REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL under Article 75 of 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
Date: 2021-07-01
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: European Securities and Markets Authority, financial control, financial institution, financial instrument, financial legislation, financial transaction, liquidity control, market supervision, securities, third country

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 1.7.2021  COM(2021) 348 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL under Article 75 of 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  
 
 
REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

under Article 75 of 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 

1.  INTRODUCTION 

The  Regulation  on  improving  securities  settlement  in  the  European  Union  and  on  central 
securities depositories1 (CSDR) sought to improve the safety and efficiency of settlement as 
well  as  provide  a  set  of  common  requirements  for  central  securities  depositories  (CSDs) 
across  the  EU.  It  was  adopted  in  2014,  however certain  requirements  started  applying  only 
after adoption of the relevant regulatory technical standards (RTSs) a few years later. 

Article  75  of  CSDR  requires  the  Commission  to  review  and  prepare  a  general  report  on  a 
wide  range  of  issues  by  19  September  2019.  The  report  was  postponed  and  its  scope  is 
narrower than prescribed in CSDR due to delays in the application of some measures, as well 
as  the  recent  (re)authorisation  of  a  sufficient  number  of  CSDs  under  CSDR  to  allow  a 
comprehensive assessment.  Article 81(2c) of the European Securities and Markets Authority 
(ESMA)  Regulation2  also  requires  the  Commission  to  assess  the  potential  supervision  of 
third-country CSDs by ESMA.  

The  Commission  has  engaged  in  a  broad  consultation  process  in  the  preparation  of  this 
report. In broad terms, CSDR is achieving its original objectives to enhance the efficiency of 
settlement  in  the  EU  and  the  soundness  of  CSDs.  In  some  areas,  the  introduction  of 
significant  changes  to  CSDR  would  be  premature  considering  the  relatively  recent 
application  of  requirements.  Nevertheless,  stakeholders  have  expressed  concerns  on  the 
implementation of specific rules that already apply (i.e. on cross-border provision of services, 
access to commercial bank money, framework for third-country CSDs). The Final Report of 
the  High  Level  Forum  on  the  Capital  Markets  Union  (CMU)3  also  recommended  that  the 
Commission conduct a targeted review of CSDR to strengthen the CSD passport and improve 
supervisory convergence among national competent authorities, to enhance the cross-border 
provision  of  settlement  services  in  the  EU,  foster  competition  and  generate  cost  savings. 
Concerns were also  raised about  the proportionality of the settlement  discipline regime and 
its  impact  on  financial  stability.  The  pressure  put  on  markets  by  the  COVID-19  pandemic 
seems to shed light on some of those concerns. 

1 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. 
2  Regulation  (EU)  No  1095/2010  of  the  European  Parliament  and  of  the  Council  of  24  November  2010 
establishing  a  European  Supervisory  Authority  (European  Securities  and  Markets  Authority),  amending 
Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC, OJ L 331, 15.12.2010. 
3https://ec.europa.eu/info/sites/default/files/business_economy_euro/growth_and_investment/documents/200610
-cmu-high-level-forum-final-report_en.pdf. 

1 

 
 
 
 
                                                           
The  Commission  acknowledged  that  some  of  these  issues  need  to  be  addressed  and  in  the 
new  CMU  Action  Plan4,  adopted  in  September  2020,  it  announced  that  it  will  consider 
amending  rules  to  improve  the  cross-border  provision  of  services,  to  contribute  to  the 
development of a more integrated post-trading landscape in the EU. 

This report summarises the main areas under review to ensure fulfilment of the objectives of 
CSDR in a more proportionate, efficient and effective manner. In light of the important issues 
identified,  and  as  also  announced  in  the  2021  Commission  Work  Programme,5  the 
Commission  considers  presenting  a  legislative  proposal  to  amend  CSDR  to  improve  its 
efficiency  and  effectiveness  (CSDR  REFIT),  subject  to  an  impact  assessment  that  will 
consider the most appropriate solutions in more depth. 

