ESMA Signals Continued EU Access to Third-Country CSD Services

The European Securities and Markets Authority (ESMA) published a public statement on 7 October 2026 stating that EU market participants should not lose access to the notary and central maintenance services of third-country central securities depositories (CSDs) after 17 January 2027, while the EU finalises legislation to extend the current transitional regime.

The transitional regime allows certain third-country CSDs to provide notary and central maintenance services for financial instruments constituted under the law of an EU Member State, and it is set to end on 17 January 2027. The document, reference ESMA74-2119945926-3877, is classified as a statement in ESMA’s Post Trading section.

Under Article 25 of the Central Securities Depositories Regulation (CSDR), third-country CSDs may provide notary services to issuers and central maintenance services to participants in relation to financial instruments constituted under Member State law, subject to a specific recognition regime. According to the statement, third-country CSDs already providing these services can continue to do so during a transitional period that runs until a recognition decision has been taken or until 17 January 2027, whichever is earlier. The Market Integration and Supervision Package (MISP), the legislative package currently under negotiation, aims to extend this transitional period for third-country CSDs by three years after its entry into force.

Enforcement Expectations and Legal Limits

The statement sets out the legal constraint shaping its approach: neither ESMA nor the national competent authorities (NCAs) have the power to temporarily suspend or disapply a directly applicable EU legal text, even in exceptional circumstances. Any change to the application of EU rules would need to be implemented through EU legislation, the statement says.

Within that constraint, ESMA set an enforcement expectation addressed to national supervisors. Pointing to the proposed extension contained in the MISP and what it calls the emerging consensus between the EU co-legislators, the statement says: “ESMA expects NCAs not to prioritise their supervisory and enforcement actions in relation to third-country CSDs not recognised by ESMA, until the extended transitional period proposed in the MISP takes effect.”

ESMA said market participants, particularly issuers, had raised concerns about the uncertainty over continued access to third-country CSD services ahead of a political agreement on the proposed legislative extension, and about how that uncertainty could create operational challenges. The statement records that these participants raised operational challenges about losing access to third-country CSDs’ notary and central maintenance services beyond 17 January 2027 and until the extended transitional period takes effect, and that they called for guidance well ahead of the deadline to support effective planning. ESMA said the statement provides clarity to support the orderly functioning of EU capital markets well ahead of the 17 January 2027 deadline.

Legislative Track of the Proposed Extension

ESMA said it understands that both the Council of the European Union and the European Parliament support an extension of the transitional period. The statement’s footnotes point to paragraph 27 of the Cyprus Presidency Progress Report on the MISP, which records that Council discussions on the post-trading provisions showed broad support for extending the grandfathering period for third-country CSDs. A second footnote states that no amendments in relation to Article 69(4a) of the CSDR were tabled at the level of the European Parliament’s ECON committee, which the statement describes as leading to strong expectations that the extension may be approved by Parliament as proposed by the European Commission. Article 69(4a) is one of the CSDR provisions under which third-country CSDs are subject to notification requirements to ESMA.

The European Commission presented the MISP on 4 December 2025, according to the progress report, which the Cyprus Presidency prepared for the Permanent Representatives Committee and dated 25 June 2026. The package consists of three proposals: a regulation amending a range of existing EU regulations, including the CSDR, as regards the further development of capital market integration and supervision; a directive amending the UCITS Directive, the AIFM Directive and MiFID II; and a regulation on settlement finality that would repeal Directive 98/26/EC and amend Directive 2002/47/EC on financial collateral arrangements. The report describes the MISP as a central pillar of the Savings and Investments Union Strategy launched in March 2025 and as a response to calls from the Draghi and Letta reports to bolster EU competitiveness by mobilising private savings.

The European Council on 19 March 2026 called for the co-legislators to conclude negotiations on the MISP by the end of 2026. The One Europe, One Market Roadmap, signed on 24 April 2026 on the sidelines of an informal meeting of heads of state or government in Cyprus, includes the MISP as one of its priority deliverables, with end-2026 as the target for an agreement. On the Parliament side, the three ECON committee rapporteurs, Markus Ferber for the Master Regulation, Eero Heinäluoma for the Master Directive and Giovanni Crosetto for the Settlement Finality Regulation, published their draft reports on 11 June 2026.

The CSDR itself, Regulation (EU) No 909/2014 of 23 July 2014, was published in the Official Journal on 28 August 2014 and entered into force on 17 September 2014. According to ESMA’s overview of the framework, it aims to harmonise certain aspects of the settlement cycle and settlement discipline and to provide a set of common requirements for CSDs operating securities settlement systems across the EU. The CSDR Refit, Regulation (EU) 2023/2845, was published on 27 December 2023 and, among other changes, modified the settlement discipline regime, the review and evaluation process, the passporting process and third-country CSD reporting requirements.

Before ESMA can recognise a third-country CSD, the Commission must adopt an implementing act determining that the legal and supervisory arrangements of the relevant third country impose legally binding requirements equivalent to those in the CSDR, according to the ESMA overview. To date, the Commission has adopted Implementing Decision (EU) 2020/1766 of 25 November 2020 determining, for a limited period of time, that the regulatory framework applicable to CSDs in the United Kingdom is equivalent, and ESMA has signed a Memorandum of Understanding with the Bank of England. ESMA states that it will not actively supervise third-country CSDs and that, following recognition, it will defer to the CSD’s home supervisor for day-to-day supervision.