CACEIS NEWS 36

REGULATION

6 caceis news - No. 36 - January 2014

The T2S implementation timetable has been confirmed. CACEIS will offer its clients a single access point to all European markets through a direct connection that will improve the processing of instructions and make settlement more efficient. CACEIS will be a directly connected participant in T2S

Market infrastructures

Settlement cycle shortened from T+3 to T+2 The Central Securities Depository Regulation (CSDR) proposed by the European Commission involves harmonising market practices in order to complete the TARGET- 2 Securities (T2S) project. In this perspective, The CSDR provides that the settlement cycle must be shortened from T+3 to T+2 by 1 January 2015. CACEIS has taken part in the work done by the financial sector to assess the impact and determine the changeover date for transactions settled on the ESES securities settlement platform (Euroclear France, Euroclear Belgium, Euroclear Nederland). From Monday 6 October 2014, trades on NYSE Euronext or MTFs will be settled on ESES on T+2 (i.e. on Wednesday 8 October 2014 for trades executed on the first day). Over-the-counter (OTC) trades are not impacted by the T+2 settlement obligation. Euroclear UK & Ireland, working with the London Stock Exchange (LES), will also apply T+2 settlement rule from 6 October 2014 ■ LEI: a global identifier for each counterparty The Legal Entity Identifier (LEI) is the result of a G20 initiative supported by the FSB. The LEI is a 20-digit code that provides a single identifier for each legal entity that acts as a counterparty in financial transactions. From 12 February 2014, under the EMIR (European Market Infrastructure Regulation), counterparties will report their trades on OTC and listed derivatives to central trade repositories, including the identifiers of counterparties’ legal entities. Using these worldwide recognised identifiers will give regulators and financial institutions a better picture of how risks are distributed. As regards reporting information to central trade repositories, CACEIS offers its clients a delegated reporting service ■

T ARGET2-Securities (T2S) is the European project to create a platform for settlement in central-bank money, operated by the ECB/Eurosystem. It will short- ly enter the preparation and testing phase for the first migration, which has been confirmed for June 2015. This first phase will concern central securities depositories (CSDs) in Italy, Switzerland, Greece, Romania and Malta. Overall, 24 European CSDs have signed up to T2S. However, the ECB has adopted a migration approach that will spread the ef- fort, and the operational risk arising when systems go live, over four phases between now and February 2017. Benelux, France and Portugal, then Germany and Austria will join T2S in two successive waves in 2016. T2S is a major project for the ECB, for the CSDs and for the national central banks tak- ing part, but also for all the main post-mar- ket participants, including asset account- keepers/depositaries, like CACEIS, in T2S countries.

From the outset of the project, it was agreed that banks and clearing houses (i.e. those sub- mitting settlement instructions) would be able to access the T2S platform either indirectly (via one or more CSDs) or directly. Direct ac- cess is sensible for participants like CACEIS that represent a large volume of transactions and flows from several financial centres. As a result, CACEIS has formally confirmed to the ECB its intention to be a directly con- nected participant in T2S. For several months already, a CACEIS project team has been preparing for these migrations. The team is contributing to large-scale efforts in the financial sector, both Europe-wide and in each country. T2S is a project that CACEIS has always supported, and will be a catalyst for identifying technical and organisational initia- tives that will help CACEIS to adjust and en- hance its service offering. CACEIS will continue to keep its clients regu- larly informed about the main phases of the T2S project ■

eric derobert, Group Head of Public Affairs, CACEIS

First wave 22 June 2015

Second wave 28 March 2016

Third wave 12 September 2016 Clearstream Banking (Germany)

Fourth wave 6 February 2017

Euroclear Belgium

Centrálny depozitár cenných papierov (CDCP) (Slovakia)

Bank of Greece Securities Settlement System (BOGS) Depozitarul Central (Romania)

Euroclear France

KELER (Hungary)

Eesti Väärtpaberikeskus (Estonia)

Malta Stock Exchange

Euroclear Nederland Interbolsa (Portugal)

LuxCSD (Luxembourg)

Euroclear Finland

Monte Titoli (Italy)

Oesterreichische Kontrollbank (Austria)

Iberclear (Spain)

VP LUX (Luxembourg) KDD - Centralna Klirinško Depotna Družba (Slovenia)

SIX SIS (Switzerland)

National Bank of Belgium Securities Settlement System (NBB-SSS)

VP Securities (Denmark)

Lietuvos centrinis vertybinių popierių depozitoriumas (Lithuania)

Source: European Central Bank, September 2013

Timeline

EMIR Reporting for all derivative asset classes – commodities, credit, foreign exchange, equity and interest rates to Trade Repositories is mandatory in Europe (EEA) from 12 February 2014.

MiFID II and MiFIR Agreement reached by the European Parliament and the Council on 14 January 2014. European Parliament: Vote in Plenary expected for 25 February 2014.

february

march

april

may

Retail Distribution Review (RDR)

UCITS V The trilogue phases is expected to begin in advance of the European Parliament elections, due to be held in May 2014.

Central Securities Depositories Regulation European Parliament: Vote in Plenary expected for 4 February 2014.

Packaged Retail Investment Products (PRIPs) European Parliament: Vote in Plenary expected for 24 February 2014.

The Netherlands has adopted plans to introduce a complete ban on inducement payments from fund manufacturers to distributors from January 2014 regarding fund transactions carried out by retail investors. The FCA published a policy statement in April 2013 which bans the payment of commission from product providers to platforms from 6 April 2014 in UK.