We are the competent authority for issues related to trading venues and investment firms, including requirements to comply with the securities settlement discipline and settlement cycles.
A central securities depository (CSD) is an institution that holds financial instruments, including equities, bonds, money market instruments and mutual funds.
It allows ownership of those instruments to be transferred in electronic form through updating electronic records which are often known as ‘book-entry records’.
The UK CSD is Euroclear UK and Ireland (EUI). The Bank of England is the competent authority for the authorisation, supervision and policy for EUI.
Central Securities Depositories Regulation (CSDR)
CSDR is EU legislation that aims to harmonise the authorisation and supervision of EU CSDs and certain settlement aspects, such as dematerialisation of financial instruments.
This means that the securities will be held in electronic form, much like cash is held in a bank account.
CSDR introduces a mandatory buying-in and cash penalty securities settlement discipline to tackle failed settlement transactions.
It also reduced the standard securities settlement cycle to T+2 (with ‘T’ meaning the date of trade and the settlement of this trade being two days after the trade). This has been effective in the UK since 6 October 2014.
Settlement Internalisation Reporting
From July 2019, firms will be required to report settlement internalisation to the Bank of England under Article 9 of the EU Central Securities Depositories Regulation (CSDR).
Under this regulation, an institution is considered to be a settlement internaliser if it settles transfer orders on behalf of clients on its own account rather than through a Central Securities Depository (CSD).
Find out more about Settlement Internalisation Reporting.
What firms should do
CSDR came into force on 17 September 2014, although many of the requirements will not apply until technical standards are adopted and, in some cases, until the CSDs have been re-authorised under the new regime.
For more information about settlement internalisation reporting, firms should refer to the Bank of England’s website. Firms should complete the survey (details of which can be found in a letter to UK firms) if they think they will be captured by the reporting obligation.
For further information see: