation (EU) No 1095/2010, ESMA shall issue guidelines and recommendations addressed to competent authorities or financial market participants and periodically organise and conduct peer reviews of some or all of the activities of competent authorities, to further strengthen consistency in supervisory outcomes. The Authority shall, where appropriate, also request opinions or advice from the Securities and Markets Stakeholder Group referred to in Article 37 of Regulation (EU) No 1095/2010 and conduct a peer review, including the members of the ESCB, concerning specific questions and concerning the supervision of CSDs related to cross-border activities or interoperability links.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 22 – paragraph 6

6. ~~The Commission shall b~~ESMA shall, after consulting competent authorities and the mem~~powered to ad~~bers of the ESCB, developt d~~elegated acts in accordance with Article 64~~raft regulatory technical standards concerning measures for establishing the criteria under which the operations of a CSD in a host Member State could be considered of substantial importance for the functioning of the securities markets and the protection of the investors in that host Member State. ESMA shall submit those draft regulatory technical standards to the Commission by [nine months from the date of entry into force of this Regulation]. Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with the procedure laid down in Articles 10 to 14 of Regulation (EU) No 1095/2010.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 23 – paragraph 6

6. The Commission may adopt a decision in accordance with the procedure referred to in Article 66, determining that the legal and supervisory arrangements of a third country ensure that CSDs authorised in that third country comply with legally binding requirements, which are based on internationally agreed CPSS/IOSCO standards, which have an equivalent outcome to the requirements set out in this Regulation, and that those CSDs are subject to effective supervision and enforcement in that third country on an ongoing basis~~, and that the legal framework of that third country provides for an effective equivalent system for the recognition of CSDs authorised under third country legal regimes~~.

2012/11/12
Committee: ECON

Proposal for a regulation
Recitals 54 a (new)

(54a) Market making activities play a crucial role in providing liquidity to markets within the Union and market makers need to take short positions to perform that role , particularly in less liquid securities and those admitted to SME growth markets.

2012/11/12
Committee: ECON

Proposal for a regulation
Recital 54 b (new)

(54b) Measures to address and prevent settlement fails should be balanced against the need to maintain and protect liquidity in these securities. Regulation (EU) No 236/2012 should provide for flexibility in rules on settlement discipline to prevent and address settlement fails. This Regulation therefore amends Regulation (EU) No 236/2012 to provide for measures to allow for calibrated buy- in procedures for illiquid securities where a national competent authority has determined that this is necessary to promote and maintain liquidity.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 25 – paragraph 4

4. ~~The board shall be composed of suitable members with an appropriate mix of skills, experience and knowledge of the entity and of the market~~Competent authorities shall require the board and the nomination committees to take into account diversity as one of the criteria for selection of members of the board. The board shall be composed of suitable members with an appropriate mix of skills, experience and knowledge of the entity and of the market. In particular the board shall put in place a policy promoting gender, age, geographical, educational and professional diversity on the management body, as well as take concrete steps towards a more balanced representation on the board. Such concrete measures may for example include training of nomination committees, the creation of rosters of competent candidates, and the introduction of a nomination process where at least one candidate of each sex is presented.

2012/11/12
Committee: ECON

Kay SWINBURNE, Olle SCHMIDT, Sharon BOWLES, Gunnar HÖKMARK

Proposal for a regulation
Article 28 a (new)

Article 28a Shared services 1. Member States may provide for a person other than the CSD to be responsible for recording entries into securities accounts at the level of the CSD. Where Member States provide for such shared services, , the requirements of this Regulation shall apply, where relevant, also to that other person. 2. Where Member States provide for shared services pursuant to paragraph 1,they shall specify the applicable requirements, including requirements pursuant to this Regulation, in their national law. 3. Where Member States provide for shared services pursuant to paragraph 1, they shall notify the Commission and ESMA accordingly. ESMA shall include information on shared services in the CSD register referred to in Article 19.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 28 a (new)

