CSDR solutions must be built to adapt, says regulatory expert
13 May 2020 London
Image: Andirons Haris/Shutterstock.com
Vendors offering solutions for the incoming Central Securities Depositories Regulation (CSDR) will need to prove they are flexible and able to roll with amendments after go-live, says Meritsoft’s head of regulation, Daniel Carpenter.
Speaking to SLT on the latest developments with the controversial rules framework, Carpenter explains that firms “will also be looking to ensure that the external or internal partner they are working with has the flexibility to change their system or solution, as necessary”.
The comments come shortly after the chair of the European Securities and Markets Authority (ESMA) dismissed industry concerns that the rules framework aimed at improving settlement discipline would cause more harm than good.
In response to a letter sent from several industry bodies, Steven Maijoor confirmed that the delayed go live, from September to February 2021, was acceptable but that no changes would be made to the actual terms of CSDR until after go-live.
In this context, Carpenter says: “Houses will be looking for some form of contractual commitment from their vendor that demonstrates an understanding that houses are delivering a solution for which requirements may change.
“By going with a vendor, houses get certainty that they are obtaining one solution for the whole of the market. Crucially, the solution will be future-proofed and will be supported and developed by leveraging multiple business input and rule interpretations, as well as the vendor’s own expertise.”
CSDR aims to improve settlement rates by imposing cash penalties for fails along with a mandatory buy-in requirement.
However, there is widespread concern from several market sectors that its settlement discipline regime, which includes the mandatory buy-in provisions, are not fit-for-purpose.
As of last Friday, the European Commission has endorsed ESMA’s proposal to push back the implementation of CSDR until 1 February 2021 to solve separate “technical impossibilities” in the original timetable relating to ISO updates not due until the annual November SWIFT update.
Despite the misgivings, Carpenter is bullish that CSDR will improve market standards.
“CSDR has been introduced because of best practice,” he explains. “ESMA is encouraging best practice so that market participants are prepared to carry out their work on time. The authority is trying to level the playing field and balance the books for all market participants.”
To read the full interview with Meritsoft’s Daniel Carpenter click here.
Speaking to SLT on the latest developments with the controversial rules framework, Carpenter explains that firms “will also be looking to ensure that the external or internal partner they are working with has the flexibility to change their system or solution, as necessary”.
The comments come shortly after the chair of the European Securities and Markets Authority (ESMA) dismissed industry concerns that the rules framework aimed at improving settlement discipline would cause more harm than good.
In response to a letter sent from several industry bodies, Steven Maijoor confirmed that the delayed go live, from September to February 2021, was acceptable but that no changes would be made to the actual terms of CSDR until after go-live.
In this context, Carpenter says: “Houses will be looking for some form of contractual commitment from their vendor that demonstrates an understanding that houses are delivering a solution for which requirements may change.
“By going with a vendor, houses get certainty that they are obtaining one solution for the whole of the market. Crucially, the solution will be future-proofed and will be supported and developed by leveraging multiple business input and rule interpretations, as well as the vendor’s own expertise.”
CSDR aims to improve settlement rates by imposing cash penalties for fails along with a mandatory buy-in requirement.
However, there is widespread concern from several market sectors that its settlement discipline regime, which includes the mandatory buy-in provisions, are not fit-for-purpose.
As of last Friday, the European Commission has endorsed ESMA’s proposal to push back the implementation of CSDR until 1 February 2021 to solve separate “technical impossibilities” in the original timetable relating to ISO updates not due until the annual November SWIFT update.
Despite the misgivings, Carpenter is bullish that CSDR will improve market standards.
“CSDR has been introduced because of best practice,” he explains. “ESMA is encouraging best practice so that market participants are prepared to carry out their work on time. The authority is trying to level the playing field and balance the books for all market participants.”
To read the full interview with Meritsoft’s Daniel Carpenter click here.
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