ESMA clarifies access for EU market participants to the services of third-country CSDs

Key dates

2027-01-17 Deadline

The current transitional regime for certain third-country CSD notary and central maintenance services is scheduled to expire; ESMA says access should nevertheless not be prevented after this date pending finalisation of the legislative extension.

Suggested considerations

• Firms should identify securities, issuer programmes, custody chains and settlement arrangements that depend directly or indirectly on a third-country CSD, including arrangements involving DTC or other non-EU infrastructure.
• Compliance and operations teams may wish to document reliance on the transitional regime and assess the consequences of a delayed or unsuccessful legislative extension, including possible suspension, removal of securities from a CSD system, settlement disruption and trading interruption.
• Issuers should consider confirming with their third-country CSD, depositary, registrar, paying agent, custodian and trading venues how access is expected to be maintained after 17 January 2027 and what contingency arrangements exist.
• Firms should distinguish ESMA's policy statement from a binding legislative amendment or formal recognition decision and avoid treating it as confirmation that every third-country CSD may provide services indefinitely without satisfying CSDR requirements.
• Legal and regulatory teams may wish to monitor the final text and commencement date of the Market Integration and Supervision Package, together with any European Commission equivalence decisions and ESMA recognition decisions relevant to the CSDs used by the firm.
• Firms should review contractual, disclosure and operational-resilience documentation so that any dependency on third-country CSD access, alternative settlement routes or potential service suspension is appropriately reflected.

What changed

ESMA has provided a supervisory and market-access clarification that EU market participants should not be prevented from accessing the relevant notary and central maintenance services of third-country CSDs solely because the current transitional regime reaches its scheduled end on 17 January 2027. The clarification is intended to apply during the period after that date and until the EU finalises the proposed legislative extension under the Market Integration and Supervision Package. It does not itself amend Regulation (EU) No 909/2014, create a permanent exemption, grant ESMA recognition to any third-country CSD, or replace the formal recognition and equivalence requirements applicable under the Central Securities Depositories Regulation.

Who is affected

• EU-incorporated issuers whose securities rely on third-country CSD notary or central maintenance services
• EU-authorised investment firms and banks arranging, trading, settling or holding securities through third-country CSDs
• EU asset managers and other institutional investors whose portfolios contain securities maintained through third-country CSDs
• Third-country CSDs providing services to EU market participants or in relation to financial instruments constituted under the law of an EU Member State

Related regulations

• Regulation (EU) No 909/2014 on improving securities settlement in the European Union and on central securities depositories
• Regulation (EU) 2023/2845 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 CSDs