2.  CENTRAL SECURITIES DEPOSITORIES REGULATION (CSDR) 

CSDs6  are  financial  institutions  of  systemic  importance  for  financial  markets.  They  play  a 
crucial  role  in  the  primary  market,  by  centralising  the  initial  recording  of  newly  issued 
securities (‘notary service’). They operate the infrastructure (‘securities settlement systems’) 
that  enables  the  completion  of  a  securities  transaction  (‘settlement’).  They  also  maintain 
securities  accounts  that  record  how  many  securities  have  been  issued  by  whom  and  each 
change  in  the  holding  of  those  securities  (‘central  maintenance  service’).  According  to  the 
ECB, there were over EUR 53 trillion worth of securities in EU securities settlement systems 
at  the  end  of  2019,  which  handled  over  420  million  delivery  instructions  for  a  total  of 
turnover of over EUR 1,120 trillion that year.7 

CSDs  are  essential  for  the  financing  of  the  economy.  Apart  from  their  role  in  the  issuance 
process, securities collateral posted by companies, banks and other institutions to raise funds 
flows through securities settlement systems operated by CSDs. They are also integral for the 
implementation of monetary policy as they settle securities in central bank monetary policy 
operations.  

CSDR played a pivotal role in the post-trade harmonisation efforts in the EU by introducing:  

  shorter settlement periods; 
  settlement discipline measures (mandatory cash penalties and ‘buy-ins’ for settlement 

fails, settlement fails reporting);  

  strict organisational, conduct of business and prudential requirements for CSDs; 
 

increased  prudential  and  supervisory  requirements  for  CSDs  and  other  institutions 
providing banking services that support securities settlement; 

  a passport system  allowing authorised CSDs to provide their services across the EU 

under a specific procedure. 

4 Communication from the Commission to the European Parliament, the Council, the European Economic and 
Social Committee and the Committee of the Regions “A Capital Markets Union for people and businesses-new 
action plan”, COM(2020) 590. 
5 Communication from the Commission to the European Parliament, the Council, the European Economic and 
Social Committee and The Committee of the Regions, ‘Commission Work Programme 2021 A Union of vitality 
in a world of fragility’, COM(2020) 690.  
6 References to CSDs in this document also cover the two International Central Securities Depositories (ICSDs), 
when  applicable.  The  ICSDs  are  a  sub-category  of  CSDs  specialised  in  the  issuance  of  international  bonds 
(known as ‘Eurobonds’). 
7 
Holdings 
European 
https://sdw.ecb.europa.eu/browse.do?node=9691130 (accessed on 29.04.2021). 

Securities 

Statistics 

Central 

Bank 

Database,  

2 

 
 
                                                           
CSDR  also  sought  to  implement  the  international  standards  for  financial  markets 
infrastructures  (CPMI-IOSCO  Principles  for  Financial  Markets  Infrastructures  (PFMIs))  in 
the EU. 

3.  STAKEHOLDER INPUT 

In the preparation of this report: 

  Member States’ Expert Group meeting, where the European Central Bank (ECB), the 

European Parliament and ESMA were also invited (September 2020); 

  ESMA  submitted  to  the  Commission  its  first  two  reports  on  CSDR  implementation 
(i.e.  on  internalised  settlement  and  cross-border  provision  of  services)  as  required 
under  Article  74  of  CSDR  (November  2020).  Two  additional  reports  (on  the  use  of 
technological  innovation  by  CSDs  and  the  provision  of  banking-type  ancillary 
services) are expected mid- 2021. 
targeted consultation on the implementation of CSDR between 8 December 2020 and 
2  February  2021,  to  which  91  stakeholders  responded.  A  detailed  summary  of  the 
responses  received  is  provided  in  the  feedback  statement8.  The  Commission  also 
received confidential answers. In response to the Commission consultation on an EU 
framework  for  markets  in  crypto-assets9,  to  which  198  respondents  replied,  some 
stakeholders also raised issues in relation to CSDR.  

 

4.  PRINCIPAL ISSUES IDENTIFIED 

4.1. Clarifying  and  simplifying  burdensome  requirements  related  to  the  provision  of 

services by CSDs domestically and cross-border  

Domestically,  EU  CSDs  are  subject  to  the  authorisation  and  ongoing  supervision  of  their 
home  Member  State’s  authorities.  A  majority  of  respondents  to  the  targeted  consultation, 
public authorities and CSDs alike, argued that the annual review and evaluation of CSDs is 
disproportionate  and  of  limited  added  value.  They  also  expressed  concerns  as  to  the 
proportionality of the information required for these exercises. 

