EU Consultation on the post-trade Capital Market Union


EU Consultation on the post-trade Capital Market Union

4 September 2017

Regulatory News Alert

In 2015, the current EU Commission worked on a plan to encourage jobs and economic growth: The CMU for Capital Market Union. Its aim: reviewing regulation to stimulate business and economic activity.

On 23 August 2017, the EU Commission released in this framework a consultation on how to better integrate post-trade activities across the EU. This consultation should help the EU Commission to define its regulatory strategy for post market activities for the next 5 to 10 years, it is fundamental and likely marks a turning point (evidenced a few weeks ago by the ESMA opinion on segregation, see Deloitte alert).

Although this document is a consultation, thus at the very early stage in the regulatory process, it is nevertheless important to have it in sight for long-term developments. It should impact scores of regulations:

  • EMIR, (European Market Infrastructures Regulation),
  • CSD-R, (Central Securities Depositaries Regulation),
  • T2S (ECB Target 2 Securities),
  • SFD (settlement finality directive),
  • Removing tax processing barriers,
  • Asset segregation,
  • Client protection against bankruptcy,
  • In addition, this implements grounds to review cross border property rights definition on securities.

This consultation will also address some structural themes, such as asset segregation rules, optimization of collateral management, processing of corporate actions, and the use of blockchain in custody.

The road will likely be long and full of surprises from the origin to the finalization of EU texts and other regulations. However, there are forward thinking ideas that will be sure to shape EU Institution minds for future regulatory initiatives impacting market structures and organization at their roots.

This consultative document is accompanied by an earlier published report called EPTF report (accessible here).It is more telling in terms of potential outcomes and demands. In the report, the EU Commission invited a pan-EU group of experts of the custody to state their views on how to improve post-trade securities handling across the EU. Hence, if your activities are in the custody or depositary activities, a major milestone has been set.

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How Deloitte can help you

The European post trade market infrastructure is dramatically changing. With its experts, Deloitte can support your organization to define and implement strategies that will help you to adapt to the new regulatory framework including post MIFID II, post Brexit, and leverage new business opportunities.

EPTF Barrier

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