The Nasdaq CS’s criteria for participation are simple, transparent, objective and non-discriminatory, ensuring fair and open access to the Nasdaq CSD, with due regard for risks to financial stability and the orderliness of markets in Estonia, Latvia and Lithuania (Article 33(1) of the CSDR).
Participation is open, among others, to any entity that is authorized to provide custody services or credit institution services in Estonia, Latvia and/or Lithuania. The Nasdaq CSD, however, may deny access to a participant based on a comprehensive assessment of such risks as may be provided in the CSDR technical standards (Article 33(3) of the CSDR).
According to the rules of the Nasdaq CSD a participant of the Nasdaq CSD is a legal entity which has the right to participate in one or several settlement systems of the Nasdaq CSD with one or more of the following statuses:
- Account Operator;
- Cash Agent;
- Issuer Agent;
- Fund Administrator.
A legal entity which seeks the right to participate in one or several settlement systems of the Nasdaq CSD with one or more of these statuses must submit a standard application form and supporting documents. The Nasdaq CSD will decide whether to grant the access no later than within one month of the date the application is submitted.
For an Account Operator, the applicant must be a participant of the T2 Component System or have in place the agreement with a cash agent which is necessary for cash settlement arrangements.
For a Cash Agent, the applicant must be a participant of the T2 Component System.
For an Issuer Agent or Fund Administrator, the applicant must have all the necessary contractual arrangements with the issuer for which the role of Issuer Agent or Fund Administrator is sought, and shall be subject to all the admission criteria applicable for an Account Operator.
There is no schedule for regular review of access criteria. The current system reflects the requirements set out in Article 33 of the CSDR and ensures fair and open access to the Nasdaq CSD with due regard for financial stability and the orderliness of the markets. The user committee of each settlement system has the right to advise the Nasdaq CSD’s Supervisory Council on the criteria for admission of participants to the respective settlement system.
The Nasdaq CSD has the right to request any additional information and documents within 15 business days as of the date of submission of the application if:
- Information provided in the application or supporting documentation is inaccurate, misleading or incomplete;
- Additional information or documentation is necessary to assess the applicant’s compliance with the requirements and admission criteria prescribed for in the Nasdaq CSD rules;
- Additional information or documentation is necessary for carrying out a comprehensive risk assessment.
The Nasdaq CSD Sales & Services Department is responsible for reviewing and assessing applications and supporting documents. Decisions to grant or deny a status to a participant status must be approved by the Nasdaq CSD Management Board.
Services to account operators
A Nasdaq CSD participant authorized as an account operator is responsible for the following:
- Setting up and maintaining of securities accounts in the Nasdaq CSD system;
- Maintaining relations with their clients and following know-your-client (KYC) and other requirements;
- Intermediating settlement instructions (also CA instructions) to the Nasdaq CSD, i.e. sending settlement instructions, amendments and cancellations to the system and receiving feedback on these settlement instructions from the system in the form of status updates and advice, allegements and confirmations;
- Fulfillment of settlement in the form of payment of cash or delivery of securities derived from settlement instructions sent to the Nasdaq CSD. Cash settlement in the Nasdaq CSD is guaranteed by an appointed cash agent;
- Maintaining and monitoring cash and securities settlement obligations of their clients in the Nasdaq CSD;
- Registration, modification and release of pledges;
- Verifying and ensuring the correctness of information communicated to the Nasdaq CSD.
The access of account operators’ users to operations can be segregated to ensure that each account operator’s own activities and the activities which arise from the account operator’s services are performed independently. In other words, access to some types of data may be restricted by assigning only relevant operations to user accounts.