The Association for Financial Markets in Europe (AFME) has today published recommendations for partial settlement in view of the impending Central Securities Depository Regulation (CSDR).
The recommendations aim to encourage greater and more harmonised use of partial settlement across the industry as a way of improving settlement rates. This is against the backdrop of CSDR, which is due to come into force in September 2020* and will introduce penalties for trades that fail to settle. Therefore, any measures to improve settlement rates will help to lessen these negative impacts to firms of CSDR.
Stephen Burton, Managing Director, Post Trade at AFME, said: “The increased adoption of partial settlement is one example of how the industry can improve settlement efficiency. Particularly, at a time when the mandatory buy-in regime under CSDR is due to be implemented later this year, improving settlement rates will help to mitigate the possible negative impacts, including reduced liquidity and greater volatility, when investing in European securities.”
The market practice document is aimed at all market participants including buy-side clients, brokers and service providers such as intermediaries, central counterparties, custodians, banks and local agents.
The set of recommendations fall under the following three areas:
- Partial Hold and Release
- Auto-Partial Settlement
- Manual Partials
The full recommendations can be downloaded here.
Notes to Editors
*Correct as of time of publication, however a draft Delegated Act is under consideration by the European Commission to delay to February 1st, 2021