Regulation (EU) 2023/2845 of the European Parliament and of the Council of 13 December 2023 amending Regulation (EU) No 909/2014 as regards settlement discipline, cross-border provision of services, supervisory cooperation, provision of banking-type ancillary services and requirements for third-country central securities depositories and amending Regulation (EU) No 236/2012 (Text with EEA relevance)
Regulation (EU) 2023/2845 of the European Parliament and of the Councilof 13 December 2023amending Regulation (EU) No 909/2014 as regards settlement discipline, cross-border provision of services, supervisory cooperation, provision of banking-type ancillary services and requirements for third-country central securities depositories and amending Regulation (EU) No 236/2012(Text with EEA relevance)THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,Having regard to the Treaty on the Functioning of the European Union, and in particular Article 114 thereof,Having regard to the proposal from the European Commission,After transmission of the draft legislative act to the national parliaments,Having regard to the opinion of the European Central BankOJ C 367, 26. 9. 2022, p. 3.,Having regard to the opinion of the European Economic and Social CommitteeOJ C 443, 22.11.2022, p. 87.,Acting in accordance with the ordinary legislative procedurePosition of the European Parliament of 9 November 2023 (not yet published in the Official Journal) and decision of the Council of 27 November 2023.,Whereas:(1)Regulation (EU) No 909/2014 of the European Parliament and of the CouncilRegulation (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 (OJ L 257, 28.8.2014, p. 1). standardises the requirements for the settlement of financial instruments and the rules on the organisation and conduct of central securities depositories (CSDs) to promote safe, efficient and smooth settlement. That Regulation introduced shorter settlement periods, settlement discipline measures, strict organisational, conduct of business and prudential requirements for CSDs, increased prudential and supervisory requirements for CSDs and other institutions providing banking services that support securities settlement, and a regime allowing authorised CSDs to provide their services across the Union.(2)A simplification of the requirements in certain areas covered by Regulation (EU) No 909/2014 and a more proportionate approach to those areas would be in line with the Commission’s Regulatory Fitness and Performance (REFIT) programme, which emphasises the need for cost reduction and simplification so that Union policies achieve their objectives in the most efficient way and aims in particular to reduce regulatory and administrative burdens.(3)Efficient and resilient post-trading infrastructures are essential elements for a well-functioning capital markets union and increase the efforts to support investment, growth and jobs in line with the political priorities of the Commission. For that reason, a review of Regulation (EU) No 909/2014 is one of the key actions of the Commission Capital Markets Union Action Plan set out in the communication of the Commission of 24 September 2020 on a Capital Markets Union for people and businesses-new action plan.(4)In 2019, the Commission carried out a targeted consultation on the application of Regulation (EU) No 909/2014. The Commission also received input from the European Supervisory Authority (European Securities and Markets Authority) (ESMA) established by Regulation (EU) No 1095/2010 of the European Parliament and of the CouncilRegulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, p. 84). and the European System of Central Banks (ESCB). The feedback received indicated that stakeholders support and consider relevant the objective of Regulation (EU) No 909/2014 to promote safe, efficient and smooth settlement of financial instruments, and that no major overhaul of that Regulation was necessary. The report submitted by the Commission to the European Parliament and the Council in accordance with Regulation (EU) No 909/2014 was published on 1 July 2021. Although the provisions of that Regulation are not yet all fully applicable, the report identified areas for which targeted action is necessary to ensure that the objective of that Regulation is reached in a more proportionate, efficient and effective manner.(5)CSDs should be able to specify, in their internal rules, which events other than insolvency proceedings constitute the default of a participant. In general, such events relate to a failure to complete a transfer of funds or securities in accordance with the terms and conditions and the internal rules of the securities settlement system.(6)Regulation (EU) No 909/2014 introduced rules on settlement discipline to prevent and address failures in the settlement of securities transactions and therefore ensure the safety of transaction settlement. Additional measures and tools to improve settlement efficiency in the Union, such as shaping of transaction sizes or partial settlement, should be explored. Accordingly, ESMA should, in close cooperation with the members of the ESCB, review industry best practices, both within the Union and internationally, with a view to identifying all relevant measures that could be implemented by settlement systems or market participants, and develop updated draft regulatory technical standards on measures to prevent settlement fails in order to increase settlement efficiency.(7)The rules introduced by Regulation (EU) No 909/2014 include, in particular, reporting requirements, a cash penalties regime and mandatory buy-ins. Currently, only the reporting requirements and the cash penalties regime apply. The accumulated experience in applying the cash penalties regime as well as the development and specification of the settlement discipline framework, in particular in Commission Delegated Regulation (EU) 2018/1229Commission Delegated Regulation (EU) 2018/1229 of 25 May 2018 supplementing Regulation (EU) No 909/2014 of the European Parliament and of the Council with regard to regulatory technical standards on settlement discipline (OJ L 230, 13.9.2018, p. 1)., have allowed all interested parties to better understand that framework and the challenges its application gives rise to. In particular, the scope of the cash penalties and of the mandatory buy-in process set out in Regulation (EU) No 909/2014 should be clarified. In order to distinguish the requirements relating to cash penalties from those relating to mandatory buy-ins, such requirements should be laid down in separate articles.(8)Settlement fails the underlying cause of which is not attributable to the participants and operations that are not considered as trading should not be subject to cash penalties or mandatory buy-ins, since the application of those measures to such settlement fails and operations would not be practicable or could lead to detrimental consequences for the market. For mandatory buy-ins, that is likely to be the case for certain primary market transactions, securities financing transactions, corporate actions, reorganisations or the creation and redemption of fund units, realignment operations or other types of transactions that render the buy-in process unnecessary. Similarly, the settlement discipline measures should not apply to failing participants against which insolvency proceedings have been opened, or where central counterparties (CCPs) are the failing participants, except for transactions entered into by a CCP where it does not interpose itself between counterparties.(9)Cash penalties should be calculated for each business day for as long as the fail persists. The possibility of a negative interest rate environment should be taken into account when defining the parameters for the calculation of cash penalties. Eliminating any adverse incentives to fail that could arise in a low or negative interest rate environment is necessary in order to avoid unintended effects on the non-failing participant. The Commission should, on a regular basis, review the parameters used to calculate cash penalties and should, as a result, consider potential changes to the method used for the calculation of those penalties, such as setting progressive rates.(10)Mandatory buy-ins could have negative effects, both in normal and stressed market conditions. Therefore, mandatory buy-ins should be a measure of last resort and should apply only where the following two conditions are met at the same time: first, the application of other measures, such as cash penalties or the suspension, by CSDs, CCPs or trading venues, of participants that cause settlement fails consistently and systematically, has not resulted in a long-term sustainable reduction of settlement fails in the Union or in maintaining a reduced level of settlement fails in the Union; and, second, the level of settlement fails has or is likely to have a negative effect on the financial stability of the Union.(11)When considering whether to introduce mandatory buy-ins, the Commission should, in addition to consulting the European Systemic Risk Board, request ESMA to provide a cost-benefit analysis. Based on that cost-benefit analysis, the Commission should be able to introduce mandatory buy-ins by means of an implementing act. That implementing act should specify to which financial instruments or categories of transactions mandatory buy-ins are to be applied.(12)Applying buy-ins to a chain of transactions on the same financial instrument carried out by counterparties that are participants of a CSD could trigger unnecessary duplicative costs and affect the liquidity of the financial instrument. To avoid such consequences, a pass-on mechanism should be available to participants in such transactions. Each participant involved in the transaction chain should be allowed to pass on a buy-in obligation to the next participant.(13)Mandatory buy-ins allow for the payment of the difference between a financial instrument’s buy-in price and its original trade price to be made by the seller to the purchaser only where that buy-in reference price is higher than the original trade price. That asymmetry would unduly benefit the purchaser in the event that the buy-in reference price is lower than the original trade price. It would also make the pass-on mechanism impossible to apply since, notably, the amounts to be paid can differ between each step in the chain of transactions, depending on when each intermediary executes the buy-in. Therefore, that asymmetry should be removed to ensure that the trading parties are restored to the economic terms that would have applied had the original transaction taken place.(14)The mandatory buy-in procedures under Regulation (EU) No 236/2012 of the European Parliament and of the CouncilRegulation (EU) No 236/2012 of the European Parliament and of the Council of 14 March 2012 on short selling and certain aspects of credit default swaps (OJ L 86, 24.3.2012, p. 1). ceased to apply on 1 February 2022, as a result of the entry into force of Delegated Regulation (EU) 2018/1229. However, the mandatory buy-in procedures under Regulation (EU) No 236/2012 were independent of the regime under Regulation (EU) No 909/2014 and should have continued to apply. Therefore, it is appropriate to reinstate in Regulation (EU) No 236/2012 the provision governing mandatory buy-ins. Transactions that will fall within the scope of that provision should not be subject to mandatory buy-ins under Regulation (EU) No 909/2014.