Financial Regulations

The Central Securities Depositories Regulation No 909/2014 (CSDR) is a European Union regulation that aims to improve the safety and efficiency of securities settlement and settlement infrastructures within the European Economic Area (EEA).

CSDR is a phased regulation and most of its provisions have already been implemented since it was first introduced in 2014.

Central Securities Depositories Regulation, Art 38(5) Offer and Art 38(6) Disclosure

As a direct participant of a Central Securities Depository (CSD) in the EEA, we are required to:

(1) offer our clients whose securities are directly held through the CSD the choice between an Omnibus Client Segregated Account (OSA) and an Individual Client Segregated Account (ISA) and inform clients of the costs and risks associated with each option (Article 38(5) of the CSDR)

(2) publicly disclose the levels of protection and the costs associated with the different levels of segregation that the accounts provide, and to offer those services on reasonable commercial terms (Article 38(6) of the CSDR)

 An ISA is used to hold the securities of a single client and therefore the securities of that client are held separately from the securities of other clients and HSBC’s own proprietary securities. An OSA is used to hold the securities of a number of clients on a collective basis. However, HSBC does not hold its own proprietary securities in OSA.

The article 38(5) and (6) CSDR requirements listed above become effective as of the date of authorization of the relevant CSD under the CSDR. Please click on the link below for detailed information about what it means for you, the ISA offer to clients and the relevant disclosures. Please note that the below disclosures are applicable to HSBC Broking Securities (Asia) Limited. For other lines of business within HSBC, please refer to the disclosures on their respective websites.

Settlement Discipline Regime

The second phase of CSDR, which creates a Settlement Discipline Regime (SDR), came into effect on 1 February 2022. Its main objective is to incentivise timely settlements by introducing a set of measures to prevent, monitor and address settlement fails. This may include the following:

• Process and system enhancements across the EEA CSDs and market participants;
• The introduction of cash penalties against parties causing settlement fails;
• The introduction of mandatory buy-ins, whereby buying parties whose instruments have not been delivered for a set number of days are to be restored to the economic position as if the transaction had settled on time.

To find out more, please read the information and FAQs to understand the potential implications of CSDR SDR for HSBC Broking and our customers.