Within  the  EU,  passporting  regimes  allow  businesses  authorised  in  one  Member  State  to 
provide their services throughout the single market, thereby enhancing competition. In other 
areas,  in  principle  minimal  additional  requirements  are  required  by  host  Member  States’ 
authorities  for  entities  providing  services  cross-border.  CSDs,  however,  may  only  provide 
services for financial instruments constituted under the law of another Member State under a 
special  procedure  requiring  the  agreement  of  the  host  Member  State,  based  on  the  CSD’s 
compliance  with  the  host  Member  State’s  corporate  laws  and  cooperation  of  the  home  and 
host authorities, before, and in some cases after, granting the passport.  
Feedback  shows  there  has  been  limited  provision  of  cross-border  CSD  services.10  For 
example,  according  to  ESMA,  the  settlement  of  securities  issued  by  issuers  from  other 
Member States represents for most CSDs less than 5% of their settlement activity, although it 
represents more than 80% of the activity of ICSDs.   

8 https://ec.europa.eu/info/consultations/finance-2020-csdr-review_en.  
9 
establishing-a-European-framework-for-markets-in-crypto-assets/public-consultation_en. 
10 ESMA Report ‘Cross-border services and handling of applications under Article 23 of CSDR’, 5.11.2020. 

https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12089-Directive-regulation-

3 

 
 
 
 
                                                           
Stakeholders  were  therefore  unanimous  in  their  call  for  the  Commission  to  clarify  and 
simplify  the  passporting  rules,  in  particular  to  reduce  the  administrative  burden  and  costs. 
Different options were suggested, ranging from the more far reaching (replacing the existing 
procedure  with  a  simple  notification  as  for  other  financial  institutions)  to  more  technical 
(targeted modifications in the existing framework, e.g. allowing certain financial instruments 
(e.g.  bonds)  to  be  serviced  cross-border  without  following  the  passporting  procedure; 
clarification of the home and host authorities’ assessment; standardisation of the procedure’s 
content and format).  

Based on this feedback, it is appropriate to evaluate the rules regarding CSDs’ annual 
review  and  evaluation,  in  particular  their  frequency  and  content,  as  well  as  CSDR’s 
passporting requirements. 

4.2. Improving  supervisory  convergence  amongst  authorities  involved  in  CSDs’ 

supervision 

While  the  (re)authorisation  process  has  taken  time,  today  almost  all  EU  CSDs  have  been 
authorised  pursuant  to  CSDR;  the  rest,  provided  they  were  authorised  under  the  previously 
applicable  national  law,  continue  to  operate  under  a  grandfathering  clause.  As  it  is  already 
seven  years  since  CSDR  was  adopted,  many  stakeholders  were  in  favour  of  introducing  an 
end-date to that clause to ensure a level playing field amongst EU CSDs.  

Furthermore, many stakeholders asked the Commission to enhance supervisory convergence 
in  relation  to  CSDs  operating  both  domestically  and  on  a  cross-border  basis.  For  example, 
most  respondents  to  the  targeted  consultation  considered  that  there  is  need  to  improve 
cooperation among authorities and enhance convergence in the review and evaluation process 
due  to  different  approaches.  There  were  also  suggestions  to  clarify  the  role  of  relevant 
authorities in the authorisation process and the review and evaluation procedure.  

In addition, the divergent application of CSDR requirements and the insufficient cooperation 
between home and host authorities hinder the creation of a true single market for settlement. 
Therefore, many stakeholders, including ESMA and the CMU High Level Forum, advocated 
for  additional  supervisory  convergence  and  enhanced  cooperation  amongst  authorities.  For 
example, the establishment of colleges of supervisors for CSDs making use of the passport, 
where  such  cooperation  is  more  formalised  and  subject  to  specific  rules,  is  voluntary  and 
decided by the CSD's home authority; in practice, only one college has been set up to date. 

Further consideration should therefore be given to ending the grandfathering clause for 
EU  CSDs  and  to  different  ways  to  enhance  the  cooperation  amongst  authorities  and 
strengthen  supervisory  convergence  (e.g.  through  a  requirement  for  mandatory 
colleges, empowerments to ESMA for RTSs)  to ensure a true single market for CSDs.  

4.3. Facilitating the provision of banking-type ancillary services 

CSDR encourages settlement in central bank money; however, CSDs' access to non-domestic 
central  banks  is  subject  to  strict  conditions  and,  therefore,  in  practice  quite  limited.  To 
address  this  difficulty,  CSDR  also  allows  settlement  using  commercial  bank  money  under 
certain  conditions.  Commercial  bank  money  can  be  provided  by  the  CSD  itself  if  it  is 
licensed  to  provide  banking-type  ancillary  services  or  from  a  credit  institution.  CSDs 
providing banking-type ancillary services need to comply with additional requirements due to 
significant  credit  and  liquidity  risks  for  the  CSD  and  its  participants.  When  using  a  bank, 
CSDs  must  use  a  designated  credit  institution  (i.e.  a  limited-licence  bank  introduced  by 

4 

 
 
 
 
CSDR  that  provides  services  only  to  CSDs  and  that  has  to  comply  with  additional 
requirements to mitigate the risks) when their settlement activity exceeds certain thresholds; 
below those thresholds, they can use a commercial credit institution. 