(15)Transactions not cleared by a CCP might be uncollateralised and therefore each trading venue member or trading party bears the counterparty risk. Moving that risk to other entities, such as participants of a CSD, would force the participants to cover their exposure to counterparty risk with collateral, which could lead to a disproportionate increase in the costs of securities settlement. The failing trading venue member or the failing trading party, as applicable, should therefore bear responsibility for the payment of the price difference, the cash compensation and the buy-in costs.(16)Where mandatory buy-ins apply, it should be possible for the Commission to temporarily suspend their application in certain exceptional situations. Such a suspension should be possible for specific categories of financial instruments where necessary to avoid or address a serious threat to financial stability or to the orderly functioning of financial markets in the Union. Such a suspension should be proportionate to those aims.(17)ESMA should develop updated draft regulatory technical standards in order to take into account the amendments introduced by this Regulation to Regulation (EU) No 909/2014. That would enable the Commission to make any necessary corrections or amendments with a view to clarifying the requirements set out in such existing regulatory technical standards. ESMA should also develop draft regulatory technical standards to specify the details of the pass-on mechanism, which types of transactions render the buy-in process unnecessary and how to take into account the specificities of retail investors when executing mandatory buy-ins.(18)Where a CSD does not carry out a settlement activity before the beginning of the authorisation process, the criteria determining which relevant authorities should be involved in such authorisation process should take into account the anticipated settlement activity to ensure that the views of all relevant authorities potentially interested in the activities of that CSD are taken into account.(19)Where a new CSD applies for authorisation, but compliance with certain requirements cannot be assessed because the CSD is not yet operational, the competent authority should be able to grant the authorisation where it can reasonably be assumed that that CSD will comply with Regulation (EU) No 909/2014 when it effectively commences its activities. That assessment is particularly relevant as regards the use of distributed ledger technology and the application of Regulation (EU) 2022/858 of the European Parliament and of the CouncilRegulation (EU) 2022/858 of the European Parliament and of the Council of 30 May 2022 on a pilot regime for market infrastructures based on distributed ledger technology, and amending Regulations (EU) No 600/2014 and (EU) No 909/2014 and Directive 2014/65/EU (OJ L 151, 2.6.2022, p. 1)..(20)While Regulation (EU) No 909/2014 requires national supervisors to cooperate with and involve relevant authorities, national supervisors are not required to inform those relevant authorities whether or how their views have been considered in the outcome of the authorisation process or whether additional issues have been identified in the course of regular reviews and evaluations. The relevant authorities should therefore be able to issue reasoned opinions on the authorisation of CSDs and the review and evaluation process. The competent authorities should take into account such opinions or explain why such opinions were not followed. The competent authorities should inform the relevant authorities, as well as other authorities consulted, of the results of the authorisation process. The competent authorities should inform the relevant authorities, ESMA and the college of the results of the review and evaluation process.(21)The provisions regarding the timelines for the authorisation of a CSD to outsource core services to a third party or to extend its activities to certain other services should be amended to remove unintended inconsistencies between those timelines and the timelines of the general authorisation process.(22)Regular reviews and evaluations of CSDs by competent authorities are necessary to ensure that CSDs continue to have in place appropriate arrangements, strategies, processes and mechanisms to evaluate the risks to which CSDs are, or might be, exposed or which could constitute a threat to the smooth functioning of securities markets. Experience has, however, shown that an annual review and evaluation is disproportionately burdensome for both CSDs and competent authorities and of limited added value. Subject to a minimum frequency of once every three years, competent authorities should be able to set a more appropriate frequency for the review and evaluation of each CSD in order to alleviate that burden and avoid a duplication of information from one exercise to the next. Furthermore, in assessing what would be the appropriate frequency and depth of the review and evaluation, the competent authority should consider what would be proportionate, taking into account the size, systemic importance, risk profile, nature, scale and complexity of the CSD. The supervisory capacities of competent authorities and the objective of safeguarding financial stability should, however, not be undermined. Therefore, competent authorities should continue to have the possibility to perform any additional review and evaluation. CSDs providing banking-type ancillary services are also subject to review and evaluation under Directive 2013/36/EU of the European Parliament and of the CouncilDirective 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338)..