Amendments to Central Depository AD’s Rules

Following approval by the Financial Supervision Commission, the Central Depository AD has updated its Rules as of 5 May 2021. Amongst the major amendments, CSDR-related changes include:

• Introduction of the settlement tolerance. This will comply with the requirements of Article 6 of the Commission Delegated Regulation (EU) 2018/1229 from 25 May 2018, supplementing Regulation (EU) No 909/2014 of the European Parliament and Council with regard to regulatory technical standards on settlement discipline (“Regulation (EU) 2018/1229”). The settlement tolerance level and operating procedures for its implementation shall be decided by CDAD’s Board of Directors.
• Partial settlement will not be introduced, as long as the CDAD’s Settlement System meets the derogation conditions as per Article 12 of Regulation (EU) 2018/1229.
• Bilateral cancellation of settlement instructions will be possible until the moment of blocking the respective financial instruments for the purpose of settlement.

No changes have been made to the existing cash penalties for failed settlement.

Other important updates to CDAD’s Rules include:

• The obligation for issuers to use the CDAD’s electronic system (and not paper notifications) when providing information about corporate events.
• Obligation for CDAD to transmit information about corporate events to its members via CDAD’s electronic system within the deadlines stipulated by the Commission Implementing Regulation (EU) 2018/1212 from 3 September 2018.
• The CDAD’s Settlement Guarantee Fund shall automatically cover settlement fails related to trades on a regulated market or other place of trade, as long as the trades do not exceed 1% of the Fund’s total assets, unless the Fund’s Management Committee has decided otherwise.
• Introduction of regulations for the Central Register of Securities which is maintained by Central Depository AD as per local legislation. CDAD shall ensure electronic access via its website to the holders of financial instruments in respect to information for their financial instruments and transactions.
• Issuing by CDAD of FISN (Financial Instrument Short Name) in accordance with ISO 18774 and CFI (Classification of Financial Instruments) according to ISO 10962 for financial instruments admitted to trading on regulated market.

Impact on investors: Clients should take note of the CSDR- related amendments which have been officially published by the Central Depository AD.