Upcoming CSDR affects Danish market participants
Now is the time to prepare for the impacts of the new European CSD Regulation. At first in 2017, it is all about record keeping and asset segregation and at a later stage, a new settlement discipline regime is introduced.
CSDR makes way for a level playing field for the CSDs in Europe. VP is on track and will apply for a European CSD license in Q2 2017, and soon after CSDR will affect banks, brokers and operators. New introductory information material has just been published.
Download the guide "Get ready for the new CSDR regulations" here (link removed).
“For issuers and investors CSDR is all about freedom to choose among CSDs. The requirement is a level playing field and regulatory regime. Naturally, it has a very big impact on VP, but it will also affect all our customers. We are focused on helping our customers comply and benefit from this new regime,” says Thomas Bo Christensen, Head of Clearing & Settlement Products in VP SECURITIES.
Two steps - 2017 and 2019
In general, the CSDR implications for participants can be divided in two steps. The first step takes effect in 2017 in parallel with VP receiving its license, and it will primarily concern asset segregation and record keeping. The second part is expected to take place in 2019 with focus on settlement discipline.
On an overall level, CSDR will improve investor protection through asset segregation, and VP is in practice already supporting this requirement. In addition, CSDR will ensure more integrity of a securities issue, and this includes daily reconciliation and a full reconciliation every two weeks.
CSDR and new record keeping
“At this point in time market participants should focus their efforts on compliance with the new European reporting duties, as they will be mandatory, when VP receives its CSDR license. We expect this to happen from September 2017,” says Thomas Bo Christensen.
The CSDR requires both static and transaction data. The static data is about legal identities related to securities accounts, issuers and CSD participants with legal entity identifier (LEI) and bank identifier code (BIC). A whole set of static data is required in the future, and part of this information is currently not available to VP.
Transaction data and settlement discipline
Expected in 2019 a new settlement discipline regime will be introduced, when VP joins T2S with DKK. In terms of transaction data, three new fields are required, and they are “type of transaction”, “place of trading” and “place of clearing”. As part of the new settlement discipline regime CSDR intends to improve safety and limit failure, and in 2019, a new penalty system is scheduled to take effect. The penalty system for failing settlement will be a reality 24 months after EU approval expected during 2017.
VP plans to host a series of meetings with customers to share information about technical compliance to CSDR during 2017. All participants will be invited accordingly.
For further information about the CSDR requirements do not hesitate to contact us.