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ISLA response to ESMA CSDR buy in consultation




CSDR – our response to the ESMA consultation on buy-ins mechanics and responsibilities was submitted today. A copy of the response (which was put together with the help of our CSDR subgroup) can be found here.

We also saw this week that ESMA has published its technical advice to the Commission on the CSDR which includes recommendation on the implementation of settlement penalties (fines).


CSDR L2 - ESMA Consultation Paper on buy-in provisions


Today ESMA published a 2nd Consultation on its draft Regulatory Technical Standards (RTSs) on the CSDR which is limited to the buy-in provisions (here).


Given the controversial nature of the results to the 1st consultation on the buy-in provisions conducted earlier this year, ESMA has finally decided to identify three options allowing a possible move of the responsibility for the execution of the buy-in and to submit them for feedback from stakeholders. 

This will allow ESMA more time and breathing space to resolve the issue and assess the options and it is expected that the RTS will be formally transmitted to the Commission  by September instead of the June 2015 deadline. ESMA also insists on getting ‘quantitative  elements’ from stakeholders in order to finalise a cost-benefit analysis and include the results in the Final Report submitted to the Commission. 

The CP outlines three options for the execution of buy-ins:-

 Trading level execution

  • Trading level with fall-back option execution
  • CSD participant level execution


The paper includes a number of specific questions and respondents have until August 6th to respond.  As always we will be looking to gain members’ feedback on this consultation shortly.



SFTR text is adopted in COREPER II


Level 1 text for the SFTR was agreed on June 17th and we are now able to provide a copy of the text here .


The text evolved during the trilogue process, mostly in ways that are positive. That said we expect that the reporting and compliance issues for firms will be significant and we will consider ways to raise awareness of these with members over the coming weeks. The text must now be reviewed by EU legal services but is unlikely to change materially. 

We expect the Regulation to be published in the Official Journal in late October or early November and the Regulation will be effective 20 days later. Work on Level 2 (the detailed technical rules) by ESMA and the Commission will begin soon we expect and we have reached out to ESMA and the UK FCA to engage further on this. 

In terms of compliance, most of the requirements allow for some transitional time. For trade repository reporting the regulations will bite between 12 and 21 months after the Level 2 is finalised; for disclosures by managers, the first disclosures will be 12 months from the effective date of the Regulation; and for disclosures on collateral re-use, 6 months from the effective date of the Regulation.  


ESMA request to the EC to delay the draft RTS for CSDR



A  letter from ESMA to the European Commission requesting a delay until  September for the submission of the draft Level 2 regulatory technical standards that were due to be published today and can be found here.



EU reaches political deal on the SFTR


Although we haven’t seen the final text yet, the EU has announced that it has reached political agreement on the SFTR. This means that work will shortly commence on Level 2 by ESMA and the Commission. We (and ICMA) will be looking to engage with regulators on this soon (we already have a meeting with the UK FCA early next month). There are some formalities that will take place over the next few months before the Regulation is officially published (which we expect to be in October/ November).

Whilst the agreement has been announced we understand that a number of technical matters are yet to be resolved and hope to get some more feedback on all of this in the next few days.

The new rules will certainly require some additional reporting for our market, over and above what firms may be producing today. Whilst some of this detail won’t be known until Level 2 is nearer completion, some aspects are already clear (such as the need to have LEIs for all clients and counterparties). We will be considering how best to support members in the coming months as they consider implementation.  


Commission welcomes agreement on improving transparency of certain financial transactions in the shadow banking sector


Extending the CHAPS and CREST Settlement Day



The Bank of England, CHAPS Co and Euroclear UK & Ireland have issued the attached paper “Extending the CHAPS and CREST Settlement Day”.  The paper provides key information for institutions that provide services that settle in CHAPS and CREST, in order to enable them to prepare for an extension in settlement hours from summer 2016, and to provide a basis for communications with their clients.  A copy of the paper can be found here 


ISLA response to FCA Consultation on the Transparency Directive (CP15-11)


ISLA has responded to the FCA’s consultation on the Implementation of the Transparency Directive Amending Directive (2013/50/EU) and other Disclosure Rule and Transparency Rule Changes (CP15/11). The Amending Directive sets out the disclosure requirements for major shareholders who engage in securities lending. The FCA propose that such shareholders must notify a change in the interest of their holding whenever lending takes place above the EU minimum threshold holding of 5%. In our response we note that whilst we support the existing FCA approach to notifications and securities lending we acknowledge that the Directive requires the rules to change. Our response makes further points and seeks additional clarifications about the notifiable interest of a firm that borrows and on-lends shares.  The CP can be found by clicking here and ISLA’s response here


European Commission Green Paper on Building a Capital Markets Union


European Commission Green Paper on Building a Capital Markets Union .


ISLA publishes its response to the EU Green Paper on building a Capital Markets Union across Europe and the role that securities lending can play in this important economic and political initiative. Details of our response may be found here.


Securities Financing Transactions Regulation (SFTR)


Securities Financing Transactions Regulation (SFTR) – 20 April 2015

In advance of trilogue discussions between the European Commission, Parliament and Council which begin next week, ISLA has prepared a position statement outlining its views. In the paper ISLA stresses the benefits of position level reporting (versus transactions reporting), the rationale for exempting title transfer collateral arrangements (TTCA) from re-use provisions, aligning the investor disclosure requirements with existing ESMA Guidelines for UCITS and other matters. The paper can be found by clicking here.

Kevin McNulty

Chief Executive


Joint Response to WS5 DEG Consultation


 ISLA,PASLA & RMA have submitted a joint response letter to the FSB on the Workstream5 Data Experts Group consultation.

A copy can be found here