The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, is today publishing its Peer Review Report on the national supervision of Central Securities Depositories (CSDs) providing cross-border services or participating in interoperable links.
The peer review assessed six National Competent Authorities (NCAs) in respect of how they supervise CSDs, which make use of the freedom to provide services in another Member State. The exercise included onsite visits to the CSSF (Luxembourg), FKTK (Latvia) and NBB (Belgium) to gain a deeper understanding of how these NCAs supervise the cross-border activities of CSDs.
Verena Ross, Chair, said:
“The publication of this peer review marks an important juncture regarding the supervision of CSDs that make use of the freedom to provide services in other Member States.”
“The report sets out important recommendations for national authorities that aim at reinforcing their supervision of CSDs to ensure efficient securities settlement. An efficient, open internal market in securities settlement allows investors across the Union to invest in securities in another member state with the same ease, and using the same processes, as when they invest in their home country.”
Key findings:
NCAs generally have satisfactory initial authorisation processes using adequate tools and procedures to assess the cross-border links;
There is room for improvement in some NCAs’ approval processes during passporting procedures when acting in their capacity as host authority;
NCAs should consider improving cooperation between them, notably with the home authorities of the CSDs which provide services in their jurisdiction;
Overall, NCAs conduct ongoing supervision of CSDs in a holistic way considering the entire organisation without distinguishing between domestic and cross-border services; and
NCAs supervisory approaches should follow a risk-based approach and rely on adequate tools to monitor risks.
Today’s peer review is the first of a series of peer reviews mandated by the Central Securities Depositories Regulation, according to which ESMA should conduct at least every three years a peer review on the supervision of CSDs which make use of the freedom to provide services in another Member State.
Next steps
ESMA expects to carry out a follow-up assessment in two years to review the level of improvements achieved based on the findings and recommendations of this peer review.
