The European Central Securities Depositories Association (ECSDA) was established in 1997 in Madrid as a forum for the exchange of knowledge and the representation of common interests of the European CSD industry. ECSDA has 39 members (as at January 2018), consisting of CSDs from 35 European countries.
Activities within ECSDA are mostly carried out within working groups (WGs), which cover specific areas of CSD business. KDPW representatives are members of four WGs:
- Public Policy Working Group (WG2),
- Settlement Working Group (WG3),
- Compliance Working Group,
- Harmonisation Working Group (WG5).
Public Policy Working Group (WG2)
The Public Policy Working Group analyses and prepares common positions for European CSDs with respect to initiatives and draft legislative proposals relating to the capital market, which affect the business activities of infrastructure institutions responsible for safekeeping and settlement operations. Position papers and recommendations prepared by the WG, based on identified common interests of European CSDs, are sent to ECSDA members and – via the ECSDA Board of Directors – to European market and legislative bodies, i.e. the EU Commission and the EU Parliament, as well as to European regulatory entities – ESMA and EBA. The WG also monitors the implementation of European regulations in EU member states and provides comments where relevant.
One important area of work for the WG has been Regulation (EU) No 909/2014 on improving securities settlement in the European Union and on central securities depositories (known as CSDR) and related secondary legislation. This has resulted in the formulation of a common position among members of the Association during the consultation stage of the legislative process and assessment of the effects of CSDR on the business operations of CSDs, other infrastructure institutions and market participants. The WG also played a significant role at the interpretation stage of the regulations and in preparing comments relating to their implementation to the relevant authorities.
The WG participates in the process of agreeing a common position for members participating in consultation and lobbying exercises relating to other significant legislative efforts (apart from CSDR), including regulatory initiatives (updates to the AIFMD and UCITS V directives, regulations forming part of the Capital Markets Union project, including conflict of law regulations) as well as technological initiatives (e.g. blockchain). Co-operation also takes place with expert groups working closely with the EU Commission (the European Post-Trade Forum - EPTF) and with the ECB (Advisory group on Market Infrastructures for Securities and Collateral - AMI-SeCo).
Settlement Working Group (WG3)
WG3 is responsible for examining specific securities settlement processes, including those surrounding failed settlement, as part of settlement discipline requirements set out in the provisions of CSDR.
The WG was responsible for addressing cross-border CSD operational links. The WG has also prepared reports on harmonisation of settlement principles in Europe for the EU Commission, the EBC and AFME (formerly ESF).
Compliance Working Group
The Compliance Working Group addresses specific issues relating to processes ensuring compliance with various regulations affecting CSDs. At the initial stage of preparation for CSD authorisation under the requirements of CSDR, the WG examined organisational requirements set out in the Regulation, requirements on risk management in cross-CSD links and principles of recovery and resolution for CSDs. An important feature of the work of the WG remains risk management and anti-money laundering.
Harmonisation Working Group (WG5)
The Harmonisation WG primarily concentrates on standardisation in corporate actions processes at the stage of the drafting and interpretation of the standards, as well as the monitoring of the implementation processes.
The WG has been building on the work of the former WG5, which prepared reports on corporate actions processing, which contained proposals for market standards for corporate actions processed by CSDs. The proposals for standards have formed the basis for the work carried out by the Corporate Actions Joint Working Group (CAJWG), which has resulted in European Markets Standards for Corporate Actions Processing, published by the CAJWG in 2009.
The WG is currently engaged in a consultation exercise on regulatory solutions supplementing the Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement (known as SRD-II).