(23)A CSD should be prepared to face scenarios that could potentially prevent it from being able to provide its critical operations and services as a going concern and should assess the effectiveness of a full range of options for recovery or orderly wind-down in those scenarios. Regulation (EU) No 909/2014 introduced requirements in that respect, providing in particular that a competent authority is to require the CSD to submit an adequate recovery plan and is to ensure that an adequate resolution plan is established and maintained for each CSD. No harmonised resolution regime on which a resolution plan could be based, however, currently exists. CSDs that are authorised to offer banking-type ancillary services fall within the scope of Directive 2014/59/EU of the European Parliament and of the CouncilDirective 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ L 173, 12.6.2014, p. 190).. However, no specific provisions exist for CSDs which are not authorised to provide such services and therefore are not considered credit institutions under Directive 2014/59/EU with the obligation to have recovery and resolution plans in place. Clarifications should therefore be introduced with a view to better aligning the requirements applicable to CSDs taking into account the absence of a Union framework for the recovery and resolution for all CSDs. In order to avoid a duplication of requirements, where a recovery and resolution plan has been drawn up for a CSD under Directive 2014/59/EU, that CSD should not be required to prepare plans on recovery or orderly wind-down under Regulation (EU) No 909/2014, insofar as the information to be included in those plans has been already provided. However, such CSDs should provide their competent authority with the recovery plans drawn up under that Directive.(24)The procedure set out in Regulation (EU) No 909/2014 regarding the provision by a CSD of notary and central maintenance services in relation to financial instruments constituted under the law of a Member State other than the law of the Member State where the CSD is authorised has proven to be burdensome and some of its requirements are unclear. That procedure has resulted in a disproportionately costly and lengthy process for CSDs. The procedure should therefore be clarified and simplified to better dismantle the barriers to cross-border settlement so as to enable authorised CSDs to fully benefit from the freedom to provide services within the Union. Without prejudice to the measures that CSDs need to take to allow their users to comply with national law, it should be clear which is the relevant legal framework for the assessment that a CSD is required to perform under Regulation (EU) No 909/2014 in relation to the measures that it intends to take to allow its users to comply with the law of another Member State and that the assessment be limited only to shares. The competent authority of the host Member State should be offered the possibility to comment on the assessment related to the law of that Member State. The final decision should be left to the competent authority of the home Member State.(25)In order to allow for better cooperation regarding the supervision of CSDs providing cross-border services, the competent authority of the home Member State should be able to invite staff from the competent authorities of the host Member States and from ESMA to participate in on-site inspections in branches. The competent authority of the home Member State should also transmit to ESMA and the college the findings of the on-site inspections and information on remedial actions or penalties decided on by that competent authority.(26)Regulation (EU) No 909/2014 requires the cooperation of authorities that have an interest in the operations of CSDs that offer services in relation to financial instruments constituted under the laws of more than one Member State. Nonetheless, the supervisory arrangements remain fragmented and can lead to differences in the allocation and nature of supervisory powers depending on the CSD concerned. Such fragmentation creates barriers to the cross-border provision of CSD services in the Union, perpetuates the remaining inefficiencies in the Union settlement market and has a negative impact on the stability of Union financial markets. While Regulation (EU) No 909/2014 provides for the possibility of setting up colleges, that option has rarely been used. In order to ensure the effective and efficient coordination of the supervision by competent authorities, the setting up of colleges should become mandatory under certain conditions. A college of supervisors should be established for CSDs the activities of which are considered to be of substantial importance for the functioning of the securities markets and the protection of investors in at least two host Member States. A college set up under this Regulation should not prevent or replace other forms of cooperation between competent authorities. ESMA should develop draft regulatory technical standards to specify the criteria on the basis of which it can be determined whether the activities are of substantial importance. Members of a college should have the possibility of requesting the adoption by the college of a non-binding opinion concerning issues identified during the review and evaluation of a CSD or during the review and evaluation of providers of banking-type ancillary services, or concerning issues that relate to the extension or outsourcing of activities and services provided by the CSD, or concerning any potential breach of the requirements of Regulation (EU) No 909/2014 arising from the provision of services in a host Member State. Non-binding opinions should be adopted by a simple majority vote.