Settlement Internalisers should report to CySEC on a quarterly basis the aggregated volume and value of all securities transactions that they settle outside securities settlement systems.
Entities responsible for reporting:
According to paragraph 14 of the Guidelines on Internalised Settlement Reporting, internalised settlement can happen at different levels of a securities holding chain (global custodians, sub-custodians, etc.), and it should be reported at the level where it takes place. Each settlement internaliser should be responsible for reporting the settlement which has been internalised in its books only.
Financial instruments that are in scope of internalised settlement reporting:
The following types of financial instruments should be considered in scope of internalised settlement reporting:
- financial instruments which are initially recorded or centrally maintained in CSDs authorised in the EU, i.e. financial instruments in relation to which an EU CSD acts in an issuer CSD capacity;
- financial instruments which are recorded in an EU CSD that acts in an investor CSD capacity for the respective financial instruments, even though they may be initially recorded or centrally maintained outside of CSDs authorised in the EU.
Types of transactions and operations that are in scope of internalised settlement reporting:
The following types of transactions and operations should be considered in scope of internalised settlement reporting:
- purchase or sale of securities (including primary market purchases or sales of securities);
- collateral management operations;
- securities lending or securities borrowing;
- repurchase transactions;
- transfers of securities between accounts of different investment funds (funds with or without legal personality should be treated as clients);
- execution of transfer orders by a settlement internaliser on its own account, to the extent that they result from securities transactions with clients of the settlement internaliser;
- transfer of securities between two securities accounts of the same client;
- title transfer financial collateral arrangements as defined in point (b) of Article 2(1) of Directive 2002/47/EC (FCD);
- security financial collateral arrangements as defined in point (c) of Article 2(1) of FCD, where there is a transfer of securities between accounts;
- corporate actions on flow represented by transformations.
Timeline for reporting: The internalised settlement reports should be submitted within 10 working days from the end of each quarter of a calendar year.
Content of templates and procedures for Internalised Settlement Reports:
- The Commission Delegated Regulation (EU) 2017/391 (RTS on Internalised Settlement). specify the content of the internalised settlement reporting;
- The Commission Implementing Regulation (EU) 2017/393 (ITS on Internalised Settlement) specifies the templates and procedures for the reporting and transmission of information on internalised settlement;
- The Guidelines on Internalised Settlement Reporting clarify further the scope and process on internalised settlement reporting;
- The Questions and Answers on CSDR provide additional guidance on internalised settlement reporting.
Actions required by CIFs:
CIFs should ensure that they are familiar with the internalised settlement reporting requirements and should send an email to [email protected] by the 13th September 2019, in which the compliance officer of the CIF must confirm whether or not, the CIF settles securities transactions outside securities settlement systems.
CIFs which settle securities transactions outside securities settlement systems should ensure that their reporting system is in line with the technical reporting standards and should follow the technical instructions mentioned in Annex 2 of the Circular on how to create and submit an internalised settlement report/XML file to CySEC.
First reporting in relation to the quarter ending 30 September 2019 (i.e. covering the period from 1/7/2019-30/9/2019) should be submitted by 15 October 2019.
In order to assist with the preparation of the XML files, CySEC has published on the 9th September 2019 relevant XSD and sample files. For more information CIFs should visit the CySEC website (Technical Information) section.
CySEC has launched a trial period from the 9th September 2019 to the 4th October 2019 regarding internalised settlement reporting. CIFs should submit on a test basis their new XML files and should perform validation tests before submitting any testing XML files to CySEC.
CIFs are encouraged to start testing in the early stages of the trial period so as to have enough time to correct possible errors and be ready for full implementation of the relevant requirements immediately after the trial period. Files sent during the trial period will be deleted at the end of the trial period and will be considered as non-received.
It is noted that currently there is no time limit for submitting reports for the previous quarters. However, such reports (i.e. reports relating to the quarter ending 30 June 2019) should be submitted by 25 October 2019 the latest.
For any queries, clarifications or any other correspondence, CIFs should send an email on:
- regulatory issues and business aspects of transaction reporting, to [email protected]
- technical aspects of transaction reporting, to [email protected]
Should you need more information or assistance you can contact us on [email protected]