Delegated regulation 2017/392 - Supplement to Regulation 909/2014 with regard to regulatory technical standards on authorisation, supervisory and operational requirements for central securities depositories - Main contents

EN

Official Journal of the European Union

L 65/48

The provisions in this Regulation are closely linked, since they all deal with the supervisory requirements applicable to central securities depositories (CSDs). To ensure coherence between these provisions, which should enter into force at the same time, and to facilitate a comprehensive view and easy access by persons that are subject to these provisions, it is desirable to include all the regulatory technical standards concerning the supervisory requirements under Regulation (EU) No 909/2014 in a single Regulation.

In view of the global nature of financial markets and given the commitments undertaken by the Union in this field, due regard should be had to the Principles for Financial Market Infrastructures issued by the Committee on Payment and Settlement Systems and the International Organisation of Securities Commissions (CPSS-IOSCO Principles) in April 2012.

In order to ensure consistent application of rules concerning improving securities settlement in the Union, certain technical terms should be clearly defined.

It is important to ensure appropriate authorisation and supervision of a CSD. As such, a list of the relevant authorities issuing the most relevant Union currencies in which settlement takes place to be involved in the process of authorisation and supervision of a CSD should be defined. This should be based on the share of the currencies that those authorities issue in the total value of settlement instructions against payment settled annually by a CSD and on the share of settlement instructions against payment settled by a CSD in a Union currency compared to the total value of settlement instructions against payment settled in that currency across all CSDs in the Union.

In order to allow competent authorities to perform a thorough assessment, a CSD applying for authorisation should provide information on the structure of its internal controls and the independence of its governing bodies to enable the competent authority to assess whether the corporate governance structure ensures the independence of the CSD and whether that structure and its reporting lines, as well as the mechanisms adopted for managing possible conflicts of interest are adequate.

To enable the competent authority to assess the good reputation and the experience and skills of the CSD's senior management and members of the management body, an applicant CSD should provide all relevant information to perform that assessment.

Information on a CSD's branches and subsidiaries is necessary to enable the competent authority to clearly understand the CSD's organisational structure and evaluate any potential risk to the CSD due to the activity of those branches and subsidiaries.

A CSD applying for authorisation should provide the competent authority with the relevant information to demonstrate that it has the necessary financial resources at its disposal and adequate business continuity arrangements for the performance of its functions on an ongoing basis.

In addition to receiving information on the core activities, it is important for the competent authority to receive information on the ancillary services that the CSD applying for authorisation intends to offer to enable the competent authority to have a complete overview of the applicant CSD's services.

In order for the competent authority to assess the continuity and orderly functioning of technological systems of an applicant CSD, that CSD should provide the competent authority with descriptions of the relevant technological systems and how they are managed, including if they are outsourced.

Information concerning the fees associated with the core services provided by CSDs is important and should form part of the application for authorisation of a CSD in order to enable the competent authorities to verify whether those fees are proportionate, non-discriminatory and not bundled with the costs of other services.

In order to ensure that the investors' rights are protected, and that conflict of laws issues are adequately managed, when assessing the measures that a CSD intends to take to allow its users to comply with the national laws referred to in Article 49(1) of Regulation (EU) No 909/2014, the CSD should take into account both issuers and participants, as appropriate, in accordance with the respective national laws.

In order to secure fair and non-discriminatory access to the notary, central maintenance and securities settlement services within the financial market, issuers, other CSDs and other market infrastructures have been granted access to a CSD in accordance with Regulation (EU) No 909/2014. An applicant CSD should, therefore, provide the competent authority with information about its access policies and procedures.

In order to carry out its authorisation duties effectively, the competent authority should receive all information from CSDs applying for authorisation and related third parties, including third parties to whom applicant CSDs have outsourced operational functions and activities.

To ensure general transparency of governance rules of a CSD applying for authorisation, the competent authority should be provided with documents confirming that the applicant CSD has adopted the necessary arrangements for a non-discriminatory establishment of an independent user committee for each securities settlement system that it operates.

To secure the orderly functioning of core infrastructure services within the financial market, a CSD applying for authorisation should provide the competent authority with all necessary information to demonstrate that it has adequate policies and procedures for ensuring reliable record-keeping systems as well as effective mechanisms for CSD services, including in particular the measures for preventing and addressing settlements fails, and the rules concerning the integrity of the issue, the protection of securities of participants and those of their clients, settlement finality, participant default and transfer of participants and clients' assets in case of a withdrawal of authorisation.

The risk-management models associated with the services provided by an applicant CSD are a necessary item in its application for authorisation so as to enable the competent authority to evaluate the reliability and integrity of the adopted procedures and help market participants make an informed choice.

In order to verify the safety of the link arrangements of the CSD applying for authorisation, to assess the rules applied in the linked systems and evaluate the risks stemming from those links, the competent authority should receive from an applicant CSD any relevant information for the analysis, together with the CSD assessment of the link arrangements.

When granting the approval of a CSD's participation in the capital of another entity, the competent authority of the CSD should take into consideration the criteria that ensure that the participation does not increase significantly the CSD's risk profile. In order to ensure its safety and continuity of its services, a CSD should not assume unlimited financial liabilities as a result of its participation in the capital of legal persons other than those providing the services set out in Regulation (EU) No 909/2014. A CSD should fully capitalise the risks resulting from any participation in the capital of another entity.

In order for a CSD not to be dependent on other shareholders of the entities in which it holds a participation, including with regard to the risk-management policies, it should have full control of those entities. This requirement should also facilitate the exercise of supervisory and oversight functions by competent authorities and relevant authorities by allowing easy access to relevant information.

A CSD should have a clear strategic rationale for the participation beyond mere profit making, taking into account the interests of the issuers of securities issued with the CSD; its participants and its clients.

In order to properly quantify and outline the risks stemming from its participation in the capital of another legal person, a CSD should provide independent risk analyses, approved by an internal or external auditor, for the financial risks and liabilities of the CSD resulting from that participation.

Following the experience of the financial crisis, authorities should focus on ongoing rather than ex post supervision. It is, therefore, necessary to ensure that for each review and evaluation under Regulation (EU) No 909/2014, the competent authority has sufficient access to information on a continuous basis. In order to determine the scope of information to be delivered for each review and evaluation, the provisions of this Regulation should follow the requirements for authorisation with which a CSD has to comply under Regulation (EU) No 909/2014. This includes substantive changes to elements already submitted during the process of authorisation, information relating to periodic events and statistical data.

To promote an effective bilateral and multilateral exchange of information between competent authorities, the results of the review and evaluation by one authority of the activities of a CSD should be shared with other competent authorities where this information is likely to facilitate their tasks, without prejudice to confidentiality and data protection requirements and in addition to any cooperation arrangements provided in Regulation (EU) No 909/2014. An additional exchange of information among competent authorities and relevant authorities or authorities in charge of markets in financial instruments should be organised allowing for a sharing of the findings of the competent authority in the course of the process of review and evaluation.

Taking into account the possible burden of gathering and processing a vast amount of information related to the operation of a CSD, and in order to avoid duplications, only relevant modified documents should be provided in the context of the review and evaluation. Those documents should be delivered in a manner that enables the competent authority to identify all the relevant changes made to the arrangements, strategies, processes and mechanisms implemented by the CSD since authorisation or since the completion of the last review and evaluation.

Another category of information that is useful for the competent authority to have in order to be able to perform the review and evaluation refers to events that by nature occur on a periodic basis and which are related to the operation of the CSD and the provision of its services.

To carry out a comprehensive risk evaluation of a CSD, the competent authority will need to request statistical data on the scope of the CSD's business activities in order to evaluate the risks related to CSDs operation and to the smooth operation of securities markets. In addition, statistical data enable the competent authority to monitor the size and importance of securities transactions and settlements within the financial markets as well as to assess the ongoing and potential impact of a given CSD on the securities market as a whole.