Certain  stakeholders,  mainly  CSDs,  argued  that  CSDR  hinders  settlement  in  foreign 
currencies,  thereby  making  cross-border  activity  less  likely  and  limiting  competition.  In 
particular,  they  observed  that  the  requirements  under  which  they  can  provide  banking-type 
ancillary services are too restrictive and costly. This is evidenced by the fact that only four 
CSDs  have  been  authorised  under  CSDR  to  provide  such  services  to  date.  Furthermore,  no 
designated credit institutions exist. Certain stakeholders also noted that the thresholds under 
which  CSDs  can  use  a  commercial  bank  for  settlement  rather  than  a  designated  credit 
institution  are  too  low.  Some  public  authorities  also  expressed  their  openness  to  reviewing 
certain  aspects  of  the  rules  without  endangering  financial  stability.  However,  other 
stakeholders, including certain CSDs and CSDs’ participants, noted that loosening the rules 
could endanger the level playing field between banks and CSDs or even possibly increase the 
risk of contagion. 

It  is  appropriate  to  assess  whether  there  is  a  need  to  simplify  and  make  more 
proportionate  certain  requirements  to  address  the  challenges  when  settling  in 
commercial bank money, while ensuring the resilience of the financial system. In view of 
facilitating  access  to  settlement  in  EU  currencies  through  accounts  opened  with  a 
central  bank,  the  Commission  invites  the  European  System  of  Central  Banks  to 
consider  possibilities  to  facilitate  the  access  by  EU  CSDs  authorised  in  other  Member 
States to their central bank services.  

4.4. Reducing disproportionate burdens and costs related to settlement discipline 
Settlement  discipline is  due to  apply  on 1 February 2022 when the relevant  RTS11 is  set  to 
enter into force. Its main elements are the introduction of cash penalties for CSD participants 
in case of settlement fails, and mandatory buy-ins where a CSD participant fails to deliver the 
security  within  a  fixed  extension  period.  Despite  the  absence  of  experience  in  applying  the 
rules,  the  development  and  specification  of  the  framework  in  the  RTS  has  allowed  all 
interested parties to better understand the regime and the challenges its application could give 
rise to, especially at times of crisis such as the COVID-19 crisis in spring 2020. Settlement 
discipline attracted the most attention in the targeted consultation, with almost all respondents 
providing feedback. The European Parliament in its resolution on further development of the 
Capital  Markets  Union12  also  invited  the  Commission  to  review  the  settlement  discipline 
regime in view of the COVID-19 crisis and Brexit.  

Almost  all  stakeholders  noted  that  there  is  a  significant  lack  of  clarity  as  to  the  scope  of 
application  of  the  mandatory  buy-in  rules.  This  is  also  confirmed  by  the  number  of 
requests  for  clarifications  to  make  the  framework  operational  that  have  been  submitted  to 
ESMA and the Commission. 

Furthermore, the vast majority of respondents to the targeted consultation indicated that buy-
in  rules  should  be  reviewed,  with  a  large  majority  in  favour  of  voluntary  rather  than 

11  Commission  Delegated  Regulation  (EU)  2018/1229  of  25  May  2018  supplementing  Regulation  (EU)  No 
909/2014  of  the  European  Parliament  and  of  the  Council  with  regard  to  regulatory  technical  standards  on 
settlement discipline, OJ L 230, 13.09.2018. 
12  European  Parliament  resolution  of  8  October  2020  on  further  development  of  the  Capital  Markets  Union 
(CMU): improving access to capital market finance, in particular by SMEs, and further enabling retail investor 
participation (2020/2036(INI)), para. 21. 

5 

 
 
                                                           
mandatory  buy-ins.  It  was  argued  that  mandatory  buy-ins  will  reduce  liquidity  in  the 
market, increase costs for investors and place EU CSDs at a competitive disadvantage when 
competing with third-country CSDs that do not have to comply with similar rules.  

