Commission Delegated Regulation (EU) 2017/392 of 11 November 2016 supplementing Regulation (EU) No 909/2014 of the European Parliament and of the Council with regard to regulatory technical standards on authorisation, supervisory and operational requirements for central securities depositories (Text with EEA relevance. )

For the purposes of this paragraph, a direct or indirect link to a natural person shall comprise the spouse or legal partner, family members in direct ascending or descending line up to the second degree and their spouses or legal partners, the siblings and their spouse or legal partners, and any person having the same domicile or habitual residence as the employees, managers or members of the management body.

Article 51

Audit methods

(a) 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;

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

(c) establish a comprehensive risk-based audit;

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

(e) report internal audit matters to the management body;

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

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

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

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

(c) 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.

Internal audit assessments shall include an on-going monitoring of the performance of the internal audit activity and periodic reviews performed through self-assessment carried out by the audit committee or by other persons within the CSD or the group with sufficient knowledge of internal audit practices.

An external assessment of the internal audit function shall be conducted by a qualified and independent assessor from outside the CSD and its group structure at least once every five years.

The frequency of the audits shall be determined on the basis of a documented risk assessment. Audits referred to in the first subparagraph shall be carried out at least every two years.

Article 52

Sharing audit findings with the user committee

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

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

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

CHAPTER VIII

RECORD-KEEPING

(Article 29(3) of Regulation (EU) No 909/2014)

Article 53

General requirements

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

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

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

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

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

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

Article 54

Transaction/settlement instruction (Flow) records

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

(c) unique instruction reference of the participant;

(d) trade date;

(e) intended settlement date;

(f) settlement timestamp;

(g) timestamp of the moment of entry of the settlement instruction into the securities settlement system;

(h) timestamp of the moment of irrevocability of the settlement instruction;

(i) matching timestamp in case of matched settlement instructions;

(j) securities account identifier;

(k) cash account identifier;

(l) settlement bank identifier;

(m) identifier of the instructing participant;

(n) identifier of the instructing participant's counterpart;

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

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

(q) securities identifier;

(r) settlement currency;

(s) settlement cash amount;

(t) quantity or nominal amount of securities;

For each of the categories of settlement instructions referred to in the first subparagraph, the following information shall be recorded:

(a) whether an instruction is matched or not matched;

(b) whether an instruction can settle partially;

(c) whether an instruction is on hold;

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

(e) place of trading;

(f) if applicable, place of clearing;

where a buy-in process is initiated in accordance with Article 7(3) of Regulation (EU) No 909/2014, details regarding:

(i) 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;

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

(iii) the cancellation of the initial settlement instruction;

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

Article 55

Position (Stock) records

(a) 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;

(b) 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;

(c) 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;

(d) 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);

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

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

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

(h) participants' identifiers;

(i) participants' country of incorporation;

(j) participants' securities accounts identifiers;

(k) participants' cash accounts identifiers;

(l) identifiers of settlement banks used by each participant;

(m) country of incorporation of settlement banks used by each participant.

(a) identifiers of participants and of other account holders;

(b) 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’);

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

(d) 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.

Article 56

Ancillary Services Records

Article 57

Business Records

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

(b) 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;

(c) participations of the CSD in the capital of other legal entities;

(d) 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;

(e) the minutes of management body meetings and of meetings of senior management committees and other committees;

(f) the minutes of meetings of the user committees;

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

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

(i) all outsourcing contracts;

(j) business continuity policy and disaster recovery plan;

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

(l) 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;

(m) 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;

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

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

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

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

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

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

Article 58

Additional records

A CSD shall keep the additional records requested by the competent authority for the purpose of enabling the competent authority to monitor compliance of the CSD with Regulation (EU) No 909/2014.

CHAPTER IX

RECONCILIATION MEASURES

(Article 37(4) of Regulation (EU) No 909/2014)

Article 59

General reconciliation measures

The CSD shall compare the previous end-of-day balance with all the settlements processed during the day and the current end-of-day balance for each securities issue and securities account centrally or not centrally maintained by the CSD.

