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.
On 11 March 2021, EFAMA and 14 trade associations representing a wide range of stakeholders in the European and global financial markets wrote to the European Commission and ESMA raising concerns about the implementation of the mandatory buy-in requirement under the EU’s CSDR Settlement Discipline Regime.
