The European System of Central Banks and the Committee of European Securities Regulators published recommendations for securities clearing and settlement systems and central counterparties in the region.

The consultation paper contains 19 recommendations that deal with central securities depositaries, and 15 recommendations regarding central counterparties, which aim to increase the safety, soundness and efficiency of securities clearing and settlement systems and CCPs, respectively.

The recommendations are based on the recommendations for securities settlement systems of November 2001 and the recommendations for CCPs of November 2004 issued by the Committee on Payment and Settlement Systems and the Technical Committee of the International Organization of Securities Commissions. The initial work in this area was frozen in 2005 due to open issues regarding scope, content and the legal basis of the recommendations.

However, earlier this year, the ECOFIN Council invited the ESCB and the CESR to finalize an earlier draft of these recommendations. They resumed this work in June and revised the recommendations in line with the ECOFIN Council’s principles taking into account other recent regulatory and legal developments.

The draft recommendations are now addressed to regulators and overseers and, once finalized, will be used as a regulatory tool by them. The recommendations no longer address the supervision of custodian banks, but further work is being undertaken by the Committee of European Banking Supervisors to ensure a level playing-field in that area.

Comments are due by Jan, 23, 2009. And, the ESCB and the CESR will jointly hold an open hearing on these recommendations on December 9 in the CESR office in Paris.