A CSD shall use double-entry accounting, according to which for each credit entry made on a securities account maintained by the CSD, centrally or not centrally, there is a corresponding debit entry on another securities account maintained by the same CSD.

Article 60

Reconciliation measures for corporate actions

Article 61

Reconciliation measures for the registrar model

Where a registrar, issuance agent, or other similar entity is involved in the reconciliation process for a certain securities issue in accordance with Article 37(2) of Regulation (EU) No 909/2014, and maintains records of securities which are also recorded in the CSD, the measures to be taken by the CSD and that entity to ensure the overall integrity of the issue shall include a daily reconciliation of the total balance recorded on the securities accounts maintained by the CSD with the corresponding records of securities maintained by that entity. The CSD and that entity shall also conduct:

(a) 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;

(b) 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.

Article 62

Reconciliation measures for the transfer agent model

Where a fund manager, transfer agent or other similar entity is responsible for the reconciliation process for an account that maintains a part of a securities issue recorded in a CSD, the measures to be taken by the CSD and that entity to ensure the integrity of this part of the issue shall include a daily reconciliation of the total balance of the securities accounts maintained by the CSD with that entity's records of securities maintained by the CSD, including the aggregated opening and closing balances.

Where the CSD maintains its accounts in that entity's register through a third party which is not a CSD, the CSD shall require the third party to inform that entity that it is acting on behalf of the CSD and to set up equivalent cooperation and information exchange measures with that entity to ensure that the requirements under this Article are met.

Article 63

Reconciliation measures for the common depository model

Where CSDs that have established an interoperable link use a common depository or any other similar entity, each CSD shall reconcile on a daily basis the total balance per securities issue recorded on the securities accounts it maintains, other than for other CSDs in the interoperable link, with the corresponding records of securities that the common depository or the other similar entity maintains for that CSD.

Where a common depository or any other similar entity is responsible for the overall integrity of a certain securities issue, the common depository or the other similar entity shall conduct a daily comparison of the total balance per securities issue against the balances in the securities accounts it maintains for each CSD.

Where the reconciliation process concerns securities subject to immobilisation, the CSDs shall ensure that the common depository or the other entity meets the requirements set out in Article 59(3).

Article 64

Additional measures where other entities are involved in the reconciliation process

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

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

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

The CSD shall provide the information referred to in the first subparagraph at the request of other holders of securities accounts maintained by the CSD, centrally or not centrally, where that information is necessary for the reconciliation of those holders' records with the records of the CSD.

For the purposes of this paragraph, ‘account operator’ shall mean an entity that is contracted by a CSD to record book entries into its securities accounts.

Article 65

Problems related to reconciliation

CHAPTER X

OPERATIONAL RISKS

(Article 45(1) to (6) of Regulation (EU) No 909/2014)

SECTION 1

Identifying operational risks

Article 66

General operational risks and their assessment

Article 67

Operational risks that may be posed by key participants

(a) their transaction volumes and values;

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

(c) 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.

For the purposes of point (b) in the first subparagraph, the CSD shall also identify the following:

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

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

For the purposes of the first subparagraph, the operational risk-management system referred to in Article 70 shall also provide for rules and procedures to gather all relevant information about their participants' clients. The CSD shall also include in the agreements with its participants all terms necessary to facilitate the gathering of that information.

Article 68

Operational risks that may be posed by critical utilities and critical service providers

Where the service provider outsources its services in accordance with the first subparagraph, the CSD shall ensure that the level of service and its resilience is not impacted and full access by the CSD to the information necessary for the provision of the outsourced services is preserved.

Article 69

Operational risks that may be posed by other CSDs or market infrastructures

(a) 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;

(b) 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.

SECTION 2

Methods to test, address and minimise operational risks

Article 70

Operational risk-management system and framework

Article 71

Integration of and compliance with the operational and enterprise risk-management system

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

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

(c) 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.

Article 72

Operational risk-management function

As part of the risk-management function, the operational risk-management function of a CSD shall manage the CSD's operational risk. It shall in particular:

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

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

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

Article 73

Audit and testing

Article 74

Mitigation of operational risk through insurance

A CSD may only contract insurance to mitigate the operational risks referred to in this Chapter where the measures referred to in this Chapter do not fully mitigate operational risks.

