Central securities depositories
In Finland, a CSD is a Finnish limited liability company that is licensed to operate a book-entry system and to offer issuance, safekeeping and delivery of securities in the book-entry system. There is currently one CSD in Finland, Euroclear Finland Ltd.
Shares, bonds and other cash instruments admitted to trading on the stock exchange must be transferred to a book-entry system before trading begins. In addition, transactions and other transfers of shares of a Finnish limited liability company owned by a Finnish owner must be recorded in the owner’s account in the book-entry system. Transactions in these and other cash instruments are settled in the settlement system of the CSD or internally by a bank.
The core services of a CSD are:
- first registration of securities in a book-entry system (‘notarial services’), i.e. issuance in a book-entry system,
- provision and maintenance of securities accounts at the highest level (‘centralised account management service’), i.e. the provision of book-entry accounts, and
- maintenance of a securities settlement system (the ‘securities settlement service’)
In addition to core services, a CSD may provide ancillary services related to core services, such as collateral management, maintenance of a share register or services related to corporate transactions. Ancillary services such as banking services require a special licence. There are currently no CSDs in Finland that are licensed to provide these banking services.
A bank or other service provider can also deliver securities in its own system. Internalised settlement is only possible if the securities of both the transferor and the transferee are registered in the same omnibus account with the CSD or a custodian.
ESMA issued a statement on the supervision of buy-in procedure in the settlement discipline relation on 17 December 2021.
Securities transactions have a statutory or contractual settlement date by which the transaction must be paid for and the securities delivered. For shares, this is generally two days from the trade date. The aim is to ensure timely delivery. Failing parties will be subject to specific settlement discipline, under which they must pay a penalty fee for delays. If settlement does not take place despite this, a missing delivery will be subject to a buy-in procedure, in which the missing securities will be acquired at the expense of the failing party. These procedures for harmonising settlement discipline in the EEA will enter into force from the beginning of February 2022.
However, in a letter sent to the EU Commission in September, ESMA proposed to postpone the buy-in procedure included in the settlement discipline regulation due to both the expected changes in the review of the CSDR and the difficulties encountered by market participants in implementing the buy-in provisions.
In November, the European Commission, the Parliament, and the Council reached a political agreement to postpone the implementation of the buy-in procedures. However, the necessary legislative action will not be completed before the application of the settlement discipline regime begins. ESMA has therefore published a statement on the issue: "Supervisory approach on the implementation of the CSDR buy-in provisions".
In this situation, ESMA expects that national supervisors (in Finland the Financial Supervisory Authority) will not prioritize supervisory measures against the buy-in procedure. This is due to the pending postponement of the application of the buy-in procedure included in the settlement discipline regulation and possible additional costs.