CSDR

The Central Securities Depositories Regulation (CSDR) is one of the key regulations adopted in the aftermath of the 2008 financial crisis and looks to ensure that the settlement of securities are carried out more safely and efficiently in Europe.

Coming into force on September 17, 2014, CSDR looks to establish an EU-wide harmonised regulatory framework for financial market infrastructures, covering a wide range of requirements in its phased implementation timeline.

The last phase due to be implemented is the “Settlement Discipline Regime” which seeks to improve settlement efficiency. This includes the provision of mandatory buy-ins and cash penalties for failed transactions. 

These mandatory buy-ins pose a number of issues for parties involved in the settlement chain in European markets which requires industry preparation. (Read AFME’s framework that looks to assist firms).

AFME is engaged with regulators to help ensure that CSDR achieves its objectives of facilitating financial stability, while ensuring it does not come at the cost of the effective functioning of financial markets.

Key Publications

• Survey of Topics for the CSDR Review – AFME Response
• Guidelines for AFME members to handle bilateral claims between trading counterparties, related to penalties applied under CSDR on failed settlement instructions (July 2020)
• AFME Recommendations for Partial Settlement
• Joint Trade Association Letter regarding Implementation of the CSDR Settlement Discipline Regime (January , 2020): AFME, toghether with 13 other trade associations, wrote to the European Commission and ESMA to highlight the impact of the implementation of the CSDR Settlement Discipline Regime on European capital markets.
• Framework of Platform for Managment of Buy-Ins under CSDR (December, 2019): With this framework AFME seeks to minimise the number of buy-ins as per article 7.10 of CSDR and automate the processing. These high level requirements have been developed to help vendors build the relevant enabling technology.
• Introduction to CSDR Settlement Discipline (September, 2019): A introductory guide to CSDR and how the regulation covers a wide range of requirements across its phased implementation timeline, the last of which is the Settlement Discipline Regime which comes into force in Sep 2020.