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Document 32014R0909

Title and reference
Improving securities settlement in the EU

Summaries of EU legislation: direct access to the main summaries page.
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Dates
  • Date of last review: 31/10/2016
  • Initial creation date: 31/10/2016
Summarized and linked documents
Miscellaneous information
  • Author: Publications Office
Text

Improving securities settlement in the EU

 

SUMMARY OF:

Regulation (EU) No 909/2014 on improving securities settlement in the European Union and on central securities depositories

WHAT IS THE AIM OF THE REGULATION?

  • It aims to harmonise the timing and conduct of securities settlement in the European Union (EU) and the rules for central securities depositories (CSDs)* which operate the settlement infrastructure.
  • It is designed to increase the safety and efficiency of the system, particularly for intra-EU transactions.

KEY POINTS

  • The regulation introduces:
    • shorter settlement periods: in general, these should take place no later than the second business day after the trading occurs;
    • an obligation to record in book-entry form* all transferable securities admitted to trading or traded on the trading venues;
    • settlement discipline: CSDs must operate a penalty system, including cash fines, to deal with settlement failures.
  • EU countries’ national authorities:
  • CSDs must:
    • have robust governance arrangements, a clear organisational structure, internal controls and sound administrative and accounting procedures;
    • ensure senior management is of sufficiently good repute and experience;
    • establish user committees for each securities settlement system they operate;
    • maintain for at least 10 years all records of their services and activities;
    • remain fully responsible for any work they outsource;
    • display transparency by publicly disclosing the prices and fees involved in the core services they provide;
    • have sufficient capital to be adequately protected against operational, legal, custody, investment and business risks;
    • secure additional authorisation before providing any banking-type ancillary services.
  • CSDs in a non-EU country may operate through an EU-based branch, provided they meet certain requirements.
  • ESMA maintains a publicly available register of each authorised CSD.
  • Alongside the right to impose criminal sanctions, EU countries’ competent authorities have the power to apply appropriate administrative sanctions and other measures for an infringement.

FROM WHEN DOES THE REGULATION APPLY?

  • Book-entry form requirements (Article 3(1)) apply from 1 January 2023 to transferable securities issued after that date and from 1 January 2025 to all transferable securities.
  • The regulation’s settlement date rules (Article 5(2)) apply from 1 January 2015.

BACKGROUND

  • Settlement across borders presents higher risks and costs for investors than domestic operations. At the same time, this form of transaction is increasing. Traditionally, CSDs have been regulated nationally.
  • The legislation provides a common set of prudential, organisational and conduct of business standards for use across the EU, whose existence will play a crucial role in financing the economy.
  • For more information, see:

* KEY TERMS

Central securities depositories: institutions that put into effect transactions agreed on the market between buyers and sellers.

Book entry: where the ownership of a security is recorded in electronic form rather than in certificate form.

MAIN DOCUMENT

Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012 OJ L 257, 28.8.2014, pp. 1-72)

Successive amendments to Regulation (EU) No 909/2014 have been incorporated in the original text. This consolidated version is of documentary value only.

last update 23.03.2017

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