With 56 votes in favour and 3 against, MEPs on the European Parliament’s Committee on Economic and Monetary Affairs (ECON) adopted, on Wednesday 1 March, their negotiating position on the proposal for a report on the revision of the Regulation governing central securities depositories (CSDs).
“CSDs are financial institutions of systemic importance, so it is essential to subject them to a safe and efficient regulatory framework”, said rapporteur Johan van Overtveldt (ECR, Belgian) in a statement.
As regards the ‘mandatory buy-in’ (MBI) regime, on which the rapporteur was “sceptical” but which was wanted by the Greens/EFA in particular (see EUROPE 13105/17), they agreed that mandatory buy-in rules should only apply as a last resort. MBIs are one of the regulatory tools to remedy settlement defaults: it gives the buyer of a share or bond the right to obtain that title from another party, should the seller fail to deliver, in addition to the recently introduced sanctions for the seller.
“We suggest that alternative regulatory tools to prevent settlement fails are considered first, and further require the fulfilment of cumulative conditions and a thorough cost-benefit analysis by the European Securities and Markets Authority (ESMA) before the MBI process can be triggered”, Mr Van Overtveldt explained.
In addition, MEPs agreed to minimise cross-border obstacles and the administrative burden for CSDs so that they can operate throughout the EU with a single licence.
They also want the recognition regime for CSDs established in a third country expanded to cover securities settlement services, which should contribute to a more level playing field between CSDs established in a Member State and CSDs established in a third country and mitigate the risks.
Furthermore, they voted for a substantial simplification of the Commission’s proposal on the establishment of colleges of supervisors. At present, third country CSDs can provide settlement services freely in the EU, without supervision, creating an uneven playing field with EU CSDs.
They proposed that colleges should be established whenever a CSD is of substantial importance in more than one host Member State.
While the Greens/EFA wanted ESMA to directly supervise systemic or third country CSDs, it was finally decided to give ESMA a more prominent role in these colleges.
CSDs could also access banking services to provide settlement services for a broader range of currencies and obtain financing from cross-border investors. (Original version in French by Anne Damiani)