1.

The following Annex VIa is inserted: ‘ ANNEX VIa ELIGIBILITY CRITERIA FOR THE USE OF SECURITIES SETTLEMENT SYSTEMS AND LINKS BETWEEN SECURITIES SETTLEMENT SYSTEMS IN EUROSYSTEM CREDIT OPERATIONS I. ELIGIBILITY CRITERIA FOR SECURITIES SETTLEMENT SYSTEMS (SSSS) AND LINKS BETWEEN SSSS 1. The Eurosystem determines the eligibility of an SSS operated by a central securities depository (CSD) established in a Member State whose currency is the euro or a national central bank (NCB) or a public body as specified in Article 1(4) of Regulation (EU) No 909/2014 of the European Parliament and of the Council (1) of a Member State whose currency is the euro (hereinafter an ‘SSS operator’ or an ‘operator of an SSS’) on the basis of the following criteria: (a) the euro area SSS operator complies with the requirements for authorisation as a CSD laid down in Regulation (EU) No 909/2014; and (b) the NCB of the Member State in which the respective SSS operates has set up and maintains appropriate contractual or other arrangements with the euro area SSS operator, which include the Eurosystem requirements laid down in Section II. If the authorisation procedure laid down in Title III of Regulation (EU) No 909/2014 in respect of a euro area CSD has not been completed, points (a) and (b) do not apply. In this situation, the SSS operated by this CSD must instead be positively assessed under the ‘Framework for the assessment of securities settlement systems and links to determine their eligibility for use in Eurosystem credit operations’, January 2014, which is published on the ECB's website. 2. The Eurosystem determines the eligibility of a direct link or a relayed link on the basis of the following criteria: (a) the direct link or, in the case of a relayed link, each of the underlying direct links, complies with the requirements laid down in Regulation (EU) No 909/2014; (b) the NCBs of the Member States in which the investor SSS, any intermediary SSS and the issuer SSS are established have set up and maintain appropriate contractual or other arrangements with the euro area SSS operators, which include the Eurosystem requirements laid down in Section II; (c) the investor SSS, any intermediary SSS and the issuer SSS involved in the link are all considered eligible by the Eurosystem. If the authorisation procedure laid down in Title III of Regulation (EU) No 909/2014 in respect of any CSD operating an SSS involved in a link has not been completed, points (a) to (c) do not apply. In this situation, links involving an SSS operated by such a CSD must instead be positively assessed under the ‘Framework for the assessment of securities settlement systems and links to determine their eligibility for use in Eurosystem credit operations’, January 2014. 3. Before determining the eligibility of a direct link or relayed link involving one or more SSSs operated by CSDs established in a European Economic Area (EEA) State whose currency is not the euro or NCBs or public bodies of an EEA State whose currency is not the euro (hereinafter a ‘non-euro area EEA SSS’ operated by a ‘non-euro area EEA SSS operator’), the Eurosystem carries out a business case analysis which takes into account, inter alia, the value of the eligible assets issued by or held in those SSSs. 4. Subject to the business case analysis having a positive outcome, the Eurosystem determines the eligibility of a link involving non-euro area EEA SSSs on the basis of the following criteria. (a) The non-euro area EEA operators of the SSSs involved in the link and the link itself comply with the requirements laid down in Regulation (EU) No 909/2014. (b) For direct links, the NCB of the Member State in which the investor SSS operates has set up and maintains appropriate contractual or other arrangements with the euro area operator of the investor SSS. These contractual or other arrangements must stipulate the obligation of the euro area SSS operator to implement the provisions laid down in Section II in its legal arrangements with the non-euro area EEA operator of the issuer SSS. For relayed links, each of the underlying direct links in which a non-euro area EEA SSS acts as issuer SSS must fulfil the criterion in the first paragraph of point (b). In a relayed link where both the intermediary SSS and the issuer SSS are non-euro area EEA SSSs, the NCB of the Member State in which the investor SSS operates must set up and maintain appropriate contractual or other arrangements with the euro area operator of the investor SSS. These contractual or other arrangements must stipulate not only the obligation of the euro area SSS operator to implement the provisions laid down in Section II in its legal arrangements with the non-euro area EEA operator of the intermediary SSS, but also the obligation of the non-euro area EEA operator of the intermediary SSS to implement the legal provisions laid down in Section II in its contractual or other arrangements with the non-euro area EEA operator of the issuer SSS. (c) All euro area SSSs involved in the link are considered eligible by the Eurosystem. (d) The NCB of the non-euro area EEA State in which the investor SSS operates has committed to reporting information on the eligible assets traded on domestic acceptable markets in a manner determined by the Eurosystem. If the authorisation procedure laid down in Title III of Regulation (EU) No 909/2014 in respect of any CSD operating the investor SSS, intermediary SSS or issuer SSS involved in a link has not been completed, points (a) to (d) do not apply. In this situation, links involving an SSS operated by such a CSD must instead be positively assessed under the ‘Framework for the assessment of securities settlement systems and links to determine their eligibility for use in Eurosystem credit operations’, January 2014. II. EUROSYSTEM