EACH updates CSDR SDR framework
15 July 2020 Brussels
Image: fotogestoeber/Shutterstock.com
The European Association of CCP Clearing Houses (EACH) has updated its framework on Central Securities Depositories Regulation (CSDR) settlement discipline regime (SDR) to reflect feedback received from industry participants and the authorities.
CSDR aims to harmonise certain aspects of the settlement cycle and settlement discipline and to provide a set of common requirements for central securities depositories (CSDs) for both domestic and cross-border transactions.
The framework's objective is to provide the European Securities and Markets Authority and market participants with details of EACH’s implementation of the CSDR settlement discipline provisions that affect CCPs and their Clearing Members.
Included in the new version is an updated EACH position on Article 19 SDR, which requires CSDs to ensure that CCPs receive all relevant cash penalty calculations for failed cleared transactions and duly collect and distribute these penalties to their clearing members.
CCPs are planning to go ahead with the implementation of Article 19 unless another solution presents itself prior to the implementation date, despite the fact EACH believes this article to be "unnecessary".
The association explains that there is no operational or risk-based justification for having a separate collection and distribution mechanisms for penalties originating from failed cleared transactions and penalties originating from failed non-cleared transactions.
EACH adds that it will continue advocating for the removal of Article 19 SDR at the latest with a review of CSDR’s SDR.
Meanwhile, the updated section on penalties includes EACH members alignment with CSDs on penalty calendars, as well as new positions on penalties mismatch scenarios.
Additionally, the section on reporting includes updated positions on penalties daily reporting and monthly reporting.
“EACH members have agreed to align the management of penalties to ECSDA’s monthly timetable as described in chapter two of the European Central Securities Depositories Association's CSDR penalties framework where possible,” EACH cites.
“CCPs will, therefore, trigger the reporting, collection and redistribution of penalties as follows: 14th business day: Monthly report of aggregated penalty amounts will be delivered; 17th business day: aggregated penalty amounts will be charged and redistributed to the relevant clearing members.”
CSDR aims to harmonise certain aspects of the settlement cycle and settlement discipline and to provide a set of common requirements for central securities depositories (CSDs) for both domestic and cross-border transactions.
The framework's objective is to provide the European Securities and Markets Authority and market participants with details of EACH’s implementation of the CSDR settlement discipline provisions that affect CCPs and their Clearing Members.
Included in the new version is an updated EACH position on Article 19 SDR, which requires CSDs to ensure that CCPs receive all relevant cash penalty calculations for failed cleared transactions and duly collect and distribute these penalties to their clearing members.
CCPs are planning to go ahead with the implementation of Article 19 unless another solution presents itself prior to the implementation date, despite the fact EACH believes this article to be "unnecessary".
The association explains that there is no operational or risk-based justification for having a separate collection and distribution mechanisms for penalties originating from failed cleared transactions and penalties originating from failed non-cleared transactions.
EACH adds that it will continue advocating for the removal of Article 19 SDR at the latest with a review of CSDR’s SDR.
Meanwhile, the updated section on penalties includes EACH members alignment with CSDs on penalty calendars, as well as new positions on penalties mismatch scenarios.
Additionally, the section on reporting includes updated positions on penalties daily reporting and monthly reporting.
“EACH members have agreed to align the management of penalties to ECSDA’s monthly timetable as described in chapter two of the European Central Securities Depositories Association's CSDR penalties framework where possible,” EACH cites.
“CCPs will, therefore, trigger the reporting, collection and redistribution of penalties as follows: 14th business day: Monthly report of aggregated penalty amounts will be delivered; 17th business day: aggregated penalty amounts will be charged and redistributed to the relevant clearing members.”
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