SECTION 3

IT systems

Article 75

IT tools

The CSD IT systems shall be:

(a) resilient, including in stressed market conditions;

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

(c) achieve the service level objectives of the CSD.

A CSD shall have procedures for ensuring sufficient capacity of its IT systems, including in the case of the introduction of new technology.

(a) users;

(b) critical utilities and critical service providers;

(c) other CSDs;

(d) other market infrastructures;

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

(a) access controls to the system;

(b) adequate safeguards against intrusions and data misuse;

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

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

(e) audit trails.

SECTION 4

Business continuity

Article 76

Strategy and policy

(a) approved by the management body;

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

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

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

(d) 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;

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

Article 77

Business impact analysis

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

(b) 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;

(c) 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;

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

(e) 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.

(a) they are kept up to date;

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

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

Article 78

Disaster recovery

(a) the availability of adequate human resources;

(b) the availability of sufficient financial resources;

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

The secondary processing site shall:

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

(b) 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;

(c) 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.

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

(b) response measures to operational incidents and emergency situations;

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

(d) 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;

(e) the activation and transition to alternative operational and business sites;

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

Article 79

Testing and monitoring

A CSD shall monitor its business continuity policy and disaster recovery plan and test them at least annually. The CSD shall also test its business continuity policy and disaster recovery plan after substantive changes to the systems or related operations in order to ensure that the systems and operations achieve the CSD objectives. The CSD shall plan and document these tests, which shall include:

(a) scenarios of large scale disasters;

(b) switchovers between the primary processing site and secondary processing site;

Article 80

Maintenance

CHAPTER XI

INVESTMENT POLICY

(Article 46(2), (3) and (5) of Regulation (EU) No 909/2014)

Article 81

Highly liquid instruments with minimal market and credit risk

(b) 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;

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

(e) 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;

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

For the purposes of point (b), in performing the assessment the CSD shall employ a defined and objective methodology that shall not exclusively rely on external opinions and that takes into consideration the risk arising from the establishment of the issuer in a particular country

(a) 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);

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

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

Article 82

Appropriate timeframe for access to assets

Article 83

Concentration limits to individual entities

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

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

(c) the level of credit risk of the entity holding the financial assets.

CHAPTER XII

CSD LINKS

(Article 48(3), (5), (6) and (7) of Regulation (EU) No 909/2014)

Article 84

Conditions for the adequate protection of linked CSDs and of their participants

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

(b) 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;

(c) 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);

(d) 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;

(e) 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;

(f) 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;

(g) 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;

(i) 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);

(j) 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.

For the purposes of point (e), in performing the assessment, the CSD shall ensure that the securities maintained in the securities settlement system operated by the receiving CSD benefit from a level of asset protection comparable to the one ensured by the rules applicable to the securities settlement system operated by the requesting CSD. The requesting CSD shall require from the third-country CSD a legal assessment addressing the following issues:

(i) 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;

(ii) 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.

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

(b) 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;

(c) 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.

(a) 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;

(b) 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;

(c) 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;

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

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

Article 85

Monitoring and management of additional risks resulting from the use of indirect links or intermediaries to operate CSD links

(b) 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;

(c) 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;

(e) 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;

(f) 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;

(g) 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;

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

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

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

(k) the proceeds from settlement are promptly transferred to the requesting CSD.

For the purposes of the first indent in point (a)(i), the third indent in point (a)(ii) and point (h), the requesting CSD shall ensure that it can have access to the securities held in the individually segregated account at any point in time. Where an individually segregated account at the receiving CSD is however not available for the operations of a CSD link established with a third-country CSD, the requesting CSD shall inform its competent authority about the reasons justifying the unavailability of individually segregated accounts and shall provide it with the details on the risks resulting from the unavailability of individually segregated accounts. The requesting CSD shall in any case ensure an adequate level of protection of its assets held with the third-country CSD.

(a) the intermediary does not have any entitlement to the securities held;

(b) 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;

(c) 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.

Article 86

Reconciliation procedures for linked CSDs

(b) 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.