(27)ESMA and competent authorities currently have limited information on the services offered by third-country CSDs in relation to financial instruments constituted under the law of a Member State as a result of several factors. The first is the deferred application, without an end date, of the recognition requirements for third-country CSDs that already provided central maintenance and notary services in the Union before the date of application of Regulation (EU) No 909/2014 pursuant to Article 69(4) of that Regulation. The second is the fact that where a third-country CSD provides only the settlement service, it is not subject to recognition requirements. The third is the fact that Regulation (EU) No 909/2014 does not require third-country CSDs to notify Union authorities of their activities in relation to financial instruments constituted under the law of a Member State. Given the lack of information, neither issuers nor public authorities at Union or national level have been able to assess the activities of those CSDs in the Union when needed. Therefore, third-country CSDs should be required to inform Union authorities of their activities in relation to financial instruments constituted under the law of a Member State.(28)Regulation (EU) No 909/2014 requires a CSD to have a management body of which at least one third, but no less than two, of its members are independent. In order to ensure a more consistent application of the concept of independence, that concept should be clarified in line with the definition of "independent members" in Regulation (EU) No 648/2012 of the European Parliament and of the CouncilRegulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (OJ L 201, 27.7.2012, p. 1)..(29)Regulation (EU) No 909/2014 does not contain specific requirements applying in the case of an acquisition of, or increase in, qualifying holdings in the capital of CSDs. Such requirements, including as regards the procedures to be followed, should therefore be introduced in order to ensure the consistent application of requirements regarding the shareholding structure of a CSD, similar to provisions laid down in Regulation (EU) No 648/2012 and Directive 2013/36/EU. ESMA should develop guidelines on the assessment of the suitability of any person who will direct the business of the CSD, as well as on the procedural rules and evaluation criteria for the prudential assessment of direct or indirect acquisitions of, and increases in, holdings in CSDs.(30)In order to ensure legal certainty as regards the key arrangements on which user committees should advise the management body, it should be further clarified what elements are included in the "service level".(31)Given their central role regarding the safety of transactions, CSDs should not only reduce the risks associated with the safekeeping and settlement of transactions in securities, but should also seek to minimise those risks.(32)Several CSDs established in the Union operate securities settlement systems that apply deferred net settlement. Those CSDs should adequately measure, monitor and manage the risks stemming from the use of such settlement.(33)Under certain circumstances, a security might be constituted under the corporate or similar law of two different Member States. That is in particular the case for debt securities where the issuer is incorporated in one Member State and the securities are issued under the law of another Member State. It is important to clarify that in such cases the corporate or similar law of both Member States should continue to apply. The choice of the applicable law is not to be governed by Regulation (EU) No 909/2014 and should therefore remain at the issuers’ discretion or otherwise be determined by law.(34)In order to ensure that issuers who arrange for their securities to be recorded in a CSD established in another Member State can comply with the relevant provisions of the corporate or similar law of that Member State, Member States should regularly update the list of such key relevant provisions of national law and communicate it to ESMA for the purposes of publication.(35)In order to avoid settlement risks due to the insolvency of a settlement agent, a CSD should settle, whenever practical and available, the cash payments of its securities settlement system through accounts opened with a central bank. Where that option is not practical and available, such as where a CSD does not meet the conditions to open an account with a central bank other than that of its home Member State, the CSD should be able to settle the cash payments for all or part of its securities settlement systems in a currency other than that of the country where the CSD is established through accounts opened with CSDs or with credit institutions authorised to provide banking services under the conditions laid down in Regulation (EU) No 909/2014.(36)In order to better support the efficiency of the settlement market, deepen capital markets and enhance cross-border settlement, a CSD authorised to provide banking-type ancillary services in accordance with Regulation (EU) No 909/2014, whose relevant risks are already monitored, should be able to offer services pertaining to the settlement of the cash payments to CSDs that are not authorised under Directive 2013/36/EU, in a currency other than that of the country where the CSD seeking to use those services is established, irrespective of whether they are part of the same group of companies. An authorisation to designate CSDs or credit institutions should only be used for the settlement of the cash payments for all or part of the securities settlement systems of the CSD seeking to use the banking-type ancillary services. It should not be used for the purposes of carrying out any other activities. It should also be possible for a CSD that intends to settle the cash payments for all or part of its securities settlement systems through its own accounts or that otherwise intends to provide any banking-type ancillary services to be authorised to do so under the conditions laid down in Regulation (EU) No 909/2014.