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ECSDA WG1

The responsibilities of the Working Group include in particular:

1. Developing guiding principles relating to risk management, security and audit for ECSDA Members,
2. Providing internal consulting at the request of the ECSDA Board of Directors and ECSDA Working Groups,
3. Organising a forum for sharing information and experience on risk management, security and audit,
4. Developing a standardised disclosure questionnaire for ECSDA members for providing external information in a standardised format.

ECSDA WG3

The Working Group is responsible for examining cross-border clearing and settlement issues. The Group consists of approximately 20 representatives from European CSDs, including KDPW.

Works of WG3:

Report on cross-border settlement

In February 2002, the Working Group prepared a description of cross-border DVP and FOP clearing and settlement models in the report entitled ECSDA cross-border settlement. Following the commencement of work in the European Central Bank on the TARGET 2 payment system in 2002, ECSDA decided that the WG3 report should also include settlement descriptions using this platform. Moreover, it was also suggested that many of the settlement models described in the report were theoretical and did not operate in practice in any European market. WG3 were asked to update the report along those lines in August 2004. Their new report, Cross-border clearing and Settlement through CSD links was completed in May 2006.

Pre-Settlement matching harmonisation

Towards the end of 2004, the European Securities Forum (ESF), the association of the largest 20 international banks operating in European securities markets, sent a request to ECSDA with a proposal to jointly define standards for pre-settlement matching in Europe. The new standards prepared by WG3 were described in the Proposals to harmonise and standardise pre-settlement date matching processes throughout Europe, whose final version was sent to market participants and financial institutions for consultation. Implementation of the matching standards is planned for the end of 2009.

European Code of Conduct

A special task force consisting of members of WG3 was established to work on principles of access and interoperability arising from the European Code of Conduct, signed in November 2006.

The Giovannini Reports (First Report in 2001, Second Report in 2003), identified barriers preventing the operation of a harmonised pan-European capital market. ECSDA was identified as the organisation responsible for the elimination of three of the barriers, these being:

• Barrier 3, on harmonisation of corporate action processing,
• Barrier 4, on intra-day settlement finality,
• Barrier 7, on the harmonisation of opening days and times of clearing and settlement systems and settlement deadlines.

ECSDA WG5:

WG5, the working group responsible for harmonisation, is examining the above-mentioned barriers and has prepared standards for their elimination.

Work of WG5 on the elimination of Barriers 4 and 7:

• April 2004 - European Central Securities Depositories Association's Response to the Giovannini Report - 10 standards relating to opening days and times of clearing and settlement systems, as well as settlement finality.
• April 2005 - ECSDA's First Annual Status Report Relating to its Standards for the Removal of Giovannini Barriers 4 and 7, describing progress of the implementation of the standards among ECSDA members.
• June 2006 - European Central Securities Depositories Association's Second Annual Status Report Relating to its Standards for the Removal of Giovannini Barriers 4 and 7, describing the high (85.6% on average) rate of implementation of the standards among the 17 "old" ECSDA members, prior to the joining of the CEECSDA CSDs in January 2006, including KDPW.

Work of WG5 on the elimination of Barrier 3:

• June 2005 - "The European Central Securities Depositories Association's Response to the Giovannini Report Barrier 3, Corporate Actions - Part 1 Mandatory Distributions". This report concerns corporate actions processing of mandatory distributions, i.e. cash and non-cash payments by issuers that are mandatory for investors (e.g. dividend or interest payments).
• October 2006 - "The European Central Securities Depositories Association's Response to the Giovannini Report Barrier 3, Corporate Actions - Part 2 Market Claims". This report concerns market claims and defines 10 standards and their implementation deadlines.

Other work on standards by WG5 include optional distributions, i.e. cash and non-cash payments by issuers that are optional for investors, as well as reorganisations, i.e. the processing of corporate events which result in changes to the status of securities (e.g. bond redemptions, assimilations conversions, splits, etc.)

KDPW has a representative in WG5 since June 2006. As a result of work by WG5, in August 2006, as part of a joint initiative by KDPW and the Custodian Bank Council, the National Working Group on the Removal of Giovannini Barrier 3 was created, which is planning the implementation in Poland of the ECSDA standards and European Credit Sector Associations (ECSA) recommendations relating to corporate actions.

ECSDA WG6:

ECSDA WG6 on Communications was established in May 2006. The task of the working group is to prepare standards for communication between CSDs and harmonising communication between CSDs and their participants. WG6 works in co-operation with SMPG, SWIFT and ISO.