CHAPTER V

REVIEW AND EVALUATION

(Article 22 of Regulation (EU) No 909/2014)

Information to be provided to the competent authority
Article 40
1
For the purposes of this Chapter, a ‘review period’ as defined in point (a) of Article 1 shall include the period between the first authorisation granted to a CSD in accordance with Article 17(1) of Regulation (EU) No 909/2014 and the first review and evaluation referred to in Article 22(1) of that Regulation
2
For the purposes of the review and evaluation referred to in Article 22(1) of Regulation (EU) No 909/2014, a CSD shall provide the following information to its competent authority:
a
the information referred to in Articles 41 and 42;
b
a report on the CSD's activities and the substantive changes referred to in Article 16(4) of Regulation (EU) No 909/2014 made during the review period and all related documents;
c
any additional information requested by the competent authority that is necessary for assessing the compliance of the CSD and its activities with Regulation (EU) No 909/2014 during the review period.
3
The report referred to under point (b) of paragraph 2 shall include a declaration by a CSD of an overall compliance with the provisions of Regulation (EU) No 909/2014 during the review period.

Periodic information relevant for the reviews
Article 41
For each review period, the CSD shall provide the competent authority with the following information:
1. a complete set of the latest audited financial statements of the CSD, including those consolidated at group level;
2. a summarised version of the most recent interim financial statements of the CSD;
3. any decisions of the management body following the advice of the user committee, as well as any decisions where the management body has decided not to follow the advice of the user committee;
4. information on any pending civil, administrative or any other judicial or extrajudicial proceedings involving the CSD, in particular in relation to matters concerning tax and insolvency, or matters that may cause financial or reputational costs for the CSD;
5. information on any pending civil, administrative or any other judicial or extrajudicial, proceedings involving a member of the management body or a member of the senior management that may have an negative impact on the CSD;
6. any final decisions resulting from the proceedings referred to in points (d) and (e);
7. a copy of the results of business continuity stress tests or similar exercises performed during the review period;
8. a report on the operational incidents that occurred during the review period and affected the smooth provision of any core services, the measures taken to address them and the results thereof;
9. a report on the performance of the securities settlement system, including an assessment of the system's availability during the review period, measured on a daily basis as the percentage of time the system is operational and functioning according to the agreed parameters;
10. a summary of the types of manual intervention performed by the CSD;
11. information concerning the identification of the CSD's critical operations, any substantive changes to its recovery plan, the results of stress scenarios, the recovery triggers and the recovery tools of the CSD;
12. information on any formal complaints received by the CSD during the review period including information on the following elements:
  1. the nature of the complaint;
  2. how the complaint was handled, including the outcome of the complaint;
  3. the date when the treatment of the complaint ended;
13. information concerning the cases where the CSD denied access to its services to any existing or potential participant, any issuer, another CSD or another market infrastructure in accordance with Articles 33(3), 49(3), 52(2) and 53(3) of Regulation (EU) No 909/2014;
14. a report on changes affecting any CSD links established by the CSD, including changes to the mechanisms and procedures used for the settlement in those CSD links;
15. information concerning all cases of identified conflicts of interests that materialised during the review period, including the description of how they were managed;
16. information concerning internal controls and audits performed by the CSD during the review period;
17. information concerning any identified infringement of Regulation (EU) No 909/2014, including those identified through the reporting channel referred to in Article 26(5) of Regulation (EU) No 909/2014;
18. detailed information concerning any disciplinary actions taken by the CSD, including any cases of suspension of participants in accordance with Article 7(9) of Regulation (EU) No 909/2014 with a specification of the period of suspension and the reason for suspension;
19. the general business strategy of the CSD covering a period of at least three years after the last review and evaluation and a detailed business plan for the services provided by the CSD covering at least a period of one year after the last review and evaluation.

