Over the past few years KDD has been busy working on the implementation of the CSD Regulation
Up until April 2017 all CSDR requirements were analysed and detailed measures for implementation were prepared. An application for a licence in line with the CSDR requirements was presented to the Securities Market Agency in September 2017, which reviewed the application until March 2018. The KDD was obliged to prepare additional documentation, mainly related to the management of KDD, which were presented to the Agency in July this year.
All required documentation for the licence is now being translated into English for review by the ECB. Since there are not many translators with financial markets knowledge available in Slovenia, it is expected that the translation will be prepared by the beginning of October. As the KDD cooperated closely with the Agency during preparation of additional documentation, the Agency thinks that all requirements for the licence’s approval are met and the licence will be approved without any additional requirements at the beginning of 2019.
The KDD prepared draft versions of amendments to its Rules and Regulations, which include changes required by the EU Settlement finality Directive (98/26/EC) and the EU CSDR Directive (909/2014).
The main changes prescribed by drafts are as follows:
- Establishment of a Committee of KDD’s Participants for better communication between KDD’s Management Board and its participants and to relay KDD’s decisions important to its users. The Committee will have 3 members, two of which will represent systemic-settlement members and one the issuers.
- The conditions for KDD‘s participants - the issuers and the systemic-settlement members - are redefined. The KDD is obliged to provide an answer to an application of a potential participant within one month at the latest.
- Daily reconciliation of securities positions on securities with the KDD is required for systemic participants.
- The KDD’s obligations regarding the supervision of its participants are set in line with the CSDR.
- A procedure in a case of insolvency of a systemic participant is now in place. Even in case of temporary disconnection of such participant from its system, the KDD will allow following transactions to be settled:
- Trades executed on LjSE on the day that KDD becomes aware of an insolvency procedure.
- Trades approved by a bankruptcy manager or a bankruptcy court.
- Trades of owners of securities, which have a direct agreement with the KDD.
- Links with other CSDs in EU countries are defined.
- The LEI (Legal Entity Identifier) code will be an obligatory part of data in the KDD register for all entities, which are obliged to acquire a LEI code.
- Process of participants’ initiatives and claims is prescribed.
- Deadlines for settlement of FOP and OTC DVP/RVP instructions are shortened by 10 minutes (from 18:00 to 17:50 CET for FOP trades and from 16:00 to 15:50 CET for OTC DVP/RVP trades).
- The deadline for enforcement of KDD’s measures for late delivery of securities for LjSE trades will be prolonged (from 11:30 to 13:00).
KDD Technical Regulations will be integrated into the KDD Regulations. The amended Rules and Regulations will most likely be applicable after the licence is approved.
The Users Committee has been operative starting 1 October.
Vanda Močnik Kohek
Senior Relationship Manager
UniCredit GSS Slovenia
vanda.mocnik@unicreditgroup.si