Trading, Clearing, Settlement & Custody
In the past, the German post-trade market was relatively neglected. However, the single market changed the landscape, especially for cross-border clearing and settlement. The Giovannini Reports in 2001 and 2003 identified obstacles to the emergence of a truly single post-trading market within the European Union, for the first time.
During the financial crisis market players and institutions began to focus on this sector again. Indeed, the financial crisis, and in particular the insolvency of Lehman Brothers (Europe) revealed safety and efficiency issues related to the infrastructure in the post-trade market more so than in the past. While the European commitment to a single post-trading market remains strong, recent European regulatory developments, like AIFMD and the discussion paper for a proposal for a new German Kapitalanlagegesetzbuch, MiFID II, EMIR, UCITS V, the Commission proposal for a Regulation on improving securities settlement in the European Union and on central securities depositories (CSDs), SLD or T2S will have a direct impact on custody business, clearing and settlement in Germany. Questions concerning the safekeeping and segregation of securities, liability of depositories, clearing of OTC derivatives through a central counterparty or mandatory on- platform trading will be the predominating issues in this landscape for the next month and the following years. The post-trade market is a major industry, both in Germany and worldwide and is currently in a process of rapid transformation.
This is the first in a series of briefings targeted at post-trade market participants. These briefings will provide an overview of the German post-trade market and its regulatory requirements. In particular, the briefings will highlight those aspects of current German, European and international initiatives that might impact your business. The briefings are not intended to provide exhaustive legal advice and should not be read as such, but are rather meant to put the reader “in the know”. We recommend to read this briefing to learn more about the following:
- What is trading, clearing, settlement and custody?
- Which regulatory requirements have to be met to start post-trade business in the Federal Republic of Germany?
- What is the impact of MiFID II, UCITS V, AIFMD and EMIR?
Going forward, we will provide you with a series of briefings to refresh your knowledge about various relevant topics in this area and to inform you about national and international developments, in particular:
- Proposal for a German Act for the Prevention of Risks and the Misuse of High Frequency Trading
- UCITS V and VI;
- MiFID II;
- EMIR; and
- Securities Law Directive.
The briefing may be downloaded here.
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