EC Publishes Regulatory Technical Standards on Settlement Discipline

The provisions in EU Regulation 2018/1229 deal with measures to prevent and address settlement fails and to encourage settlement discipline, by monitoring settlement fails, by collecting and distributing cash penalties for settlement fails, and by specifying the operational details of the buy-in process. This regulation also defines a number of terms, in an effort to ensure the consistent application of CSD Regulation. This regulation is based on the draft regulatory technical standards submitted by ESMA to EC, pursuant to the procedure in Article 10 of Regulation (EU) No 1095/2010. ESMA has conducted open public consultations on these draft regulatory technical standards, analyzed the potential related costs and benefits, requested the opinion of the Securities and Markets Stakeholder Group, and worked in close cooperation with the members of the European System of Central Banks for developing these regulatory standards.

The key objective of the CSD Regulation is to increase the safety and efficiency of securities settlement and settlement infrastructures (CSDs) in EU by providing, among others, for the following:

• Shorter settlement periods
• Settlement discipline measures (mandatory cash penalties and ‘buy-ins’ for settlement fails)
• An obligation regarding dematerialization for most securities
• Strict prudential and conduct of business rules for CSDs
• Strict access rights to CSD services
• Increased prudential and supervisory requirements for CSDs and other institutions providing banking services ancillary to securities settlement

Related Links

• Regulation (EU) 2018/1229
• CSD Regulation and Settlement-Related Measures
  

Effective Date: September 13, 2020

Keywords: Europe, EU, PMI, Securities, CSDR, CSD, Regulatory Technical Standards, Regulation 2018/1229, EC