REQUIREMENTS 1. In order to ensure legal soundness, an SSS operator must satisfy the NCB of the Member State in which the respective SSS operates, by reference to binding legal documentation, whether in the form of a duly executed contract or by reference to the mandatory terms and conditions of the relevant SSS operator or otherwise, that: (a) the entitlement to securities held in an SSS operated by that SSS operator, including to securities held through the links operated by the SSS operator (held in accounts maintained by the linked SSS operators), is governed by the law of an EEA State; (b) the entitlement of the participants in the SSS to securities held in that SSS is clear, unambiguous and ensures that the participants in the SSS are not exposed to the insolvency of that SSS operator; (c) where the SSS acts in the capacity of an issuer SSS, the entitlement of the linked investor SSS to securities held in the issuer SSS is clear, unambiguous and ensures that the investor SSS and its participants are not exposed to the insolvency of the issuer SSS operator; (d) where the SSS acts in the capacity of an investor SSS, the entitlement of that SSS to the securities held in the linked issuer SSS is clear, unambiguous and ensures that the investor SSS and its participants are not exposed to the insolvency of the issuer SSS operator; (e) no lien or similar mechanism provided for under applicable law or contractual arrangements will have a negative impact on the NCB's entitlement to the securities held in the SSS; (f) the procedure for allocating any shortfall of securities held in the SSS, in particular in the event of the insolvency of: (i) the SSS operator; (ii) any third party involved in safekeeping the securities; or (iii) any linked issuer SSS, is clear and unambiguous; (g) the procedures to be followed in order to claim securities under the legal framework of the SSS are clear and unambiguous, including, where the SSS acts as an investor SSS, any formalities to be fulfilled towards the linked issuer SSS. 2. An SSS operator must ensure that when the SSS it operates acts as an investor SSS, securities transfers made via links will be final within the meaning of Directive 98/26/EC of the European Parliament and of the Council (2), i.e. it is not possible to revoke, unwind, rescind or otherwise undo such securities transfers. 3. When the SSS that it operates acts as an issuer SSS, an SSS operator must ensure that it does not make use of a third-party institution, such as a bank or any party other than the SSS acting as intermediary between the issuer and the issuer SSS, or the SSS operator must ensure that its SSS has a direct or relayed link with an SSS which has this (unique and direct) relationship. 4. In order to utilise the links between SSSs used to settle central bank transactions, facilities must be in place to allow either intraday delivery-versus-payment settlement in central bank money or intraday free of payment (FOP) settlement, which may take the form of real-time gross settlement or a series of batch processes with intraday finality. Owing to the settlement features of TARGET2-Securities, this requirement is considered as already fulfilled for direct and relayed links in which all SSSs involved in the link are integrated in TARGET2-Securities. 5. With regard to operating hours and opening days: (a) an SSS and its links must provide settlement services on all TARGET2 business days; (b) an SSS must operate during daytime processing as referred to in Appendix V of Annex II to Guideline ECB/2012/27 (3); (c) SSSs involved in direct links or relayed links must enable their participants to submit instructions for same-day delivery-versus-payment settlement via the issuer and/or the intermediary SSS (as applicable) to the investor SSS until at least 3.30 p.m. Central European Time (CET) (4); (d) SSSs involved in direct links or relayed links must enable their participants to submit instructions for same-day FOP settlement via the issuer or intermediary SSS (as applicable) to the investor SSS until at least 4 p.m. CET; (e) SSSs must have measures in place to ensure that the operating times specified in points (b) to (d) above are extended in the event of emergency. Owing to the settlement features of TARGET2-Securities, these requirements are considered as already fulfilled for SSSs integrated in TARGET-2 Securities, and for direct and relayed links in which all SSSs involved in the link are integrated in TARGET2-Securities. III. APPLICATION PROCEDURE 1. Euro area SSS operators that intend for their services to be used in Eurosystem credit operations should submit an application for an assessment of eligibility to the NCB of the Member State in which the SSS is established. 2. For links, including those involving a non-euro area EEA SSS, the operator of the investor SSS should submit the application for an assessment of eligibility to the NCB of the Member State in which the investor SSS operates. 3. The Eurosystem may reject an application or, where the SSS or link is already eligible, it may suspend or withdraw eligibility if: (a) one or more of the eligibility criteria provided for in Section I are not met; (b) the use of the SSS or link could affect the safety and efficiency of Eurosystem credit operations and expose the Eurosystem to the risk of financial losses, or is otherwise deemed, on the grounds of prudence, to pose a risk. 4. The Eurosystem decision on the eligibility of an SSS or link is notified to the SSS operator which submitted the application for an assessment of eligibility. The Eurosystem will provide reasons for any negative decision. 5. The SSS or link may be used for Eurosystem credit operations once it has been published in the Eurosystem lists of eligible SSSs and eligible links on the ECB's website.