Statistical data to be delivered for each review and evaluation
Article 42
1
For each review period, the CSD shall provide the competent authority with the following statistical data:
a
a list of the participants of each securities settlement system operated by the CSD, specifying their country of incorporation;
b
a list of issuers and a list of securities issues recorded in securities accounts centrally and not centrally maintained in each securities settlement system operated by the CSD, specifying the country of incorporation of the issuers and the identification of the issuers to whom the CSD provides the services referred to in points (1) and (2) of Section A of the Annex to Regulation (EU) No 909/2014;
c
the total market value and nominal value of the securities recorded in securities accounts centrally and not centrally maintained in each securities settlement system operated by the CSD;
d
the nominal and market value of the securities referred to in point (c) specified as follows:
1. by each of the following types of financial instruments:
  - transferable securities referred to in point (a) of Article 4(1)(44) of Directive 2014/65/EU,
  - sovereign debt referred to in Article 4(1)(61) of Directive 2014/65/EU,
  - transferable securities referred to in point (b) of Article 4(1)(44) of Directive 2014/65/EU, other than sovereign debt referred to in Article 4(1)(61) of Directive 2014/65/EU,
  - transferable securities referred to in point (c) of Article 4(1)(44) of Directive 2014/65/EU,
  - exchange-traded funds as defined in point (46) of Article 4(1) of Directive 2014/65/UE (ETF),
  - units in collective investment undertakings, other than ETFs,
  - money-market instruments, other than sovereign debt referred to in Article 4(1)(61) of Directive 2014/65/EU,
  - emission allowances,
  - other financial instruments;
2. by country of incorporation of the participant;
3. by country of incorporation of the issuer;
e
the nominal and market value of the securities initially recorded in each securities settlement system operated by the CSD;
f
the nominal and market value of the securities referred to in point (e) specified as follows:
1. by types of financial instruments referred to in point (d)(i);
2. by country of incorporation of the participant;
3. by country of incorporation of the issuer;
g
the total number and the values of the settlement instructions against payment and the total number and the values of the free of payment (FOP) settlement instructions settled in each securities settlement system operated by the CSD;
h
the total number and the values of the settlement instructions categorised as follows:
1. by types of financial instruments referred to in point (d)(i);
2. by country of the incorporation of the participant;
3. by country of incorporation of the issuer;
4. by settlement currency;
5. by type of settlement instructions, as follows:
  - a free of payment (FOP) settlement instructions that consist of deliver free of payment (DFP) and receive free of payment (RFP) settlement instructions,
  - delivery versus payment (DVP) and receive versus payment (RVP) settlement instructions,
  - delivery with payment (DWP) and receive with payment (RWP) settlement instructions,
  - payment free of delivery (PFOD) settlement instructions;
6. for settlement instructions against payment, by whether the cash leg is settled in accordance with Article 40(1) of Regulation (EU) No 909/2014 or in accordance with Article 40(2) of Regulation (EU) No 909/2014;
i
the number and value of buy-in transactions referred to in Article 7(3) of Regulation (EU) No 909/2014;
j
the number and amount of penalties referred to in Article 7(2) of Regulation (EU) No 909/2014 per participant;
k
the total value of securities borrowing and lending operations processed by the CSD acting as an agent or as principal for each type of financial instruments referred to in point (d)(i);
l
the total value of settlement instructions settled via each CSD link, specifying whether the CSD is the requesting CSD or the receiving CSD;
m
the value of guarantees and commitments received or provided by the CSD related to securities borrowing and lending operations;
n
the value of treasury activities involving foreign exchange and transferable securities related to managing participants' long balances including categories of institutions whose long balances are managed by the CSD;
o
the number of reconciliation processes revealing undue creations or deletions of securities as referred to in Article 65(2) where those processes concern securities issues recorded in securities accounts centrally and not centrally maintained by the CSD;
p
the mean, median, and mode for the length of time taken to remedy the error identified according to Article 65(2).
The values referred to in points (g), (h) and (l) of subparagraph 1 shall be calculated as follows:
a
in the case of settlement instructions against payment, the settlement amount of the cash leg;
b
in the case of FOP settlement instructions, the market value of the financial instruments or, where not available, the nominal value of the financial instruments.
2
The market value referred to in paragraph 1 shall be calculated on the last day of the review period as follows:
a
for financial instruments referred to in Article 3(1) of Regulation (EU) No 600/2014 of the European Parliament and of the Council admitted to trading on a trading venue within the Union, the market value shall be the closing price of the most relevant market in terms of liquidity referred to in Article 4(6)(b) of that Regulation;
b
for financial instruments admitted to trading on a trading venue within the Union other than those referred to in point (a), the market value shall be the closing price derived from the trading venue within the Union with the highest turnover;
c
for financial instruments other than those referred to in points (a) and (b) the market value shall be determined on the basis of a price calculated using a pre-determined methodology that refers to criteria related to market data, such as market prices available across trading venues or investment firms.
3
The CSD shall provide the values referred to in paragraph 1 in the currency in which the securities are denominated, settled or in which credit is extended. The competent authority may request the CSD to provide these values in the currency of the home Member State of the CSD or in euro.
4
For the purposes of statistical reporting by a CSD, the competent authority may determine algorithms or principles for data aggregation.

Other information
Article 43
Documents provided by the CSD to the competent authority pursuant to Article 41 shall indicate the following:
1. whether a document is provided for the first time or is a document that has already been provided and has been updated during the review period;
2. the unique reference number of the document assigned by the CSD;
3. the title of the document;
4. the chapter, section or page of the document where changes have been introduced during the review period and any additional explanation in relation to the changes introduced during the review period.

Information to be supplied to the authorities referred to in Article 22(7) of Regulation (EU) No 909/2014
Article 44
For each review period, the competent authority shall supply the following information to the authorities referred to in Article 22(7) of Regulation (EU) No 909/2014:
1. a report on the evaluation by the competent authority of the risks to which the CSD is or might be exposed or which it creates for the smooth functioning of securities markets;
2. any envisaged or final remedial actions or penalties against the CSD as a result of the review and evaluation.
Where applicable, the report referred to in point (a) shall include the results of the competent authority's analysis of how the CSD complies with the requirements referred to in Article 24(2), and the relevant documents and information referred to in Article 24(2) submitted by the CSD.

Exchange of information between the competent authorities referred to in Article 22(8) of Regulation (EU) No 909/2014
Article 45
1
During the review and evaluation, the competent authority shall send to the competent authorities referred to in Article 22(8) of Regulation (EU) No 909/2014 any relevant information provided by the CSD in connection to staff, key individuals, functions, services or systems shared between that CSD and other CSDs with which it maintains the types of relations referred to in points (a), (b) and (c) of Article 17(6) of Regulation (EU) No 909/2014 within 10 working days from the receipt of that information.
2
After performing the review and evaluation, the competent authority shall send the following information to the competent authorities referred to in Article 22(8) of Regulation (EU) No 909/2014:
a
a report on the evaluation by the competent authority of the risks to which the CSD is or might be exposed or which it creates for the smooth functioning of securities markets;
b
any envisaged or final remedial actions or penalties against the CSD as a result of the review and evaluation.
Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 (OJ L 173, 12.6.2014, p. 84).