(37)Below an appropriate threshold, CSDs that are not authorised to provide banking-type ancillary services should be able to settle the cash payments through accounts opened with CSDs authorised to provide banking-type ancillary services in accordance with Regulation (EU) No 909/2014 and through accounts opened with any credit institution, in any currency. That threshold should consist of a maximum aggregate amount for such settlement of cash payments. In addition, the threshold should be calibrated in a way that promotes efficiency of settlement and allows CSDs to reach a level of cash settlement beyond which requiring a banking authorisation under Directive 2013/36/EU or connecting to a central bank of issue becomes relevant, while ensuring financial stability and limiting risk implications that result from the derogations applicable under that threshold. The calibration of the threshold should take into account the need for a CSD to be able to settle payments in different currencies, especially for the most liquid currencies, while setting an appropriate limit that would be applicable to the CSD as a whole. The calibration of the threshold should also take into account the need to avoid an unintended shift away from settlement in central bank money.(38)As a body with specialised expertise regarding banking and credit risk matters, the European Supervisory Authority (European Banking Authority) (EBA) established by Regulation (EU) No 1093/2010 of the European Parliament and of the CouncilRegulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC (OJ L 331, 15.12.2010, p. 12). should be entrusted with the development of draft regulatory technical standards to set an appropriate threshold and to specify any appropriate risk management and prudential requirements related thereto. EBA should also cooperate closely with the members of the ESCB and with ESMA. The Commission should be empowered to adopt those regulatory technical standards in accordance with Article 290 of the Treaty on the Functioning of the European Union (TFEU). The competent authorities, which regularly monitor the threshold, should transmit their findings together with the underlying data to ESMA and EBA and their findings to the members of the ESCB, notably in order to feed into a regular report that should be prepared by EBA, in cooperation with the members of the ESCB and with ESMA, on banking-type ancillary services.(39)CSDs, including those authorised to provide banking-type ancillary services, and designated credit institutions should cover relevant risks in their risk management and prudential frameworks. Tools to cover those risks should include maintaining sufficient qualifying liquid resources in all relevant currencies and ensuring that stress scenarios are sufficiently strong. CSDs should also ensure that corresponding liquidity risks are managed and covered by highly reliable funding arrangements with creditworthy institutions; those arrangements should be committed or have similar reliability. CSDs which provide banking-type ancillary services should also have specific rules and procedures to tackle potential credit, liquidity and concentration risks stemming from the provision of those services. EBA should develop draft regulatory technical standards to update the existing regulatory technical standards in order to take into account those changes to prudential requirements. That would enable the Commission to make any necessary amendments with a view to clarifying the requirements set out in such regulatory technical standards, such as those related to the management of potential liquidity shortfalls.(40)A period of only one month for relevant authorities and competent authorities to issue a reasoned opinion on the authorisation to provide banking-type ancillary services has proven to be too short for those authorities to be able to make a substantiated analysis. Therefore, a longer period of two months should be provided for in this Regulation.(41)In order to provide CSDs established in the Union and third-country CSDs with sufficient time to apply for authorisation and recognition of their activities, the date of application of the authorisation and recognition requirements of Regulation (EU) No 909/2014 was initially deferred until an authorisation or recognition decision was made pursuant to that Regulation. Sufficient time has elapsed since the entry into force of that Regulation. Therefore, those requirements should now start to apply to ensure, on the one hand, a level playing field amongst all CSDs offering services in relation to financial instruments constituted under the law of a Member State and, on the other hand, that authorities at Union and national level have the necessary information to ensure investor protection and monitor financial stability.(42)Regulation (EU) No 909/2014 currently requires ESMA, in cooperation with EBA, national competent authorities and relevant authorities, to prepare annual reports on 12 topics and to submit those reports annually to the Commission. That requirement is disproportionate considering the nature of certain topics which do not require an annual update. The frequency and number of those reports should therefore be recalibrated in order to reduce the burden on ESMA and competent authorities while ensuring that the Commission is provided with the information it needs to review the implementation of Regulation (EU) No 909/2014. However, given the changes to the settlement discipline regime of Regulation (EU) No 909/2014 introduced by this Regulation, it is appropriate to require ESMA to regularly prepare reports to the Commission on some additional topics, such as measures taken by competent authorities to address situations where a CSD’s settlement efficiency over a six-month period is significantly lower than the average settlement efficiency levels recorded in the Union market and the possibility of applying additional regulatory tools to improve settlement efficiency in the Union. Furthermore, ESMA, in cooperation with the members of the ESCB, should also submit a report to the European Parliament and to the Council on the potential shortening of the settlement cycle in order to inform potential future developments on that topic. EBA should prepare an annual report focussing on the findings of competent authorities as a result of their monitoring of the threshold for settlement of cash payments. Upon the request of the Commission, ESMA should provide a cost-benefit analysis that should be used as a basis for the implementing act on mandatory buy-ins.