EBF response to the ESMA Consultation Paper
Publication date: 30 June 2016
The EBF notes that this consultation is very tightly focused on CSD rules and procedures in the event of a default/insolvency of a direct participant in the CSD. This is clearly an important and relevant focus.
However, it is also important to note that a CSD, as a central safe-keeper, and as operator of a settlement system, is impacted by an insolvency of any trading party in the issuance and custody chains (i.e. by the insolvency of issuers, and of trading parties/investors that use an intermediary to access the CSD).
It is also important that CSD rules and procedures (with relation to insolvency procedures, but also broadly, such as with relation to settlement discipline) take into account the possibility that an issuer or investor, or indeed another intermediary in the issuance and custody chains, may enter into insolvency, and that intermediaries (issuer agents, custodians) may have to manage the insolvency of their clients.