Moreover,  most  respondents  to  the  targeted  consultation  considered  that  settlement 
discipline,  in  particular  mandatory  buy-ins,  would  have  had  a  significant  negative 
impact on the market during the market turmoil provoked by COVID-1913 as it would 
have:  (i)  increased  liquidity  pressure,  (ii)  increased  the  cost  of  securities  at  risk  of  being 
bought-in, and (iii) hampered the ability to hedge.  

Nonetheless, few stakeholders were in favour of mandatory buy-ins, arguing that: voluntary 
buy-ins  today  do  not  incentivise  the  optimisation  of  back-office  procedures  that  can  also 
cause settlement fails; there will be significant hesitation to execute voluntary buy-ins against 
large market participants; and they have already made significant investments to comply with 
the framework.  

The public consultation as well as questions to ESMA and the Commission have illustrated 
that  clarifications  on  the  scope  of  the  rules  on  cash  penalties  might  also  be  required.  In 
addition, it seems that in certain Member States the current methodology for the calculation 
of  cash  penalties  cannot  be  applied14  due  to  the  absence  of  an  official  interest  rate  for 
overnight credit.  

In  light  of  stakeholders’  feedback,  it  is  appropriate  for  the  Commission  to  consider 
proposing  certain  amendments,  subject  to  an  impact  assessment,  to  the  settlement 
discipline  framework,  in  particular  the  mandatory  buy-in  rules,  to  make  it  more 
proportionate and avoid potential undesired consequences.  

4.5. Enhancing the framework for third-country CSDs 

Article 81(2c) of the ESMA Regulation requires the conduct of a comprehensive assessment 
of  the  potential  supervision  of  third-country  CSDs  by  ESMA  exploring  certain  aspects, 
including recognition based on systemic importance, ongoing compliance, fines and periodic 
penalty payments. 

At  present,  third-country  CSDs  can  only  provide  notary  and  central  maintenance  services 
after the Commission has adopted an equivalence decision with respect to the third-country 
legal  framework  and  following  recognition  by  ESMA.  ESMA  does  not  have  direct 
supervisory powers over recognised third-country CSDs. However, in principle, third-country 
CSDs that provided their services in the EU before the entry into force of CSDR can continue 
to do so under a grandfathering clause that has no end date. 

To date the Commission has adopted only one equivalence decision (for the UK) which is in 
force  until  30  June  2021  and  ESMA  has  recognised  only  the  UK  CSD.  Limited  practical 
experience exists therefore for the third-country regime. 

to 

ESMA 

According 

13 
(https://www.esma.europa.eu/sites/default/files/library/esma_50-165-
1287_report_on_trends_risks_and_vulnerabilities_no.2_2020.pdf)  in  March  2020,  settlement  fails  climbed  to 
14% for equities (vs 6% in 2019) and close to 6% for bonds (vs 3% in 2019); however they have since largely 
recovered to historical levels. 
14 Commission Delegated Regulation (EU) 2017/389 of 11 November 2016 supplementing Regulation (EU) No 
909/2014 of the European Parliament and of the  Council as regards the parameters for the calculation of cash 
penalties for settlement fails and the operations of CSDs in host Member States, OJ L 65, 10.3.2017. 

6 

 
 
 
  
                                                           
Against  this  background,  the  majority  of  stakeholders  were  not  in  favour  of  introducing  at 
this  stage  a  comprehensive  framework  for  the  recognition  and  supervision  of  third-country 
CSDs.  Nevertheless,  the  consultation  showed  certain  areas  where  further  reflection  may  be 
needed to strengthen the applicable rules.  

Concerning the grandfathering clause, first, it seems that there is insufficient information on 
which  third-country  CSDs  currently  provide  services  under  that  clause  for  financial 
instruments constituted under the law of a Member State. ESMA and many stakeholders were 
in  favour  of  introducing  a  notification  requirement  to  enhance  transparency  in  the  market. 
Second, some stakeholders questioned whether there is an unlevel playing field between EU 
CSDs and third-country CSDs that continue to operate under that clause. 

Questions were also raised about the scope of the third-country provisions. First, recognition 
by ESMA is currently not required for third-country CSDs providing settlement services 
for  financial  instruments  constituted  under  the  law  of  a  Member  State.  ESMA  is  in 
favour  of  expanding  the  scope  of  recognition  to  settlement  services  arguing  that  this  could 
ensure financial stability and investor protection as well as a level playing field between EU 
and third-country CSDs. Little information is however available as to whether third-country 
CSDs  engage  in  such  activities.  Second,  certain  stakeholders  invited  the  Commission  to 
clarify  the  scope  of  financial  instruments  for  which  recognition  is  required,  taking  into 
account the passporting rules where similar terminology is used. 

