Central Securities Depositories (CSDs) are key market infrastructures enabling the so-called securities settlement system, including the registration and safekeeping of securities and the settlement of securities in exchange for cash. The Central Securities Depositories Regulation (CSDR) was adopted in 2014 (subject to a phased implementation) with a view to harmonising rules and increasing the safety and efficiency of securities settlement and settlement infrastructures in the EU.
The CSDR is under review. Whilst wholeheartedly supportive of the objectives of the CSDR, EFAMA is advocating for a number of improvements to be made to the existing regulation. Chief among our recommendations is the removal of the mandatory buy-in obligation which (once applicable) could bring unintended consequences, such as deteriorating the liquidity for already less liquid financial instruments.
EFAMA supports the main objectives of CSDR to increase the safety and efficiency of securities settlement, including:
- Shorter settlement periods,
- Prudential and supervisory requirements for CSDs and other institutions providing banking services ancillary to securities settlement,
- The imposition of a penalty regime under CSDR as an important step towards improving settlement efficiency in European capital markets.
The Joint Associations1 welcome clarification from ESMA that national competent authorities are expected not to prioritise supervisory actions in relation to the application of the CSDR buy-in regime.2
On 14 July 2021, sixteen trade associations, representing buy-side, sell-side and market infrastructures, wrote to ESMA and the European Commission regarding the timeline for implementation of the mandatory buy-in rules as part of the CSDR Settlement Discipline Regime.
The Joint Associations welcome the Report from the Commission on the CSDR Review published in July 2021 and fully support the Commission’s intention to consider amendments to the mandatory buy-in regime, subject to an impact assessment.
Following the publication of the European Commission report confirming the settlement discipline regime will be reviewed, Susan Yavari, Regulatory Affairs Adviser at EFAMA, commented:
