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European Commission - Press release

Commission acts to increase the safety and efficiency of securities settlement in Europe

Brussels, 7 March 2012 - As part of its ongoing efforts to create a sounder financial system, the European Commission has proposed today to set up a European common regulatory framework for the institutions responsible for securities settlement, called Central Securities Depositories (CSDs). The proposal will bring more safety and efficiency to securities settlement in Europe. It also seeks to shorten the time it takes for securities settlement and to minimise settlement fails.

Commissioner for Internal Market and Services Michel Barnier said: "I am committed to ensuring that all financial markets are properly regulated and supervised. Settlement is a crucial process for the securities markets and the financing of our economy, and as such its safety and efficiency needs to be ensured. The numbers speak for themselves: in the European Union, transactions worth over one quadrillion euro were settled by CSDs in the last two years. Today's proposal will introduce, in line with our international partners, common standards across the Union for securities settlement and CSDs to ensure a true single market for the services provided by national CSDs."

The proposal contains the following key elements:

  • The settlement period will be harmonised and set at a maximum of two days after the trading day for the securities traded on stock exchanges or other regulated markets (currently two to three days are necessary for most securities transactions in Europe).

  • Market participants that fail to deliver their securities on the agreed settlement date will be subject to penalties, and will have to buy those securities in the market and deliver them to their counterparties.

  • Issuers and investors will be required to keep an electronic record for virtually all securities, and to record them in CSDs if they are traded on stock exchanges or other regulated markets.

  • CSDs will have to comply with strict organisational, conduct of business and prudential requirements to ensure their viability and the protection of their users. They will also have to be authorised and supervised by their national competent authorities.

  • Authorised CSDs will be granted a 'passport' to provide their services in other Member States.

  • Users will be able to choose between all 30 CSDs in Europe.

  • CSDs in the EU will have access to any other CSDs or other market infrastructures such as trading venues or Central Counterparties (CCPs), whichever country they are based in.

The proposal now passes to the European Parliament and the Council (Member States) for negotiation and adoption.


Settlement is an important process, which ensures the exchange of securities against cash following a securities transaction (for instance an acquisition or a sale of securities). CSDs are systemically important institutions for the financial markets because they operate the infrastructures (so-called securities settlement systems) that enable the settlement of virtually all securities transactions. CSDs also track how many securities have been issued, by whom, and each change in the holding of such securities. Finally, they play a crucial role for the financing of the economy, as almost all the collateral posted by banks to raise funds flows through securities settlement systems operated by CSDs.

However, CSDs are still regulated only at national level, and cross-border settlement is less safe (failure for cross-border transactions can reach up to 10% in certain markets) and efficient than domestic settlement: costs are up to four times higher.

The proposed Regulation will complete the European regulatory framework for securities markets. There are three main steps in securities transactions:

Trading – this is regulated by MiFID

Clearing – this will be regulated by EMIR

Settlement – this is addressed by today's proposal

See also: MEMO/12/163

More information:

Contacts :

Chantal Hughes (+32 2 296 44 50)

Carmel Dunne (+32 2 299 88 94)

Audrey Augier (+32 2 297 16 07)

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