Article 28a Direct holding model 1. Member states may provide for a person other than the CSD to be responsible for the performance of certain, but not all, functions of the relevant CSD pursuant to this Regulation. Where Member States provide for such shared services, provisions of this Regulation shall apply mutatis mutandis to the person responsible for performing the function to which the provision applies. 2. Where Member States provide for shared services pursuant to paragraph 1, they shall specify the functions for which that other person is responsible, and the applicable requirements, including requirements under this Regulation. 3. Where Member States provide for shared services pursuant to paragraph 1, they shall notify the Commission and ESMA accordingly. ESMA shall include information on shared services in the CSD register referred to in Article 19.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 30 – paragraph 1

1. For each securities settlement system it operates a CSD shall have publicly disclosed criteria for participation which allow fair and open access. Such criteria shall be transparent, objective, risk-based, and non-discriminatory so as to ensure fair and open access to the CSD. Criteria that restrict access shall only be permitted to the extent that their objective ~~is to~~justifiably controls the specified risk for the CSD.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 32 – paragraph 1

CSDs shall use in their communication procedures with participants of the securities settlement systems they operate, and with the market infrastructures they interface with ~~the recognised~~, international and transparent open communication procedures and standards for messaging and reference data in order to facilitate efficient recording, payment and settlement.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 33 a (new)

Article 33 a Recording and storage of repurchase agreements and securities lending processed and serviced by CSDs CSDs shall record and store, at least on an aggregate basis, all repurchase agreements and securities lending which they have processed and serviced. This shall include all forms of encumbrance and claw back arrangements. The CSD shall allow competent authorities to access this information.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 34 – paragraph 1

1. A CSD shall take appropriate reconciliation measures to verify that the number of securities making up a securities issue or part of a securities issue submitted to the CSD is equal to the sum of securities recorded on the securities accounts of the participants of the securities settlement system operated by the CSD and, where relevant, on owner accounts maintained by the CSD. Such reconciliation measures shall be conducted ~~intrada~~at least daily.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 42 – paragraph 3

3. For its notary and central maintenance services as well as for each securities settlement system it operates, a CSD shall establish, implement and maintain an adequate business continuity policy ~~and~~, disaster recovery plans and recovery plans to ensure the preservation of its services, the timely recovery of operations and the fulfilment of the CSD’s obligations in the case of events that pose a significant risk of disrupting operations. Where a CSD also performs banking-type ancillary services as specified in Annex C of this Regulation, it shall comply with the requirements specified in Article 52(2a).

2012/11/12
Committee: ECON

Proposal for a regulation
Article 42 – paragraph 4

4. The plans referred to in paragraph 3 shall at a minimum provide for the recovery of all transactions at the time of disruption to allow the participants of a CSD to continue to operate with certainty and to complete settlement on the scheduled date. It shall include the setting up of a second processing site with the requisite level of key resources, capabilities and functionalities, including appropriately skilled and experienced staff.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 42 – paragraph 7 – subparagraph 1

ESMA shall develop in consultation with the members of the ESCB draft regulatory technical standards to specify the operational risks referred to in paragraphs 1 and 6, the methods to test, address or minimise those risks, including the business continuity policies ~~and~~, disaster recovery plans and recovery plans referred to in paragraphs 3 and 4 and the methods of assessment thereof.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 42 – paragraph 7 – subparagraph 2

ESMA shall submit those draft regulatory technical standards to the Commission by six months from the date of entry into force of this Regulation. These draft technical standards shall be applicable to both a CSD which performs banking type ancillary services to settlement and a credit institution which obtains authorisation to operate a CSD, and shall explicitly emphasise resolvability and safety.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 44 a (new)

Article 44 a CSD with a banking licence 1. Where a CSD authorised to perform banking-type ancillary services as defined in Annex C of this Regulation, it shall comply with the specific capital requirements laid down in Directive 2006/48/EC, and any subsequent legislative act on prudential supervision of credit institutions.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 52 – paragraph 1

