HM Treasury has published a consultation paper on implementing the Central Securities Depositories Regulation (CSDR).
The CSDR was published in the Official Journal of the EU (the OJ) on 28 August 2014. As a Regulation, the CSDR is directly applicable in Member States and thus the UK Government has already amended domestic legislation through the Central Securities Depositories Regulations 2014 to fulfil certain obligations at the time the CSDR was published in the OJ.
However, many of the CSDR’s requirements only apply once the Level 2 measures, i.e. the regulatory and implementing technical standards and delegated acts have been published, and CSDs themselves have been authorised. Those Level 2 measures are anticipated to be agreed and published in the OJ in early 2016. HM Treasury has therefore published the consultation paper to make additional amendments to domestic legislation to ensure that it is compatible with the provisions of the CSDR which will apply once the Level 2 measures are in place.
In particular the consultation paper notes that at present the UK’s only CSD is Euroclear UK and Ireland Limited (EUI) which is recognised as a recognised clearing house (RCH). EUI shares the RCH category with another four entities, all of which are central counterparties (CCPs). In a recent government call for evidence on RCHs, launched in March 2014, all respondents supported the creation of a new recognised body category specifically for CSDs. The Government proposes the creation of a new recognised body category in Part 18 of the Financial Services and Markets Act 2000 (FSMA) – a recognised central securities depository (RCSD). The Government believes that creating a new category would better reflect the differences between CSDs and CCPs. Consultees attention is also drawn to a proposed new section 313(1A) of FSMA which is intended to make it clear that CSDs are distinct from clearing houses. Section 285(1)(b) of FSMA which contains the definition of “recognised clearing house” is not amended, but should be read with section 313(1A) in mind.
Alongside the consultation paper, HM Treasury has also published two draft statutory instruments, which are required for the amendments to be effective, as they amend different pieces of legislation and follow separate processes.
The deadline for comments on the consultation paper is 4 February 2015.
View Consultation on the implementation of the Central Securities Depositories Regulation (CSDR), 10 December 2015