ESMA confirms delay of CSDR's settlement discipline regime until 2022
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ESMA confirms delay of CSDR's settlement discipline regime until 2022 28 August 2020Brussels Reporter: Maddie Saghir
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The European Securities and Markets Authority (ESMA) has published a final report on draft regulatory technical standards (RTS) to postpone the implementation of the Central Securities Depositories Regulation (CSDR) settlement discipline regime until 1 February 2022.
In its final report, ESMA highlighted the “severe impact” of the ongoing COVID-19 pandemic on the overall implementation of regulatory and IT projects by central securities depositories (CSDs) and their participants as well as by other financial market infrastructures.
ESMA explained it would be “extremely difficult” for market stakeholders to comply with the requirements of the RTS on settlement discipline by 1 February 2021.
This follows ESMA’s announcement in July when it confirmed it was working on a proposal to possibly delay the entry into force of the CSDR settlement discipline regime as well as a request from the European Commission.
The RTS on settlement discipline covers measures to prevent and address settlement fails including rules for the trade allocation and confirmation process; cash penalties on failed transactions; mandatory buy-ins; and monitoring and reporting of settlement fails.
In terms of next steps, ESMA said that following the endorsement of the RTS by the EC, the delegated regulation will then be subject to the non-objection of the European Parliament and of the European Council.
In a recent issue of Asset Servicing Times, industry participants discuss the biggest challenges, the impact of COVID-19 on preparations, the cost of failing trades and more importantly how they believe the regulation will play out.
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