Dematerialisation of securities in Europe

The European Commission is proposing new legislation regulating CSDs, under which it appears highly likely that Member States will be required to deliver full dematerialisation.

The ICSA Registrars’ Group believe that the following core principles apply in relation to how the UK market should approach the debate, and decisions concerning the legislation/directive in the context of a registered share market:

1. The current registration model must be kept.
2. Dematerialisation must produce benefits.
3. Any book entry model adopted must be the best for each market.
4. Shareholder rights must be protected.
5. Issuer rights must be protected.
6. Any model introduced must have an efficient structure.
7. Benefits must outweigh costs and costs should be apportioned in a fair and balanced way. 
8. There must be a logical and measured transition plan in order to move from the current system to any future system.
9. The market should consider all dematerialisation options, provided that they meet the criteria presented above. 

The ICSA Registrars’ Group is liaising with the UK government and the European Commission to try and ensure these principles are adhered to. We expect the next communication from the EU to be published during December and this should provide more detail on their plans for dematerialisation.

Read more about the principles outlined above in the ICSA note sent to HM Treasury