We are the competent authority for issues related to trading venues and investment firms. We explain Central Securities Depositories Regulation and settlement internalisation.
A central securities depository (CSD) is an institution that holds financial instruments, including equities, bonds, money market instruments and mutual funds.
It allows ownership of those instruments to be transferred in electronic form through updating electronic records which are often known as ‘book-entry records’.
The UK CSD is Euroclear UK and Ireland (EUI). The Bank of England is the competent authority for the authorisation, supervision and policy for EUI.
Central Securities Depositories Regulation (CSDR)
CSDR sets out authorisation and supervision requirements for UK CSDs and certain settlement aspects.
CSDR sets a standard securities settlement cycle of T+2 (with ‘T’ meaning the date of trade and the settlement of this trade being 2 days after the trade). This has been effective in the UK since 6 October 2014.
For more information on CSDR and other related legislation, see:
Settlement Discipline Regime
The Treasury has stated that the UK will not be implementing the EU CSDR Settlement Discipline Regime.
The UK will assess its approach to settlement discipline to ensure that any regime is appropriate for the UK market. EUI will continue to operate its existing settlement discipline regime.
Settlement Internalisation Reporting
Since July 2019, firms have been required to report settlement internalisation to the Bank of England under Article 9 of CSDR.
Under this regulation, an institution is considered to be a settlement internaliser if it executes transfer orders on behalf of clients or on its own account other than through a securities settlement system.
What firms should do
For more information about settlement internalisation reporting, firms should refer to the Bank of England’s website.