It is therefore appropriate to assess whether further improvements are warranted in the 
framework  for  third-country  CSDs  (e.g.  end-date  to  the  grandfathering  clause, 
introduction  of  a  notification  requirement)  to  ensure  the  financial  stability  of  the  EU 
and a level  playing field between EU and third-country CSDs, taking into account the 
relevant internationally agreed PFMIs. 

4.6. Use of technological innovation 

Distributed  ledger  technology  (DLT)  and  the  tokenisation  of  securities  may  transform 
clearing and settlement  by simplifying processes, reducing costs and increasing security.  In 
September  2020,  the  Commission  published  a  proposal15  for  a  pilot  regime  for  market 
infrastructures based on DLT.  

Respondents  to  the  targeted  consultation  noted  that  CSDR  must  remain  technology  neutral 
and ensure that emerging providers submit to  the same rules as incumbents  (‘same service, 
same  risk,  same  rules’  principle).  Most  stakeholders  argued  that  any  changes  to  CSDR  to 
realise  the  full  potential  of  technology  should  be  postponed  until  the  Commission  proposal 
for a pilot regime is adopted and lessons can be drawn from its implementation.  

Further reflection will be given to the implications for CSDR of the use of technology by 
CSDs.  The  Commission  also 
invites  ESMA  to  consider  whether  supervisory 
convergence tools falling under its competence could be used or amendments to existing 
RTSs may be required to facilitate the use of technological innovation by CSDs.  

4.7 Areas where stakeholders do not consider further action is necessary at this point in 
time  

15  Proposal  for  a  Regulation  of  the  European  Parliament  and  the  Council  on  a  pilot  regime  for  market 

infrastructures based on distributed ledger technology, COM(2020) 594. 

7 

 
 
 
 
 
 
 
                                                           
Most  stakeholders  agreed  that  the  data  reported  by  settlement  internalisers16  is  effective, 
efficient,  coherent,  relevant  and  provides  EU  added  value,  thereby  increasing  market 
transparency.    Furthermore,  stakeholders  noted  that  the  obligation  has  been  in  force  for  a 
limited  period  of  time  and  it  is  too  early  for  its  review.  However,  increasing  internalised 
settlement  activity,  a  trend  confirmed  also  by  ESMA17,  warrants  careful  monitoring  to 
prevent emerging risks to financial stability.   

Regarding  the  introduction  of  measures  to  limit  the  impact  of  CSDs’  failure  on  taxpayers, 
only  few  stakeholders  provided  input.  Considering  the  limited  feedback  received,  the 
Commission  considers  appropriate  to  examine  this  in  more  detail  later,  once  public 
authorities and the industry will have had more experience with the implementation of CSDR 
and  the  recovery  resolution  framework  applicable  to  other  financial  market  infrastructures 
(namely CCPs18). 

5.  CONCLUSIONS 

Stakeholders’ feedback does not point to a need to make fundamental changes to most core 
requirements of CSDR, which are integral to ensuring transparency and mitigating systemic 
risks in settlement. Nevertheless, based on the input received, further consideration is needed 
for the issues identified in this report. 

As announced in the 2020 CMU Action Plan and the 2021 Commission  Work Programme,  
the  Commission  will  therefore  consider  proposing  a  REFIT  legislative  review  of  CSDR, 
subject  to  an  impact  assessment.  This  initiative  should  support  the  Commission's  Better 
Regulation  agenda  by  eliminating  unnecessary  costs  that  are  currently  born  by  companies 
while  making  the  EU  financial  market  more  integrated,  efficient  and  safe  to  facilitate 
investment. 

16  Settlement  internalisers  are  institutions  that  execute  transfer  orders  on  behalf  of  clients  or  on  their  own 
account other than through a securities settlement system. 
17 ESMA Report ‘CSDR Internalised Settlement’, 5.11.2020. 
18  Regulation  (EU)  2021/23  of  the  European  Parliament  and  of  the  Council  of  16  December  2020  on  a 
framework  for  the  recovery  and  resolution  of  central  counterparties  and  amending  Regulations  (EU)  No 
1095/2010,  (EU)  No  648/2012,  (EU)  No  600/2014,  (EU)  No  806/2014  and  (EU)  2015/2365  and  Directives 
2002/47/EC, 2004/25/EC, 2007/36/EC, 2014/59/EU and (EU) 2017/1132, OJ L 22, 22.1.2021. 

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