Supervisors told to hold back on enforcement while EU lawmakers finalise a three-year extension of the CSDR transitional regime
The European Securities and Markets Authority (ESMA) said on 7 October that EU market participants should keep their access to non-EU central securities depositories (CSDs) after the current transitional regime expires on 17 January 2027.
Why it matters
Issuers using non-EU CSDs, and the participants holding those securities, no longer face a rushed migration to an EU CSD before January. This is supervisory forbearance, though, not legal relief. The legal obligation still applies, and the risk returns if negotiations on the Market Integration and Supervision Package (MISP) stall or the extension changes in trilogue. Third-country CSDs that plan to serve EU issuers over the long term should use the extra time to seek formal recognition.
The background
Under Article 25 of the CSDR, a third-country CSD needs ESMA recognition before it can provide notary and central maintenance services for instruments constituted under EU member state law. CSDs that were already providing these services have been grandfathered, but that arrangement ends in January. MISP would extend it by three years, and ESMA says both the Council and the Parliament support the extension. The package is unlikely to be in force by January, however, and issuers had warned that the gap was creating operational uncertainty.
ESMA notes that it cannot suspend a directly applicable EU regulation. Instead, it has told national regulators it expects them “not to prioritise” enforcement against unrecognised third-country CSDs until the MISP extension takes effect.