(43)In order to ensure the effectiveness of this Regulation, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission to take into account, when developing the parameters for the calculation of the level of cash penalties, the duration of the settlement fail, the level of settlement fails per class of financial instruments and the effect that low or negative interest rates can have on the incentives of counterparties and on fails, and to review those parameters; and to specify which underlying causes of a settlement fail are not considered attributable to the participants and which operations are not considered as trading. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-MakingOJ L 123, 12.5.2016, p. 1.. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.(44)The Commission should be empowered to adopt, in accordance with Article 290 TFEU and with Articles 10 to 14 of Regulation (EU) No 1093/2010 and of Regulation (EU) No 1095/2010, regulatory technical standards developed by EBA and by ESMA with regard to: specifications of the mandatory buy-in process regarding the details of the pass-on mechanism, which types of transactions render the buy-in process unnecessary and how to take into account the specificities of retail investors when executing mandatory buy-ins; the information to be notified by third-country CSDs; the conditions for the activities of a CSD to be considered of substantial importance; the rules and procedures to be established by a CSD providing banking-type ancillary services; the details of the measuring, monitoring, management and reporting of the credit and liquidity risks by CSDs in relation to deferred net settlement; the threshold below which CSDs may use any credit institution to settle the cash payments; and the updated prudential requirements on liquidity and the rules and procedures on credit, liquidity and concentration risks in the case of CSDs authorised to provide banking-type ancillary services.(45)In order to ensure uniform conditions for the implementation of the amendments introduced by this Regulation, and in particular with regard to the application and the suspension of mandatory buy-in requirements where those apply, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the CouncilRegulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by the Member States of the Commission’s exercise of implementing powers (OJ L 55, 28.2.2011, p. 13).. The Commission should adopt immediately applicable implementing acts where, in duly justified cases relating to the application and the suspension of mandatory buy-ins, imperative grounds of urgency so require.(46)Delegated and implementing acts adopted in accordance with Articles 290 and 291 TFEU constitute Union legal acts. Pursuant to Articles 127(4) and 282(5) TFEU, the European Central Bank (ECB) is to be consulted on any proposed Union act in its fields of competence. Where the consultation of the ECB is required pursuant to the Treaties, the ECB is to be duly consulted on the delegated and implementing acts adopted under this Regulation.(47)Since the objectives of this Regulation, namely to increase the provision of cross-border settlement by CSDs, reduce the administrative burden and compliance costs and ensure that authorities have sufficient information in order to monitor risks, cannot be sufficiently achieved by the Member States but can rather, by reason of their scale and effects, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.(48)The application of the revised scope of the rules on cash penalties, the new requirements regarding the establishment of colleges of supervisors, the submission of a notification by third-country CSDs of the core services they provide in relation to financial instruments constituted under the law of a Member State, the new rules on deferred net settlement, the revised threshold below which credit institutions may offer to settle the cash payments for part of the CSD’s securities settlement system and the revised prudential requirements applicable to credit institutions or CSDs authorised to provide banking-type ancillary services pursuant to Article 59 of Regulation (EU) No 909/2014 should be either deferred or subject to appropriate transitional provisions to give sufficient time for the adoption of the necessary delegated acts further specifying such requirements. Given the amendments introduced by this Regulation with regard to the procedure concerning the freedom to provide services in another Member State, it is also appropriate to clarify the rules that should apply to the provision of services by CSDs in Member States other than the home Member State and the setting up of a branch in another Member State. Given the amendments introduced by this Regulation with regard to the frequency and content of the reports that ESMA is to submit to the Commission, the application of the provisions governing the content of some of those reports should be deferred to ensure that ESMA has sufficient time to prepare the new reports and that only the reports that are to be prepared under the existing provisions will be required to be submitted by 30 April 2024.(49)Regulations (EU) No 909/2014 and (EU) No 236/2012 should therefore be amended accordingly,HAVE ADOPTED THIS REGULATION: