Delegated regulation 2017/389 - Supplement to Regulation 909/2014 as regards the parameters for the calculation of cash penalties for settlement fails and the operations of CSDs in host Member States - Main contents
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Commission Delegated Regulation (EU) 2017/389 of 11 November 2016 supplementing Regulation (EU) No 909/2014 of the European Parliament and of the Council as regards the parameters for the calculation of cash penalties for settlement fails and the operations of CSDs in host Member States (Text with EEA relevance. )| Legal instrument | delegated regulation |
|---|---|
| Number legal act | Delegated regulation 2017/389 |
| CELEX number i | 32017R0389 |
| Document | 11-11-2016; Date of adoption |
|---|---|
| Publication in Official Journal | 10-03-2017; OJ L 65 p. 1-8 |
| Effect | 01-01-1001; Application Partial application See Art 9 P 3 PT (a) 30-03-2017; Entry into force Date pub. +20 See Art 9 L 1 30-03-2017; Application Partial application See Art 9 L 3 PT (c) 03-01-2018; Application Partial application See Art 9 L 3 PT (b) 10-03-2019; Application See Art 9 L 2 |
| End of validity | 31-12-9999 |
10.3.2017 |
EN |
Official Journal of the European Union |
L 65/1 |
COMMISSION DELEGATED REGULATION (EU) 2017/389
of 11 November 2016
supplementing Regulation (EU) No 909/2014 of the European Parliament and of the Council as regards the parameters for the calculation of cash penalties for settlement fails and the operations of CSDs in host Member States
(Text with EEA relevance)
THE EUROPEAN COMMISSION,
Having regard to the Treaty on the Functioning of the European Union,
Having regard to Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012 (1), and in particular Article 7(14) and Article 24(7) thereof,
Whereas:
(1) |
The provisions of this Regulation are closely linked since they deal with the elements required for the implementation of the measures laid down in Regulation (EU) No 909/2014. To ensure coherence between those measures and to facilitate a comprehensive view and easy access by persons that are subject to these provisions, it is desirable to include all these elements concerning measures under Regulation (EU) No 909/2014 in a single Regulation. |
(2) |
Regulation (EU) No 909/2014 requires that central securities depositories (CSDs) impose cash penalties on participants to their securities settlement systems that cause settlement fails (failing participants). |
(3) |
To ensure that cash penalties imposed on failing participants act as an effective deterrent, the parameters for the calculation of the level of cash penalties should be closely related to the value of financial instruments that fail to be delivered, and to which appropriate penalty rates should be applied. The value of the financial instruments underlying the transaction should also be the basis for the calculation of the level of cash penalty where the settlement fail is due to a lack of cash. The level of cash penalties should provide incentives to failing participants to promptly settle transactions that failed to be settled. In order to ensure the effective achievement of the objectives pursued by the imposition of cash penalties, the adequacy of the parameters for their calculation should be monitored on an ongoing basis and adjusted, as necessary, on the basis of the impact of those penalties on the market. |
(4) |
In view of the considerable price differences of financial instruments in the multiple underlying transactions and in order to facilitate the calculation of cash penalties, the value of financial instruments should be based on a single reference price. The same reference price should be used by CSDs on a given day for calculating cash penalties for settlement fails concerning identical financial instruments. Cash penalties should be therefore the result of multiplying the number of financial instruments underlying the transaction that failed to settle by the relevant reference price. The establishment of reference prices should be based on objective and reliable data and methodologies. |
(5) |
Taking into account that the automation of calculations of cash penalties should ensure their effective application by CSDs, appropriate penalty rates should be based on a single table of values that should be easy to automate and apply. Penalty rates for different types of financial instruments should be set at levels that would result in cash penalties that fulfil the conditions of Regulation (EU) No 909/2014. |
(6) |
Settlement of transactions in shares is usually highly standardised. Where shares have a liquid market and could therefore be bought easily, settlement fails should be subject to the highest penalty rate in order to provide incentives to failing participants to... |
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