For the competent authority to monitor and evaluate the risks to which the CSD is or may be exposed to and which may arise for the smooth functioning of securities markets, it should be able to request additional information on the risks and activities of a CSD. The competent authority should therefore be able to define and request on its own initiative, or following a request submitted to it by another authority, any additional information which it considers necessary for each review and evaluation of the activities of a CSD.

It is important to ensure that third-country CSDs that intend to provide the services pursuant to Regulation (EU) No 909/2014 do not disrupt the orderly functioning of Union markets.

The ongoing assessment of the full compliance of a third-country CSD with the prudential requirements of a third country is the duty of the third country competent authority. The information to be provided to the European Securities and Markets Authority (ESMA) by an applicant CSD should not have the objective of replicating the assessment of the third country competent authority, but ensuring that the applicant is subject to effective supervision and enforcement in that third country, thus guaranteeing a high degree of investor protection.

To allow ESMA to perform a complete assessment of the application for recognition, the information provided by the applicant should be complemented by the necessary information to assess the effectiveness of the ongoing supervision, enforcement powers and actions taken by the third country competent authority. That information should be provided under a cooperation arrangement established in accordance with Regulation (EU) No 909/2014. The cooperation arrangement should ensure that ESMA is informed in a timely manner of any supervisory or enforcement action against the third-country CSD applying for recognition and any change of the conditions under which authorisation was granted to the relevant CSD and on any relevant update of the information originally provided by the CSD under the recognition process.

In order to ensure that investors' rights are protected, and that conflict of laws issues are adequately managed, when assessing the measures that a third-country CSD intends to take to allow its users to comply with the national laws referred to in Article 49(1) of Regulation (EU) No 909/2014, that third-country CSD should take into account both issuers and participants, as appropriate, in accordance with the respective national laws referred to in Article 49(1) of that Regulation.

To establish a sound risk-management framework, a CSD should take an integrated and comprehensive view of all relevant risks. This should include the risks that the CSD bears from any other entities and the risks that it poses to third parties, including its users and to the extent practicable their clients, as well as linked CSDs, central counterparties, trading venues, payment systems, settlement banks, liquidity providers and investors.

To ensure that CSDs operate with the necessary level of human resources to meet all of their obligations and to ensure that competent authorities have the relevant contact points within the CSDs that they supervise, CSDs should have key dedicated staff that should be accountable for the CSD and their own individual performance, particularly at the level of senior management and management body.

To ensure an adequate control of the activities performed by CSDs, independent audits covering the operations of the CSD, risk-management processes, compliance and internal control mechanisms should be put in place and performed regularly. The independence of audits should not necessarily require the involvement of an external auditor, provided that the CSD demonstrates to the competent authority that the independence of its internal auditor is properly ensured. In order to ensure the independence of its internal audit function, the CSD should also establish an audit committee.

A CSD should set up a risk committee in order to ensure that the management body of the CSD is advised at the highest technical level on its overall current and future risk tolerance and strategy. To ensure its independence from the CSD's executive management and a high degree of competence, the risk committee should be composed of a majority of non-executive members and it should be chaired by a person with an appropriate experience on risk management.

When assessing potential conflicts of interest, a CSD should not only examine the members of the management body, senior management or staff of the CSD but also any person directly or indirectly linked to those individuals or to the CSD, whether it is a natural or legal person.

A CSD should have a chief risk officer, a chief compliance officer, a chief technology officer, as well as a risk-management function, a technology function, a compliance and internal control function, and internal audit function. A CSD should in any case be able to organise the internal structure of those functions according to its needs. Different persons should fulfil the roles of chief risk officer, chief compliance officer and chief technology officer given that those functions are usually fulfilled by persons with different academic and professional profiles. In this respect, the provisions set out in this Regulation closely follow the system established by Regulation (EU) No 648/2012 of the European Parliament and the Council (2) for other market infrastructures.

Records kept by a CSD should be structured and allow for easy access to the data stored by the competent authorities involved in the supervision of CSDs. A CSD should ensure that the data records it keeps, including the complete accounting of the securities it maintains, are accurate and up-to-date in order to serve as a reliable data source for supervision purposes.

To facilitate the reporting and recording of a consistent set of information under different requirements, records kept by CSDs should cover each individual service provided by the CSD in accordance with Regulation (EU) No 909/2014, and should include at least all the details to be reported under the rules on settlement discipline provided in that Regulation.

The preservation of the rights of issuers and investors is essential for the orderly functioning of a securities market. A CSD should therefore employ appropriate rules, procedures and controls to prevent the unauthorised creation or deletion of securities. It should also conduct at least daily reconciliation of the securities accounts that it maintains.

A CSD should maintain robust accounting practices and perform audits to verify that its records of securities are accurate and that its measures ensuring the integrity of securities issues are adequate.

In order to effectively ensure the integrity of the issue, the reconciliation measures provided in Regulation (EU) No 909/2014 should apply to all CSDs regardless of whether or not they provide the notary service or central maintenance service referred to in that Regulation in relation to a securities issue.

With regard to other entities involved in the reconciliation process, several scenarios should be distinguished depending on the role of those entities. The reconciliation measures should reflect the specific roles of those entities. According to the registrar model, the registrar maintains records of securities which are also recorded in a CSD. According to the transfer agent model, the fund manager or transfer agent is responsible for an account that maintains a part of a securities issue recorded in a CSD. According to the common depository model, the common depository is used by CSDs that establish an interoperable link and the common depository should be responsible for the overall integrity of the securities issues initially recorded or centrally maintained by the CSDs that have established an interoperable link.

In order to mitigate operational risks, which comprise the risks caused by deficiencies in information systems, internal processes, and personnel performance or disruptions caused by external events which result in the reduction, deterioration or breakdown of services provided by a CSD, CSDs should identify all risks and monitor their evolution, irrespective of their origin that may include, for instance, their users, providers of services to CSDs and other market infrastructures, including other CSDs. Operational risks should be managed in accordance to a well-documented and robust framework with clearly assigned roles and responsibilities. That framework should include operational targets, tracing features, assessment mechanisms and it should be integrated in the risk-management system of the CSD. In this context, a CSD chief risk officer should be responsible for the operational risk-management framework. CSDs should manage their risk internally. Where internal controls are insufficient or where eliminating certain risks is not a reasonably feasible option, a CSD should be able to take a financial coverage of those risks through insurance.

CSDs should not enter into investments that may affect their risk profile. CSDs should only enter into derivatives contracts if they are required to hedge a risk that they cannot reduce otherwise. The hedging should be subject to certain strict conditions that ensure that the derivatives are not used for purposes other than for covering risks and are not used for a realisation of profits.

The assets of CSDs should be held safely, be easily accessible and able to be liquidated promptly. A CSD should therefore ensure that its policies and procedures concerning prompt access to its own assets are based at least on the nature, size, quality, maturity and location of the assets. A CSD should also ensure that prompt access to its assets is not negatively affected by the outsourcing of custody or investment functions to a third party entity.

To manage its liquidity needs, a CSD should be able to access its cash assets immediately and also be able to access any securities that it holds under its own name on the same business day when a decision to liquidate the assets is taken.

To ensure a greater degree of protection of the assets of a CSD from the default of the intermediary, a CSD that accesses another CSD through a CSD link should maintain those assets in a segregated account at the linked CSD. This level of segregation should ensure that the assets of a CSD are segregated from those of other entities and protected appropriately. It is however necessary to allow the establishment of links with third-country CSDs even where individually segregated accounts are not available at the third-country CSD provided that assets of the requesting CSD are in any case adequately protected and competent authorities are informed of the risks resulting from the unavailability of individually segregated accounts and the adequate mitigation of such risks.

In order to ensure that a CSD invests its financial resources in highly liquid instruments with minimal market and credit risks and for these investments to be liquidated rapidly with minimal price effect, it should diversify its portfolio and establish appropriate concentration limits with respect to the issuers of the instruments in which it invests its resources.

In order to ensure the safety and efficiency of the link arrangement of a CSD with another CSD, a CSD should identify, monitor, and manage all potential sources of risk arising from the link arrangement. A CSD link should have a well-founded legal basis, in all relevant jurisdictions, that supports its design and provides adequate protection to the CSDs involved in the link. Linked CSDs should measure, monitor, and manage the credit and liquidity risks arising from each other.

A requesting CSD that uses an indirect CSD link or an intermediary to operate a CSD link with a receiving CSD should measure, monitor, and manage the additional risks, including custody, credit, legal, and operational risks, arising from the use of the intermediary in order to ensure the safety and the efficiency of the link arrangement.

In order to ensure the integrity of the issue, where securities are maintained in several CSDs through CSD links, CSDs should apply specific reconciliation measures and coordinate their actions.

CSDs should provide fair and open access to their services with due regard to the risks to financial stability and the orderliness of the market. They should control the risks arising from their participants and other users by setting risk-related criteria for the provision of their services. CSDs should ensure that their users, such as participants, any other CSDs, central counterparties (CCPs), trading venues or issuers that are granted access to their services meet the criteria and have the required operational capacity, financial resources, legal powers, and risk-management expertise in order to prevent the occurrence of risks for CSDs and other users.

In order to ensure the safety and efficiency of its securities settlement system, a CSD should monitor compliance with its access requirements on an ongoing basis and have clearly defined and publicly disclosed procedures for facilitating the suspension and orderly exit of a requesting party that breaches, or no longer meets, the access requirements.

For the purpose of the authorisation to provide banking-type ancillary services, a CSD should submit an application to the competent authority including all necessary elements to ensure that the provision of the banking-type ancillary services do not affect the smooth provision of core services of a CSD. Entities already authorised as CSDs should not be required to submit again any elements that were already submitted in the course of the process of application for being authorised as a CSD under Regulation (EU) No 909/2014.

With a view to ensuring legal certainty and a consistent application of the law, certain requirements provided for in this Regulation concerning settlement discipline measures should start to apply from the date of entry into force of those measures.

This Regulation is based on the draft regulatory technical standards submitted by ESMA to the Commission.

In drawing up the technical standards contained in this Regulation, ESMA has worked in close cooperation with the members of the European System of Central Banks and the European Banking Authority.

ESMA has conducted open public consultations on the draft regulatory technical standards on which this Regulation is based, analysed the potential related costs and benefits and requested the opinion of the Securities and Markets Stakeholder Group established in accordance with Article 37 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council (3),

‘review period’ means the period under review beginning on the day following the end of the previous review and evaluation period;

‘settlement instruction’ means a transfer order as defined in point (i) of Article 2 of Directive 98/26/EC of the European Parliament and of the Council (4);

‘settlement restriction’ means the blocking, reservation or earmarking of securities that make them unavailable for settlement, or the blocking or reservation of cash that make it unavailable for settlement;

‘exchange-traded fund’ (ETF) means a fund as defined in point (46) of Article 4(1) of Directive 2014/65/EU of the European Parliament and of the Council (5);

‘issuer CSD’ means a CSD which provides the core service referred to in point 1 or 2 of Section A of the Annex to Regulation (EU) No 909/2014 in relation to a securities issue;

‘investor CSD’ means a CSD that either is a participant in the securities settlement system operated by another CSD or that uses a third party or an intermediary that is a participant in the securities settlement system operated by another CSD in relation to a securities issue;

‘durable medium’ means any instrument which enables the storage of information in a way that is accessible for future reference for a period of time adequate for the purposes of the information, and allows the unchanged reproduction of the information stored.

the relative share of each Union currency in the total value of the settlement by a CSD of settlement instructions against payment, calculated over a period of one year, provided that each individual share exceeds 1 %;

the relative share of settlement instructions against payment settled by a CSD in a Union currency compared to the total value of settlement instructions against payment settled in that currency across all CSDs in the Union, calculated over a period of one year, provided that each individual share exceeds 10 %.

contact details of the person responsible for the application;

contact details of the person or persons in charge of the applicant CSD's compliance and internal control function;

the corporate name of the applicant CSD, its Legal Entity Identifier (LEI) and registered address in the Union;

the memorandum and articles of association or other constitutional and statutory documentation of the applicant CSD;

an excerpt from the relevant commercial or court register, or other forms of certified evidence of the registered address and business activity of the applicant CSD that is valid at the date of the application;

the identification of the securities settlement systems that the applicant CSD operates or intends to operate;

a copy of the decision of the management body regarding the application and the minutes of the meeting in which the management body approved the application file and its submission;

a chart showing the ownership links between the parent undertaking, subsidiaries and any other associated entities or branches, wherein the entities shown in the chart are identified by their full corporate name, legal status, registered address, and tax numbers or company registration numbers;

a description of the business activities of the applicant CSD's subsidiaries and other legal persons in which the applicant CSD holds a participation, including information on the level of participation;

a list including:

a list including:

a list of core services listed in Section A of the Annex to Regulation (EU) No 909/2014 that the applicant CSD is providing or intends to provide;

a list of ancillary services explicitly specified in Section B of the Annex to Regulation (EU) No 909/2014 that the applicant CSD is providing or intends to provide;

a list of any other ancillary services permitted under, but not explicitly specified under Section B of the Annex to Regulation (EU) No 909/2014 that the applicant CSD is providing or intends to provide;

a list of the investment services subject to Directive 2014/65/EU referred to in point (n);

a list of services and activities that the applicant CSD outsources or intends to outsource to a third party in accordance with Article 30 of Regulation (EU) No 909/2014;

the currency or currencies that the applicant CSD processes, or intends to process in connection with services that the applicant CSD provides, irrespective of whether cash is settled on a central bank account, a CSD account, or an account at a designated credit institution;

information on any pending and final judicial, administrative, arbitration or any other legal proceedings to which the applicant CSD is a party and which may cause it financial or other costs.

the Member State or Member States in which the applicant CSD intends to operate;

a programme of operations stating in particular the services which the applicant CSD provides or intends to provide in the host Member State;

the currency or currencies that the applicant CSD processes or intends to process in the host Member State;

where the services are provided or intended to be provided through a branch, the organisational structure of the branch and the names of the persons responsible for its management;

where relevant, an assessment of the measures that the applicant CSD intends to take to allow its users to comply with the national laws referred to in Article 49(1) of Regulation (EU) No 909/2014.

the job titles of the persons responsible for the approval and implementation of the policies and procedures;

a description of the measures implementing and monitoring the compliance with the policies and procedures.

a detailed description of the services referred to in points (l) to (p) of Article 4(2);

the procedures to be applied in the provision of the services referred to in point (a).

the policies and procedures referred to in Article 26(7) of Regulation (EU) No 909/2014;

information on the composition of the senior management, the management body, and the shareholders structure of the parent undertaking and of the other undertakings in the group;

the services and key individuals other than senior management that the applicant CSD shares with other undertakings in the group.

the registered address of the parent undertaking of the applicant CSD;

where the parent undertaking is an entity authorised or registered and subject to supervision under Union or third country legislation, any relevant authorisation or registration number and the name of the authority or authorities competent for the supervision of the parent undertaking.

financial reports including a complete set of financial statements for the preceding three years, and the statutory audit report on the annual and consolidated financial statements within the meaning of Directive 2006/43/EC of the European Parliament and of the Council (6), for the preceding three years;

where the applicant CSD is audited by an external auditor, the name and the national registration number of the external auditor;

a business plan, including a financial plan and an estimated budget that foresees various business scenarios for the services provided by the applicant CSD, over a reference period of at least three years;

any plan for the establishment of subsidiaries and branches and their location;

a description of the business activities that the applicant CSD plans to carry out, including the business activities of any subsidiaries or branches of the applicant CSD.

evidence that demonstrates sufficient financial resources during six months after the granting of an authorisation;

an interim financial report;

statements concerning the financial situation of the applicant CSD, including a balance sheet, income statement, changes in equity and in cash flows and a summary of accounting policies and other relevant explanatory notes;

audited annual financial statements of any parent undertaking for the three financial years preceding the date of the application.

a summary that provides an overview of the plan and its implementation;

the identification of the critical operations of the applicant CSD, stress scenarios and events triggering recovery, and a description of recovery tools to be used by the applicant CSD;

an assessment of any impact of the recovery plan on stakeholders that are likely to be affected by its implementation;

an assessment of the legal enforceability of the recovery plan that takes account of any legal constraints imposed by Union, national or third country legislation.

the identity and tasks of the persons responsible for the following positions:

the number of staff members in each division and operational unit.

a description of the remuneration policy including information about the fixed and variable elements of the remuneration of the senior management, the members of the management body and the staff employed in the risk-management, compliance and internal control, internal audit and technology functions of the applicant CSD;

the measures put in place by the applicant CSD to mitigate the risk of over-reliance on the responsibilities entrusted to any individual person.

a description of the governance arrangements of the applicant CSD established in accordance with paragraph 2 of Article 47;

the policies, procedures and systems established in accordance with paragraph 1 of Article 47;

a description of the composition, role and responsibilities of the members of the management body and senior management and the committees established in accordance with Article 48.

a description of the monitoring and evaluation tools for the adequacy and effectiveness of the applicant CSD's internal audit systems;

a description of the control and safeguard tools for the applicant CSD's information processing systems;

a description of the development and application of the applicant CSD's internal audit methodology;

a work plan of the internal audit function for three years following the date of application;

a description of the roles and qualifications of each individual who is responsible for internal audit referred to in Article 47(3)(d) under the oversight of the audit committee referred to in Article 48(1)(b).

a description of the roles and qualifications of individuals who are responsible for the compliance and internal control function and of any other staff involved in the assessments of compliance, including a description of the means to ensure the independence of the compliance and internal control function from the rest of the business units;

the policies and procedures of the compliance and internal control function, including a description of the compliance role of the management body and senior management;

where available, the most recent internal report prepared by the persons responsible for the compliance and internal control function or by any other staff involved in the assessments of compliance within the applicant CSD.

a copy of a curriculum vitae which sets out the experience and knowledge of each member;

details regarding any criminal and administrative sanctions imposed on a member in connection with the provision of financial or data services or in relation to acts of fraud or misappropriation of funds, in the form of an appropriate official certificate where available in the relevant Member State;

a self-declaration of good repute in relation to the provision of financial or data services, where all members of the senior management and management body shall state whether they have been subject to any of the following:

evidence of compliance with Article 27(2) of Regulation (EU) No 909/2014;

a description of the roles and responsibilities of the members of the management body;

the target for the representation of the underrepresented gender in the management body, the relevant policy on how to meet that target and the method used by the applicant CSD to make public the target, policy and its implementation.

a description of the ownership structure of the applicant CSD referred to in point (i) of Article 4(2), including a description of the identity and size of interests of any entity in a position to exercise control over the operation of the applicant CSD;

a list of the shareholders and persons who are in a position to exercise, directly or indirectly, control over the management of the applicant CSD.

a description of the policies and procedures concerning the identification, management and disclosure to the competent authority of potential conflicts of interest and of the process used to ensure that the staff of the applicant CSD is informed of those policies and procedures;

a description of the controls and measures put in place to ensure that the requirements referred to in point (a) on the management of conflicts of interest are met;

a description of the following elements:

information relating to participants, clients, issuers or other users of the applicant CSD services;

other information held by the applicant CSD as a result of its business activity not permitted to be used for commercial purposes.

the internal procedures concerning permissions of access to information that ensure secured access to data;

a description of any restrictions on the use of data for reasons of confidentiality.

the mandate of the user committee;

the governance arrangements of the user committee;

the operating procedures of the user committee;

the admission criteria and the election mechanism for the members of the user committee;

a list of the proposed members of the user committee and the indication of interests that they represent.

an analysis of the extent to which the applicant CSD's existing record-keeping systems, policies and procedures are compliant with the requirements under Article 54;

an implementation plan detailing how the applicant CSD will comply with the requirements referred to in Article 54 by the date on which it becomes applicable.

the criteria for participation that allow fair and open access for all legal persons that intend to become participants in the securities settlement systems operated by the applicant CSD;

the procedures for the application of disciplinary measures against existing participants that do not comply with the criteria for participation.

the procedures and measures to prevent settlement fails in accordance with Article 6 of Regulation (EU) No 909/2014;

the measures to address settlement fails in accordance with Articles 7 of Regulation (EU) No 909/2014.

the rules and procedures to reduce and manage the risks associated with the safekeeping of securities;

a detailed description of the different levels of segregation offered by the applicant CSD, a description of the costs associated with each level, the commercial terms on which they are offered, their main legal implications and the applicable insolvency law;

the rules and procedures for obtaining the consents referred to in Article 38(7) of Regulation (EU) No 909/2014.

a copy of the outsourcing agreements;

the methods used to monitor the service level of the outsourced services and activities.

the applicant CSD holds its financial assets in accordance with Article 46(1), (2) and (5) of Regulation (EU) No 909/2014 and Chapter XI of this Regulation.

the investments of the applicant CSD are compliant with Article 46(3) of Regulation (EU) No 909/2014 and Chapter XI of this Regulation.

information demonstrating that the capital of the applicant CSD, including retained earnings and reserves of the applicant CSD, meets the requirements of Article 47 of Regulation (EU) No 909/2014;

the plan referred to in Article 47(2) of Regulation (EU) No 909/2014 and any updates to that plan, and evidence of its approval by the management body or an appropriate committee of the management body of the applicant CSD.

a description of the CSD links accompanied by assessments of potential sources of risks arising from those link arrangements by the applicant CSD;

the expected or actual settlement volumes and values of the settlement performed within the CSD links;

the procedures concerning the identification, assessment, monitoring and management of all potential sources of risk for the applicant CSD and for its participants arising from the link arrangement and the appropriate measures put in place to mitigate them;

an assessment of the applicability of insolvency laws applicable to the operation of a CSD link and their implications for the applicant CSD;

other relevant information requested by the competent authority for assessing the compliance of CSD links with the requirements provided in Article 48 of Regulation (EU) No 909/2014 and Chapter XII of this Regulation.

from legal persons intending to become participants in accordance with Article 33 of Regulation (EU) No 909/2014 and Chapter XIII of this Regulation;

from issuers in accordance with Article 49 of Regulation (EU) No 909/2014 and Chapter XIII of this Regulation;

from other CSDs in accordance with Article 52 of Regulation (EU) No 909/2014 and Chapter XIII of this Regulation;

from other market infrastructures in accordance with Article 53 of Regulation (EU) No 909/2014 and Chapter XIII of this Regulation.

the extent of the financial liabilities assumed by the CSD as a result of that participation;

whether the CSD holds sufficient financial resources that fulfil the criteria referred to in Article 46 of Regulation (EU) No 909/2014 to cover the risks resulting from the following:

whether the legal person in which the CSD holds a participation provides services that are complementary to the core services offered by the CSD, as referred to in Article 18(4) of Regulation (EU) No 909/2014, such as:

whether the participation of the CSD results in the control by the CSD over the legal person as defined in point (21) of Article 2(1) of Regulation (EU) No 909/2014;

the CSD's analysis of the risks arising from that participation, including any analysis approved by an internal or external auditor, demonstrating that all risks resulting from the participation are adequately managed. Competent authorities shall take into account, in particular, the following aspects of the CSD's analysis:

the information referred to in Articles 41 and 42;

a report on the CSD's activities and the substantive changes referred to in Article 16(4) of Regulation (EU) No 909/2014 made during the review period and all related documents;

any additional information requested by the competent authority that is necessary for assessing the compliance of the CSD and its activities with Regulation (EU) No 909/2014 during the review period.

a complete set of the latest audited financial statements of the CSD, including those consolidated at group level;

a summarised version of the most recent interim financial statements of the CSD;

any decisions of the management body following the advice of the user committee, as well as any decisions where the management body has decided not to follow the advice of the user committee;

information on any pending civil, administrative or any other judicial or extrajudicial proceedings involving the CSD, in particular in relation to matters concerning tax and insolvency, or matters that may cause financial or reputational costs for the CSD;

information on any pending civil, administrative or any other judicial or extrajudicial, proceedings involving a member of the management body or a member of the senior management that may have an negative impact on the CSD;

any final decisions resulting from the proceedings referred to in points (d) and (e);

a copy of the results of business continuity stress tests or similar exercises performed during the review period;

a report on the operational incidents that occurred during the review period and affected the smooth provision of any core services, the measures taken to address them and the results thereof;

a report on the performance of the securities settlement system, including an assessment of the system's availability during the review period, measured on a daily basis as the percentage of time the system is operational and functioning according to the agreed parameters;

a summary of the types of manual intervention performed by the CSD;

information concerning the identification of the CSD's critical operations, any substantive changes to its recovery plan, the results of stress scenarios, the recovery triggers and the recovery tools of the CSD;

information on any formal complaints received by the CSD during the review period including information on the following elements:

information concerning the cases where the CSD denied access to its services to any existing or potential participant, any issuer, another CSD or another market infrastructure in accordance with Articles 33(3), 49(3), 52(2) and 53(3) of Regulation (EU) No 909/2014;

a report on changes affecting any CSD links established by the CSD, including changes to the mechanisms and procedures used for the settlement in those CSD links;

information concerning all cases of identified conflicts of interests that materialised during the review period, including the description of how they were managed;

information concerning internal controls and audits performed by the CSD during the review period;

information concerning any identified infringement of Regulation (EU) No 909/2014, including those identified through the reporting channel referred to in Article 26(5) of Regulation (EU) No 909/2014;

detailed information concerning any disciplinary actions taken by the CSD, including any cases of suspension of participants in accordance with Article 7(9) of Regulation (EU) No 909/2014 with a specification of the period of suspension and the reason for suspension;

the general business strategy of the CSD covering a period of at least three years after the last review and evaluation and a detailed business plan for the services provided by the CSD covering at least a period of one year after the last review and evaluation.

a list of the participants of each securities settlement system operated by the CSD, specifying their country of incorporation;

a list of issuers and a list of securities issues recorded in securities accounts centrally and not centrally maintained in each securities settlement system operated by the CSD, specifying the country of incorporation of the issuers and the identification of the issuers to whom the CSD provides the services referred to in points (1) and (2) of Section A of the Annex to Regulation (EU) No 909/2014;

the total market value and nominal value of the securities recorded in securities accounts centrally and not centrally maintained in each securities settlement system operated by the CSD;

the nominal and market value of the securities referred to in point (c) specified as follows:

the nominal and market value of the securities initially recorded in each securities settlement system operated by the CSD;

the nominal and market value of the securities referred to in point (e) specified as follows:

the total number and the values of the settlement instructions against payment and the total number and the values of the free of payment (FOP) settlement instructions settled in each securities settlement system operated by the CSD;

the total number and the values of the settlement instructions categorised as follows:

the number and value of buy-in transactions referred to in Article 7(3) of Regulation (EU) No 909/2014;

the number and amount of penalties referred to in Article 7(2) of Regulation (EU) No 909/2014 per participant;

the total value of securities borrowing and lending operations processed by the CSD acting as an agent or as principal for each type of financial instruments referred to in point (d)(i);

the total value of settlement instructions settled via each CSD link, specifying whether the CSD is the requesting CSD or the receiving CSD;

the value of guarantees and commitments received or provided by the CSD related to securities borrowing and lending operations;

the value of treasury activities involving foreign exchange and transferable securities related to managing participants' long balances including categories of institutions whose long balances are managed by the CSD;

the number of reconciliation processes revealing undue creations or deletions of securities as referred to in Article 65(2) where those processes concern securities issues recorded in securities accounts centrally and not centrally maintained by the CSD;

the mean, median, and mode for the length of time taken to remedy the error identified according to Article 65(2).

in the case of settlement instructions against payment, the settlement amount of the cash leg;

in the case of FOP settlement instructions, the market value of the financial instruments or, where not available, the nominal value of the financial instruments.

for financial instruments referred to in Article 3(1) of Regulation (EU) No 600/2014 of the European Parliament and of the Council (7) admitted to trading on a trading venue within the Union, the market value shall be the closing price of the most relevant market in terms of liquidity referred to in Article 4(6)(b) of that Regulation;

for financial instruments admitted to trading on a trading venue within the Union other than those referred to in point (a), the market value shall be the closing price derived from the trading venue within the Union with the highest turnover;

for financial instruments other than those referred to in points (a) and (b) the market value shall be determined on the basis of a price calculated using a pre-determined methodology that refers to criteria related to market data, such as market prices available across trading venues or investment firms.

whether a document is provided for the first time or is a document that has already been provided and has been updated during the review period;

the unique reference number of the document assigned by the CSD;

the title of the document;

the chapter, section or page of the document where changes have been introduced during the review period and any additional explanation in relation to the changes introduced during the review period.

a report on the evaluation by the competent authority of the risks to which the CSD is or might be exposed or which it creates for the smooth functioning of securities markets;

any envisaged or final remedial actions or penalties against the CSD as a result of the review and evaluation.

a report on the evaluation by the competent authority of the risks to which the CSD is or might be exposed or which it creates for the smooth functioning of securities markets;

any envisaged or final remedial actions or penalties against the CSD as a result of the review and evaluation.

be provided in a durable medium;

be submitted in both paper form and electronic form, the latter using open source formats that may be read easily;

be submitted in a language customary in the sphere of international finance, including translations therein where the original documents are not drawn up in a language customary in the sphere of international finance;

be provided with a unique reference number for each document included.

the composition, role, responsibilities, procedures for appointment, performance assessment and accountability of the management body and of its risk monitoring committees;

the structure, role, responsibilities, procedures for appointment and performance assessment of the senior management;

the reporting lines between the senior management and the management body;

a risk-management function;

a technology function;

a compliance and internal control function;

an internal audit function.

a risk committee responsible for advising the management body on the CSD's overall current and future risk tolerance and strategy;

an audit committee responsible for advising the management body on the performance of the CSD's internal audit function, which it shall oversee;

a remuneration committee responsible for advising the management body on the CSD's remuneration policy, which it shall oversee.

establish well-documented policies, procedures and processes by which the management body, senior management and committees shall operate;

establish clear objectives and strategies for the CSD;

effectively monitor senior management;

establish adequate remuneration policies;

ensure the surveillance of the risk-management function and take the decisions related to risk management;

ensure the independence and adequate resources of the functions referred to in Article 47(3);

monitor outsourcing arrangements;

monitor and ensure compliance with all relevant regulatory and supervisory requirements;

be accountable to shareholders or other owners, employees, users and other relevant stakeholders;

approve internal audit planning and review;

review and update regularly the governance arrangements of the CSD.

ensure consistency of the activities of the CSD with the objectives and strategy of the CSD as determined by the management body;

design and establish risk-management, technology, compliance and internal control procedures that promote the objectives of the CSD;

subject the risk-management, technology, compliance and internal control procedures to regular review and testing;

ensure that sufficient resources are devoted to risk management, technology, compliance and internal control, and internal audit.

has a personal interest in the use of the services, materials and equipment of the CSD for the purposes of another commercial activity;

holds a personal or financial interest in another entity that enters into contracts with the CSD;

holds a participation or a personal interest in another entity that provides services used by the CSD, including any entity to which the CSD outsources services or activities;

has a personal interest in an entity that uses the service of the CSD;

is related to any legal or natural person that has influence on the operations of any entity that provides the services used by the CSD or uses the services provided by the CSD;

is member of the management body or any other bodies or committees of any entity that provides the services which are used by the CSD or uses the services provided for the CSD.