In the case of an indirect link, the daily statements referred to in point (a) of the first subparagraph shall be transmitted through the intermediary referred to point (a) of Article 85(1).

Where intermediaries are involved in the operation of CSD links, those intermediaries shall establish appropriate contractual arrangements with the CSDs concerned in order to ensure compliance with the first subparagraph.

In the event of a corporate action that reduces the balances of securities accounts held by an investor CSD with another CSD, the investor CSD shall not update the securities accounts that it maintains to reflect the corporate action until the corporate action has been fully processed by the other CSD.

An issuer CSD shall ensure the timely transmission to all its participants, including investor CSDs, of information on the processing of corporate actions for a specific securities issue. The investor CSDs shall in turn transmit the information to their participants. That transmission shall include all necessary information for investor CSDs to adequately reflect the outcome of those corporate actions in the securities accounts they maintain.

Article 87

DVP settlement through CSD links

Delivery versus payment (DVP) settlement shall be regarded as practical and feasible where:

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

(b) 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;

(c) 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.

CHAPTER XIII

ACCESS TO A CSD

(Articles 33(5), 49(5), 52(3) and 53(4) of Regulation (EU) No 909/2014)

Article 88

Receiving and requesting parties

(a) 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;

(b) 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;

(c) 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;

(d) 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) 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;

(b) 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;

(c) 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;

(d) 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.

SECTION 1

Criteria justifying refusal of access

(Articles 33(3), 49(3), 52(2) and 53(3) of Regulation (EU) No 909/2014)

Article 89

Risks to be taken into account by CSDs and competent authorities

(a) legal risks;

(b) financial risks;

(c) operational risks.

(a) 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;

(b) 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;

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

(b) 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.

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

(b) 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;

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

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

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

(d) 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.

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

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

SECTION 2

Procedure for refusal of access

(Articles 33(3), 49(4), 52(2) and 53(3) of Regulation (EU) No 909/2014)

Article 90

Procedure

The responses to the request for information referred to in the first subparagraph shall be sent to the competent authority within two weeks from the date of the receipt of the request.

In accordance with Article 53(3) of Regulation (EU) No 909/2014, within two business days from the date of the receipt of the complaint referred to in paragraph 1, the competent authority of the receiving party shall transmit the complaint to the relevant authority referred to in point (a) of Article 12(1) of Regulation (EU) No 909/2014 from the Member State of the place of establishment of the receiving party.

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

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

(c) 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;

(d) 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.

The competent authority referred to in paragraph 1 shall also inform the receiving party and the authorities referred to in points (a) to (d) of paragraph 3 of the reasoned reply referred to in the first subparagraph of this paragraph within two working days from the date where it sends the reasoned reply to the requesting party.

The time limit referred to in the first subparagraph shall be extended to eight months in case of customised links that require significant development of IT tools, unless otherwise agreed by the requesting and receiving CSDs.

The order shall include the reasons why the competent authority referred to in paragraph 1 concluded that the refusal by the receiving party to grant access was unjustified.

The order shall be sent to ESMA, the authorities referred to in points (a) to (d) of paragraph 3, the requesting party and the receiving party within two working days after the date when it enters into force.

CHAPTER XIV

AUTHORISATION TO PROVIDE BANKING TYPE OF ANCILLARY SERVICES

(Article 55(1) and (2) of Regulation (EU) No 909/2014)

Article 91

CSDs offering banking-type ancillary services themselves

An application for authorisation in accordance to point (a) of Article 54(2) of Regulation (EU) No 909/2014 shall include the following information:

(a) 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;

(b) 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;

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

(d) 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;

(e) 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;

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

(h) 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;

Article 92

CSDs offering banking-type ancillary services through a designated credit institution

An application for authorisation in accordance with point (b) of Article 54(2) of Regulation (EU) No 909/2014 shall contain the following information:

(a) 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;

(b) 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;

(c) 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;

(d) 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;

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

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

(g) 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;

(h) 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;

(i) 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;

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

(l) 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;

Article 93

Specific requirements

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

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

Article 94

Standard forms and templates for the application