1. A CSD shall ~~not~~only provide ~~itself any~~ banking type of ancillary services, as set out in Section C of the Annex, if the requirements in paragraph 2(a) are met.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 52 – paragraph 2

2. By way of derogation from paragraph 1, when a national competent authority referred to in Article 53(1) of this Regulation is satisfied that a CSD has all the necessary safeguards in place to allow it to exercise ancillary services, the competent authority may submit a request to the Commission to allow this CSD also to carry out the ancillary services set out in Section C of the Annex. This request shall include: (a) evidence justifying the request, explaining in detail the arrangements the CSD has put in place to deal with all associated risks; (b) a reasoned assessment that this solution is the most effective means to ensure systemic resilience; (c) an analysis of the expected impact on the relevant financial market and financial stability. Following a detailed impact assessment, a consultation of the undertakings concerned and after taking into account the opinions of the EBA, the ESMA and the ECB, the Commission shall adopt an implementing decision in accordance with the procedure referred to in Article 66. The Commission shall give reasons for its implementing decision. A CSD which benefits from a derogation shall be authorised as a credit institution as provided in Title II of Directive 2006/48/EC. This authorisation shall be limited exclusively to the provision of the banking type of ancillary services that it is authorised to provide in accordance with paragraph 4 and shall imply the fulfilment of the prudential and supervision requirements provided in Article 57 and 58.deleted

2012/11/12
Committee: ECON

Proposal for a regulation
Article 52 – paragraph 2 a (new)

2 a. A CSD wishing to perform banking type of ancillary services, as set out in Section C of the Annex and described in paragraph 1 of this Article, shall obtain authorisation as a credit institution in accordance with Regulation (EU) No .../2012 of the European Parliament and of the Council... (CRR IV). The authorisation shall be limited exclusively to the provision of the banking type of ancillary services in accordance with paragraph 4 and comply with the prudential and supervisory requirements provided in Articles 57 and 58. It shall also: (i) follow the rules issued by the Financial Stability Board with regard to G-SIFIs and the required capital add-ons to increase the CSD’s loss absorption capacity; (ii) have in place, before its authorisation as a credit institution, robust recovery and resolution plans to ensure continuity of all its operations, as defined in Section A, B and C of the Annex. These plans shall be in accordance with CPSS-IOSCO and FSB Key Attributes for Recovery and Resolution of Financial Market Infrastructures that incur credit risk, such plans covering the continuity of the entire service offering of the CSD. The functions, as set out in Annex C of the Regulation, shall also comply with the national laws, regulations and administrative provisions implementing Directive .../.../EU of the European Parliament and of the Council establishing a framework for the recovery and resolution of credit institutions and investment firms . (iii) Publically report in its annual Pillar 3 disclosure, as required under Directive 2006/48/EC, a detailed analysis of its intraday credit and liquidity risks, and how these risks are mitigated and managed. This analysis should take into consideration the Basel Committee on Banking Supervision Consultative Document, "Monitoring Indicators for Intraday Liquidity Management" (July 2012).

2012/11/12
Committee: ECON

Proposal for a regulation
Article 52 – paragraph 2 b (new)

2 b. If the competent authority referred to in Article 53(1) of this Regulation demonstrates, based on the available evidence, that the exposure of the CSD authorised to perform banking type ancillary services to the concentration of risks under Article 57(3) and (4) of this Regulation is not sufficiently mitigated, the competent authority referred to in Article 53(1) may require the CSD to designate more than one credit institution. The designated credit institutions, in either case, shall be considered as settlement agents.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 52 – paragraph 3

3. A CSD that intends to settle the cash leg of all or part of its securities settlement system in accordance with Article 37(2) of this Regulation but which has not obtained an authorisation in accordance with Paragraph 2(a), from the competent authority referred to in Article 53(1) of this Regulation, shall obtain authorisation to designate for this purpose an authorised credit institution as provided in Title II of Directive 2006/48/EC, unless the competent authority referred to in Article 53(1) ~~of this Regulation~~ demonstrates, based on the available evidence, that the exposure of one credit institution to the concentration of risks under Article 57(3) and (4) of this Regulation is not sufficiently mitigated. In the latter case, the competent authority referred to in Article 53(1) may require the CSD to designate more than one credit institution. The designated credit institutions shall be considered as settlement agents.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 52 – paragraph 4