establish, implement and maintain an all-encompassing audit plan to examine and evaluate the adequacy and effectiveness of the CSD's systems, risk-management processes, internal control mechanisms, remuneration policies, governance arrangements, activities and operations, including outsourced activities;

review and report the audit plan to the competent authority at least annually;

establish a comprehensive risk-based audit;

issue recommendations based on the result of work carried out in accordance with point (a) and verify compliance with those recommendations;

report internal audit matters to the management body;

be independent from the senior management and report directly to the management body;

ensure that special audits may be performed at short notice on an event-driven basis.

it is separate and independent from other functions and activities of the group;

it has a direct reporting line to the management body of the CSD;

the arrangement concerning the operation of the internal audit function does not prevent the exercise of supervisory and oversight functions, including on-site access to acquire any relevant information needed to fulfil those functions.

where the findings relate to the criteria for accepting issuers or users to their respective securities settlement systems operated by the CSDs;

where the findings relate to any other aspect of the user committee's mandate;

where the findings may impact the level of provision of services by a CSD, including ensuring business continuity.

each key stage of the processing of records by the CSD may be reconstituted;

the original content of a record before any corrections or other amendments may be recorded, traced and retrieved;

measures are put in place to prevent unauthorised alteration of records;

measures are put in place to ensure the security and confidentiality of the data recorded;

a mechanism for identifying and correcting errors is incorporated in the record-keeping system;

the timely recovery of the records in the case of a system failure is ensured within the record-keeping system.

type of settlement instruction as referred to in point (h)(v) of Article 42(1);

type of transaction, as follows:

unique instruction reference of the participant;

trade date;

intended settlement date;

settlement timestamp;

timestamp of the moment of entry of the settlement instruction into the securities settlement system;

timestamp of the moment of irrevocability of the settlement instruction;

matching timestamp in case of matched settlement instructions;

securities account identifier;

cash account identifier;

settlement bank identifier;

identifier of the instructing participant;

identifier of the instructing participant's counterpart;

identifier of the instructing participant's client, where known to the CSD;

identifier of the client of the instructing participant's counterpart, where known to the CSD;

securities identifier;

settlement currency;

settlement cash amount;

quantity or nominal amount of securities;

status of the settlement instruction covering:

whether an instruction is matched or not matched;

whether an instruction can settle partially;

whether an instruction is on hold;

where relevant, what the reasons are for instruction being pending or failing

place of trading;

if applicable, place of clearing;

the final results of the buy-in process on the last business day of the deferral period at the latest, including the number and value of the financial instruments where the buy-in is partially or fully successful;

the payment of cash compensation, including the amount of the cash compensation, where the buy-in is not possible, fails or is partially successful;

the cancellation of the initial settlement instruction;

for each settlement fail, the amount of the penalties referred to in Article 7(2) of Regulation (EU) No 909/2014.

identifier of each issuer for which the CSD provides the core service referred to in point 1 or 2 of Section A of the Annex to Regulation (EU) No 909/2014;

identifier of each securities issue for which the CSD provides the core services referred to in point 1 or 2 of Section A of the Annex to of Regulation (EU) No 909/2014, the law under which the securities recorded by the CSD are constituted and the country of incorporation of the issuers of each securities issue;

identifier of each securities issue recorded in securities accounts not centrally maintained by the CSD, the law under which the securities recorded by the CSD are constituted and the country of incorporation of the issuers of each securities issue;

identifier of the issuer CSD or of the relevant third country entity performing similar functions to an issuer CSD for each securities issue referred to in point (c);

issuers' securities accounts identifiers, in the case of issuer CSDs;

issuers' cash accounts identifiers, in the case of issuer CSDs;

identifiers of settlement banks used by each issuer, in the case of issuer CSDs;

participants' identifiers;

participants' country of incorporation;

participants' securities accounts identifiers;

participants' cash accounts identifiers;

identifiers of settlement banks used by each participant;

country of incorporation of settlement banks used by each participant.

identifiers of participants and of other account holders;

type of securities accounts according to whether a securities account belongs to a participant (‘participant's own account’), to one of its clients (‘individual client segregation’) or to several of its clients (‘omnibus client segregation’);

for each securities issue identifier (ISIN), end-of-day balances of securities accounts covering the number of securities;

for each securities account and ISIN under point (c), the number of securities subject to settlement restrictions, type of the restrictions and the identity of the beneficiary of restrictions at the end of day.

the organisational charts for the management body, senior management, relevant committees, operational units and all other units or divisions of the CSD;

the identities of the shareholders, whether natural or legal persons, that exercise direct or indirect control over the management of the CSD or that have participations in the capital of the CSD and the amounts of those holdings;

participations of the CSD in the capital of other legal entities;

the documents attesting the policies, procedures and processes required under the CSD's organisational requirements and in relation to the services provided by the CSD;

the minutes of management body meetings and of meetings of senior management committees and other committees;

the minutes of meetings of the user committees;

the minutes of consultation groups with participants and clients, if any;

internal and external audit reports, risk-management reports, internal control and compliance reports, including responses from the senior management to the reports;

all outsourcing contracts;

business continuity policy and disaster recovery plan;

records reflecting all assets, liabilities and capital accounts of the CSD;

records reflecting all costs and revenues, including costs and revenues which are accounted separately in accordance with Article 34(6) of Regulation (EU) No 909/2014;

formal complaints received, including information on the complainant's name and address; the date when the complaint was received; the name of all persons identified in the complaint; a description of the nature and content of the complaint; and the date when the complaint was resolved;

records of any interruption of services or dysfunction, including a detailed report on the timing, effects and remedial actions of that interruption or dysfunction;

records of the results of the back and stress tests performed by the CSDs providing banking-type ancillary services;

written communications with the competent authority, ESMA and relevant authorities;

legal opinions received in accordance with the relevant provisions on organisational requirements in accordance with Chapter VII of this Regulation;

documentation regarding link arrangements in accordance with Chapter XII of this Regulation;

tariffs and fees applied to the different services, including any discount or rebate.

where the securities have been transferred during a given business day, an end-of-day reconciliation of the balance of each securities account maintained by the CSD with the balance of the corresponding record of securities maintained by that entity;

at least once every two weeks, a full reconciliation of all balances in a securities issue with all balances on the corresponding record of securities maintained by that entity.

the aggregated balance of a securities account at the beginning of the respective business day;

the individual transfers of securities in or from a securities account during the respective business day;

the aggregated balance of a securities account at the end of the respective business day.

their transaction volumes and values;

material dependencies between its participants and its participants' clients, where the clients are known to the CSD, that might affect the CSD;

their potential impact on other participants and the securities settlement system of the CSD as a whole in the event of an operational problem affecting the smooth provision of services by the CSD.

the participants' clients responsible for a significant proportion of transactions processed by the CSD;

the participants' clients whose transactions, based on their volumes and values, are significant relative to the respective participants' risk-management capacity.

the other CSD or other financial market infrastructure discloses to the CSD any critical service provider on which the other CSD or market infrastructure relies;

the governance arrangements and management processes in the other CSD or other market infrastructure do not affect the smooth provision of services by the CSD, including the risk-management arrangements and the non-discriminatory access conditions.

a system to classify the incidents taking into account their impact on the smooth provision of services by the CSD;

a system for reporting material operational incidents to the senior management, the management body and the competent authority;

a ‘post-incident’ review after any material disruption in the CSD's activities, to identify the causes and required improvements to the operations or business continuity policy and disaster recovery plan, including to the policies and plans of the users of the CSD. The result of that review shall be communicated to the competent authority and relevant authorities without delay.

develop strategies, policies and procedures to identify, measure, monitor and report on operational risks;

develop procedures to control and manage operational risks, including by introducing any necessary adjustments in the operational risk-management system;

ensure that the strategies, policies and procedures referred to in points (a) and (b) are properly implemented.

resilient, including in stressed market conditions;

have sufficient capacity to process additional information as a result of increasing settlement volumes;

achieve the service level objectives of the CSD.

users;

critical utilities and critical service providers;

other CSDs;

other market infrastructures;

any other institutions with which interdependencies have been identified in the business continuity policy.

