27 May 2008

Council draft conclusions on Clearing and Settlement

ECOFIN is expected to reach conclusions on the Code of Conduct, the safety and soundness of the post-trading infrastructure, the Giovannini Barriers and on Target-2 for Securities on its next meeting on 3 June.

The Council is due to adopt conclusions on the clearing and settlement of securities transactions. Deposit guarantee schemes and the solvency of insurance companies are also on the agenda.

 

The draft conclusions on clearing and settlement include:

- a code of conduct for clearing and settlement;

- the "Target2-Securities" project for the settlement in central bank money of securities transactions in euros;

- the removal of technical obstacles to securities market integration, as identified in the socalled Giovannini report;

- work on the safety and soundness of post-trading arrangements in Europe (ESCB/CESR standards)

 

The Council will take note of progress on Solvency II, on the basis of a report from the presidency. The supervision of insurance groups operating in several member states has in particular given rise to discussion, given the innovative nature of the Commission's proposal on the "group support regime" and the different circumstances in the member states and different views on how to ensure policyholder protection. Other issues on which discussions have not yet finished concern the treatment of equity risk, minimal capital requirements, surplus funds and participations.

 

The Council will hold a policy debate on deposit guarantee schemes. The Council debate is intended to provide guidance enabling the Commission, EFC and the financial services committee to prepare policy proposals before the end of the year. The EFC note contains a questionnaire to this end.

 

Progress report on Solvency II (more)

 

Clearing and Settlement

ECOFIN reached conclusions on the Code of Conduct, the safety and soundness of the post-trading infrastructure, the Giovannini Barriers and on Target-2 for Securities.

 

As to the Code of Conduct the Council emphasised that more progress is needed on effective unbundling of services and accounting separation, as well as on access and interoperability based on sound business. Council expects that the private sector to fully implement the Code, and also stressed the need to ensure that the benefits of the Code are also transmitted to the retail-side of the chain.

 

The work started with the former ESCB/CESR draft "Standards for Securities Clearing and Settlement in the EU" should be completed. The adopted text should take the form of non-binding Recommendations solely addressed to public authorities, the Council notes.

 

Its scope should include ICSDs, and exclude custodians - whilst CEBS is invited to further review, in cooperation with CESR, the coverage of risks borne by custodians, taking into account that some CSDs/ICSDs/ CCPs are also subject to the CRD, so as to ensure a level playing field while avoiding inconsistencies in the treatment of custodians and double regulation by end 2008. On credit and liquidity risk controls, the text to be adopted should replace former draft standard 9 by Recommendation 9 of the CPSS-IOSCO Recommendations for securities settlement systems of 2001.

 

The FSC should assess the impact of its implementation on enhancing the level playing field, investor protection and prudential safety by mid 2010.

 

The ESCB and CESR are invited to adapt and finalise the draft by autumn 2008 and the FSC to monitor progress to ensure that there are no remaining gaps to be addressed and to reassess the situation by end 2008.

 

Further conclusions relate to the Giovannini Barriers and T2S. With regard to the T2S project, the ECB should further explore the advantages and disadvantages of establishing a separate legal entity to further ensure responsiveness to market needs and limit potential conflicts of interest.

 

Concerning the public technical, legal and fiscal barriers identified in the Giovannini reports, the Commission intends to adopt a Recommendation on withholding tax procedures by early 2009 and to take into account the need to both simplify and improve overall tax efficiency.

 

Council conclusions on Clearing and Settlement

 

Agenda 

Background Note