CSDR's SDR delay ‘a positive step’ for the industry
28 August 2020 London
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A further delay to the Central Securities Depositories Regulation (CSDR) settlement discipline regime until 1 February 2022 has been welcomed by industry participants.
Paul Baybutt, senior product manager, HSBC, explained that the delay is a “positive step because it will allow the industry an opportunity to further address the open issues concerning the implementation of settlement discipline”.
On 28 August, the European Securities and Markets Authority (ESMA) published a final report on draft regulatory technical standards (RTS) to further postpone the implementation of CSDR’s settlement discipline until 2022.
In its final report, ESMA highlighted the “severe impact” of the ongoing COVID-19 pandemic on the overall implementation of regulatory and IT projects by central securities depositories (CSDs) and their participants as well as by other financial market infrastructures.
ESMA explained it would be “extremely difficult” for market stakeholders to comply with the requirements of the RTS on settlement discipline by the 1 February 2021 deadline.
The RTS on settlement discipline covers measures to prevent and address settlement fails including rules for the trade allocation and confirmation process; cash penalties on failed transactions; mandatory buy-ins; and monitoring and reporting of settlement fails.
Baybutt said: “This is the first step in organising a further delay to the EU settlement discipline regime.”
He suggested that as ESMA has done this at the request of the European Commission “it should pass quickly to parliament for a decision”.
Also commenting on ESMA’s announcement, consultant Tony Freeman said that confirmation “came quite quickly” but “their speed of action is very welcome”.
Freeman explained that although the postponement is officially subject to non-objection by the European Parliament and the European Council, ESMA must be very confident this is a technicality.
Paul Baybutt, senior product manager, HSBC, explained that the delay is a “positive step because it will allow the industry an opportunity to further address the open issues concerning the implementation of settlement discipline”.
On 28 August, the European Securities and Markets Authority (ESMA) published a final report on draft regulatory technical standards (RTS) to further postpone the implementation of CSDR’s settlement discipline until 2022.
In its final report, ESMA highlighted the “severe impact” of the ongoing COVID-19 pandemic on the overall implementation of regulatory and IT projects by central securities depositories (CSDs) and their participants as well as by other financial market infrastructures.
ESMA explained it would be “extremely difficult” for market stakeholders to comply with the requirements of the RTS on settlement discipline by the 1 February 2021 deadline.
The RTS on settlement discipline covers measures to prevent and address settlement fails including rules for the trade allocation and confirmation process; cash penalties on failed transactions; mandatory buy-ins; and monitoring and reporting of settlement fails.
Baybutt said: “This is the first step in organising a further delay to the EU settlement discipline regime.”
He suggested that as ESMA has done this at the request of the European Commission “it should pass quickly to parliament for a decision”.
Also commenting on ESMA’s announcement, consultant Tony Freeman said that confirmation “came quite quickly” but “their speed of action is very welcome”.
Freeman explained that although the postponement is officially subject to non-objection by the European Parliament and the European Council, ESMA must be very confident this is a technicality.
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