access controls to the system;

adequate safeguards against intrusions and data misuse;

specific devices to preserve data authenticity and integrity, including cryptographic techniques;

reliable networks and procedures for accurate and prompt data transmission without major disruptions; and

audit trails.

approved by the management body;

subject to audit reviews that shall be reported to the management body.

identifies all its critical operations and IT systems and provides for a minimum service level to be maintained for those operations;

includes the CSD's strategy and objectives to ensure the continuity of operations and systems referred to in point (a);

takes into account any links and interdependencies to at least:

defines and documents the arrangements to be applied in the event of a business continuity emergency or major disruption of the CSD's operations in order to ensure a minimum service level of critical functions of the CSD;

identifies the maximum acceptable period of time which critical functions and IT systems may be out of use.

prepare a list with all the processes and activities that contribute to the delivery of the services it provides;

identify and create an inventory of all the components of its IT system that support the processes and activities identified in point (a) as well as their respective interdependencies;

identify and document qualitative and quantitative impacts of a disaster recovery scenario to each process and activity referred to in point (a) and how the impacts change over time in case of disruption;

define and document the minimum service levels considered acceptable and adequate from the perspective of the users of the CSD;

identify and document the minimum resource requirements concerning personnel and skills, work space and IT to perform each critical function at the minimum acceptable level.

they are kept up to date;

they are reviewed following a material incident or significant operational changes and, at least, annually;

they take into account all relevant developments, including market and IT developments.

the availability of adequate human resources;

the availability of sufficient financial resources;

the failover, recovery and resuming of operations in a secondary processing site.

provide the level of services necessary to ensure that the CSD performs its critical operations within the recovery time objective;

be located at a geographical distance from the primary processing site that allows the secondary processing site to have a distinct risk profile and prevents it from being affected by the event affecting the primary processing site;

is immediately accessible by the CSD's staff in order to ensure continuity of its critical operations where the primary processing site is not available.

the identification, logging and reporting of all disruptive events for the operations of the CSD;

response measures to operational incidents and emergency situations;

the assessment of damages, and appropriate plans for activating the response measures referred to in point (b);

crisis management and communications, including appropriate contact points, to ensure that reliable and up to date information is transmitted to relevant stakeholders and the competent authority;

the activation and transition to alternative operational and business sites;

IT recovery, including activation of the secondary IT processing site and failover.

scenarios of large scale disasters;

switchovers between the primary processing site and secondary processing site;

the participation of, as appropriate:

they are issued or guaranteed by:

the CSD can demonstrate to the competent authority that the financial instruments have low credit and market risk based upon an internal assessment by the CSD;

they are denominated in any of the following currencies:

they are freely transferable and without any regulatory constraint or third party claims that impair liquidation;

they have an active outright sale or repurchase market, with a diverse group of buyers and sellers, including in stressed conditions, and to which the CSD has reliable access;

reliable price data on these instruments are publicly available on a regular basis;

they are entered into for the purpose of hedging currency risk arising from the settlement in more than one currency in the securities settlement system operated by the CSD or interest rate risk that may affect CSD assets and, in both cases, qualify as a hedging contract pursuant to International Financial Reporting Standards (IFRS) adopted in accordance with Article 3 of Regulation (EC) No 1606/2002 of the European Parliament and of the Council (9);

reliable price data is published on a regular basis for those derivative contracts;

they are concluded for the specific period of time necessary to reduce the currency or interest rate risk to which the CSD is exposed.

the geographic distribution of the entities with which the CSD holds its financial assets;

the interdependency relationships that the entity holding the financial assets or entities of its group may have with the CSD;

the level of credit risk of the entity holding the financial assets.

the requesting CSD shall meet the requirements of the receiving CSD's participation rules;

the requesting CSD shall conduct an analysis of the receiving third-country CSD's financial soundness, governance arrangements, processing capacity, operational reliability and any reliance on a third party critical service provider;

the requesting CSD shall take all necessary measures to monitor and manage the risks that are identified following the analysis referred to in point (b);

the requesting CSD shall make the legal and operational terms and conditions of the link arrangement available to its participants allowing them to assess and manage the risks involved;

before the establishment of a CSD link with a third-country CSD, the requesting CSD shall perform an assessment of the local legislation applicable to the receiving CSD;

the linked CSDs shall ensure the confidentiality of information in connection to the operation of the link. The ability to ensure confidentiality shall be evidenced by the information provided by the CSDs, including any relevant legal opinions or arrangements;

the linked CSDs shall agree on aligned standards and procedures concerning operational issues and communication in accordance with Article 35 of Regulation (EU) No 909/2014;

before the link becomes operational, the requesting and receiving CSDs shall:

all link arrangements shall be reviewed at least annually by the receiving CSD and the requesting CSD taking into account all relevant developments, including market and IT developments, as well as any developments in local legislation referred to in point (e);

for CSD links that do not provide for DVP settlement, the annual review referred to in point (i) shall also include an assessment of any developments that may allow supporting DVP settlement.

the entitlement of the requesting CSD to the securities, including the law applicable to proprietary aspects, the nature of the rights of the requesting CSD on the securities, the possibility of encumbering the securities;

the impact of insolvency proceedings opened against the receiving third- country CSD on the requesting CSD regarding the segregation requirements, settlement finality, procedures and time limits to claim the securities in the relevant third country.

the requesting CSD shall assess and mitigate the additional risks resulting from the settlement of cash;

a CSD that is not authorised to provide banking-type ancillary services in accordance with Article 54 of Regulation (EU) No 909/2014, and which is involved in the execution of cash settlement on behalf of its participants, shall not receive credit and shall use prefunding mechanisms covered by its participants in relation to the DVP settlements to be processed through the link;

a CSD that uses an intermediary for the cash settlement shall ensure that the intermediary performs that settlement efficiently. The CSD shall conduct yearly reviews of the arrangements with that intermediary.

the linked CSDs shall agree on equivalent standards concerning reconciliation, opening hours for the processing of the settlement and of corporate actions and cut-off times;

the linked CSDs shall establish equivalent procedures and mechanisms for transmission of settlement instructions to ensure a proper, secure and straight through processing of settlement instructions;

where an interoperable link supports DVP settlement, the linked CSDs shall reflect at least daily and without undue delay the results of the settlement in their books;

the linked CSDs shall agree on equivalent risk-management models;

the linked CSDs shall agree on equivalent contingency and default rules and procedures referred to in Article 41 of Regulation (EU) No 909/2014.

the intermediary is one of the following:

the intermediary complies with the rules and requirements of the requesting CSD, as evidenced by the information provided by that intermediary, including any relevant legal opinions or arrangements;

the intermediary ensures the confidentiality of information concerning the operation of the CSD link, as evidenced by the information provided by that intermediary, including any relevant legal opinions or arrangements;

the intermediary has the operational capacity and systems for:

the intermediary adheres to and complies with the risk-management policies and procedures of the requesting CSD and it has an appropriate risk-management expertise;

the intermediary has put in place measures that include business continuity policies and associated business continuity and disaster recovery plans, to ensure the continuity of its services, the timely recovery of its operations and the fulfilment of its obligations in events that pose a significant risk of disrupting its operations;

the intermediary holds sufficient financial resources to fulfil its obligations towards the requesting CSD and to cover any losses for which it may be held liable;

an individually segregated account at the receiving CSD is used for the operations of the CSD link;

the condition referred to in point (e) of Article 84(1) is fulfilled;

the requesting CSD is informed of the continuity arrangements between the intermediary and the receiving CSD;

the proceeds from settlement are promptly transferred to the requesting CSD.

the intermediary does not have any entitlement to the securities held;

the account in the books of the receiving CSD is opened in the name of the requesting CSD and the liabilities and obligations as regards the registration, transfer and custody of securities are only enforceable between both CSDs;

the requesting CSD is able to immediately access the securities held with the receiving CSD, including in the event of a change or insolvency of the intermediary.