4. The authorisation referred to in paragraph 3 shall cover the ancillary services set out in Section C of the Annex that the designated credit institution or a CSD ~~that has been granted a derogation under paragraph 2 of this Article~~ may want to provide for its participants.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 52 – paragraph 5

5. Whenever the CSD and the designated credit institution belong to a group of undertakings ultimately controlled by the same parent undertaking, the authorisation as provided in Title II of Directive 2006/48/EC of such designated credit institution shall be limited exclusively to the provision of the banking type of ancillary services that it is authorised to provide in accordance with paragraph 3 of this Article. The same requirement applies in respect of a CSD that has been granted a derogation under paragraph 2 of this Article a CSD is authorised as a credit institution in accordance with Title II of Directive 2006/48/EC and in accordance with paragraph 2, that authorisation shall be limited exclusively to the provision of the banking type of ancillary services that it is authorised to provide in accordance with paragraph 3 of this Article. The same requirement applies in respect of separate legal credit institution(s) as settlement bank(s) which have been designated by an authorised CSD. Banking type ancillary services shall only be performed when supporting core and ancillary CSD services as included in Sections A and B of the Annex of this Regulation. These services shall include those specified in Sections 1, 2, 4, 6 and 7(b) and (e) of Annex 1 of Directive 2006/48/EC and may only be performed within the limits set out in Section C of the Annex.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 52 – paragraph 5 a (new)

5 a. Any CSD that has been authorised as a credit institution according to paragraph 2, and any credit institution(s) designated in accordance with paragraph 3, shall be subject to the fulfilment of the prudential and supervision requirements provided in Articles 42, 57 and, in the case of a credit institution, 58.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 52 a (new)

Article 52 a Ongoing monitoring of CSDs with a banking licence ESMA shall, in line with the principle of an open market economy with free competition in accordance with Article 119(1) and (2) of the TFEU and in cooperation with EBA, monitor and report annually to the Commission on CSDs with a banking licence and in particular on any possible unintended consequences and spill over effects on other Member States or distortion of the single market and competition. ESMA may request additional information from CSDs to aid them in their reporting. Where these reports demonstrate that CSDs with a banking licence are making use of this in such a way that the distortion of the internal market poses systemic risk or indicates an implicit taxpayer guarantee to CSD, the Commission may intervene or shall submit legislative proposals.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 52 b(new)

Article 52 b Ongoing monitoring of access requirements ESMA shall closely monitor and annually report to the Commission on access to financial market infrastructure licensing arrangements and any negative impacts on the establishment of a competitive single market in post trade financial services, in particular where the use of such licences may be used to prevent competition from other trading venues and CCPs. Where these reports demonstrate ongoing barriers to competition in post trade financial services in such a way that poses systemic risk and an implicit taxpayer guarantee to financial market infrastructure the Commission may intervene to remove these barriers or shall come forward with legislative proposals.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 53 – paragraph 1

1. The CSD shall submit its application for authorisation to become a credit institution, or to designate a credit institution, as required under Article 52, to the competent authority of the Member State where it is established.

2012/11/12
Committee: ECON

Proposal for a regulation
Article 57 – paragraph 1

1. A credit institution designated to provide banking type of ancillary services shall be limited to provideing the services set out in Section C of the Annex that are covered by the authorisation. A credit institution providing banking services for a CSD shall be limited to only performing the activities listed in points 1, 2, 4, 6 and 7(b) and (e) of Annex 1 of Directive 2006/48/EC where they are necessary to provide the activities listed under Section C of the Annex of this Regulation.

2012/11/12
Committee: ECON