the receiving CSD shall transmit to the requesting CSD daily statements with information specifying the following, per securities account and per securities issue:

the requesting CSD shall conduct a daily comparison of the opening balance and the closing balance communicated to it by the receiving CSD or by the intermediary with the records maintained by the requesting CSD itself.

there is a market demand for DVP settlement evidenced through a request from any of the user committees of one of the linked CSDs;

the linked CSDs may charge a reasonable commercial fee for the provision of DVP settlement, on a cost-plus basis, unless otherwise agreed by the linked CSDs;

there is a safe and efficient access to cash in the currencies used by the receiving CSD for settlement of securities transactions of the requesting CSD and its participants.

a receiving CSD as defined in point (5) of Article 2(1) of Regulation (EU) No 909/2014, in respect of paragraphs 1, 4, 9, 13 and 14 of Article 89 and Article 90 of this Regulation;

a CSD which receives a request from a participant, an issuer, a central counterparty (CCP) or a trading venue to have access to its services in accordance with Articles 33(2), 49(2) and 53(1) of Regulation (EU) No 909/2014 in respect of paragraphs 1 to 3, 5 to 8 and 10 to 14 of Article 89 and Article 90 of this Regulation;

a CCP which receives a request from a CSD to have access to its transaction feeds in accordance with Article 53(1) of Regulation (EU) No 909/2014 in respect of Article 90 of this Regulation;

a trading venue which receives a request from a CSD to have access to its transaction feeds in accordance with Article 53(1) of Regulation (EU) No 909/2014 in respect of Article 90 of this Regulation.

a requesting CSD as defined in point (6) of Article 2(1) of Regulation (EU) No 909/2014 in respect of paragraphs 1, 4, 9 and 13 of Article 89 and Article 90 of this Regulation;

a participant, an issuer, a CCP or a trading venue which requests access to the securities settlement system operated by a CSD or to other services provided by a CSD in accordance with Articles 33(2), 49(2) and 53(1) of Regulation (EU) No 909/2014 in respect of paragraphs 1 to 3, 5 to 8 and 10 to 14 of Article 89 and Article 90 of this Regulation;

a CSD which requests access to the transaction feeds of a CCP in accordance with Article 53(1) of Regulation (EU) No 909/2014 in respect of Article 90 of this Regulation;

a CSD which requests access to the transaction feeds of a trading venue in accordance with Article 53(1) of Regulation (EU) No 909/2014 in respect of Article 90 of this Regulation.

legal risks;

financial risks;

operational risks.

the requesting participant is not able to comply with the legal requirements for participation in the securities settlement system operated by the CSD, or does not provide the CSD with the information necessary for the CSD to assess the compliance, including any required legal opinions or legal arrangements;

the requesting participant is not able to ensure, in accordance with the rules applicable in the home Member State of the CSD, the confidentiality of the information provided through the securities settlement system, or does not provide the CSD with the information necessary for the CSD to assess its ability to comply with those rules on confidentiality, including any required legal opinions or legal arrangements;

where a requesting participant is established in a third country, either of the following:

the issuer is not able to comply with the legal requirements for the provision of services by the CSD;

the issuer is not able to guarantee that the securities have been issued in a manner that enables the CSD to ensure the integrity of the issue in accordance with Article 37 of Regulation (EU) No 909/2014.

the criteria set out in point (b) of paragraph 2;

where a trading venue is established in a third country, the requesting trading venue is not subject to a regulatory and supervisory framework comparable to the regulatory and supervisory framework applicable to a trading venue in the Union;

the requesting participant does not have the operational capacity to participate in the CSD;

the requesting participant does not comply with the risk-management rules of the receiving CSD, or it lacks the necessary expertise in that regard;

the requesting participant has not put in place business continuity policies or disaster recovery plans;

the granting of access requires the receiving CSD to undertake significant changes of its operations affecting its risk-management procedures and endangering the smooth functioning of the securities settlement system operated by the receiving CSD, including the implementation of ongoing manual processing by the CSD.

the criterion set out in point (d) of paragraph 11;

the securities settlement system operated by the CSD cannot process the currencies requested by the issuer.

the competent authority of the place of establishment of the requesting participant in accordance with Article 33(3) of Regulation (EU) No 909/2014;

the competent authority of the place of establishment of the requesting issuer in accordance with Article 49(4) of Regulation (EU) No 909/2014;

the competent authority of the requesting CSD and the relevant authority referred to in point (a) of Article 12(1) of Regulation (EU) No 909/2014 responsible for the oversight of the securities settlement system operated by the requesting CSD in accordance with Articles 52(2) and 53(3) of Regulation (EU) No 909/2014;

the competent authority of the requesting CCP or trading venue in accordance with Article 53(3) of Regulation (EU) No 909/2014 and the relevant authority referred to in point (a) of Article 12(1) of Regulation (EU) No 909/2014 responsible for the oversight of the securities settlement systems in the Member State where the requesting CCP and trading venues are established in accordance with Article 53(3) of Regulation (EU) No 909/2014.

a copy of the decision of the management body of the applicant CSD to apply for authorisation and the minutes from the meeting where the management body approved the content of the application file and its submission;

the contact details of the person responsible for the application for authorisation, where that person is not the one submitting the application for authorisation referred to under Article 17 of Regulation (EU) No 909/2014;

evidence that proves the existence of an authorisation referred to in point (a) of Article 54(3) of Regulation (EU) No 909/2014;

evidence that the applicant CSD meets the prudential requirements referred to in Article 59(1), (3) and (4) of Regulation (EU) No 909/2014 and the supervisory requirements referred to in Article 60 of that Regulation;

evidence, containing any relevant documents including articles of incorporation, financial statements, audit reports, reports from risk committees, which proves that the applicant CSD complies with point (d) of Article 54(3) of Regulation (EU) No 909/2014;

details concerning the recovery plan referred to in point (f) of Article 54(3) of Regulation (EU) No 909/2014;

a programme of operations that fulfils the following conditions:

evidence supporting the reasons for not settling the cash payments of the CSD's securities settlement system through accounts opened with a central bank of issue of the currency of the country where the settlement takes place;

detailed information on the arrangements which ensure that the provision of banking-type ancillary services intended to be provided does not affect the smooth provision of the core CSD services referred to in Section A of the Annex to Regulation (EU) No 909/2014, including:

a copy of the decision of the management body of the applicant CSD to apply for authorisation and the minutes from the meeting where the management body approved the content of the application file and its submission;

the contact details of the person responsible for the application for authorisation, where the person is not the same person as the one submitting the application for authorisation referred to in Article 17 of Regulation (EU) No 909/2014;

the corporate name of the credit institution to be designated in accordance with point (b) of Article 54(2) of Regulation (EU) No 909/2014, its legal status and registered address in the Union;

evidence that the credit institution referred to in point (c) has obtained an authorisation referred to in point (a) of Article 54(4) of Regulation (EU) No 909/2014;

the articles of incorporation and other relevant statutory documentation of the designated credit institution;

the ownership structure of the designated credit institution, including the identity of its shareholders;

the identification of any common shareholders of the applicant CSD and the designated credit institution and any participations between the applicant CSD and the designated credit institution;

evidence that the designated credit institution meets the prudential requirements referred to in Article 59(1), (3) and (4) of Regulation (EU) No 909/2014 and the supervisory requirements referred to in Article 60 of that Regulation;

evidence, including a memorandum of association, financial statements, audit reports, reports from risk committees, or other documents, which proves that the designated credit institution complies with point (e) of Article 54(4) of Regulation (EU) No 909/2014;

the details of the recovery plan referred to in point (g) of Article 54(4) of Regulation (EU) No 909/2014;

a programme of operations that fulfils the following conditions:

evidence supporting the reasons for not settling the cash payments of the CSD's securities settlement system through accounts opened with a central bank of issue of the currency of the country where the settlement takes place;

detailed information concerning the following aspects of the relation between the CSD and the designated credit institution:

the information referred to Article 91 for each of the designated credit institution;

a description of the role of each designated credit institution and the relations between them.