EACH updates CSDR SDR framework
14 July 2020 Brussels
Image: fotogestoeber/Shutterstock
The European Association of CCP Clearing Houses (EACH) has updated the version of its framework on Central Securities Depositories Regulation (CSDR) Settlement Discipline Regime (SDR).
The latest version contains updates based on feedback received from industry participants and the authorities.
CSDR aims to harmonise certain aspects of the settlement cycle and settlement discipline and to provide a set of common requirements for central securities depositories (CSDs) for both domestic and cross-border transactions.
EACH highlighted that one of the main objectives of CSDR is to improve the safety and efficiency of securities settlement by ensuring that buyers and sellers receive their securities and money on time and without undue risk.
Included in the new version is an updated EACH position on Article 19 SDR, which requires CSDs to ensure that CCPs receive all relevant cash penalty calculations for failed cleared transactions and duly collect and distribute these penalties to their clearing members.
CCPs are planning to go ahead with the implementation of Article 19, unless another solution presents itself prior to the implementation date.
EACH said it continues to believe that Article 19 SDR is unnecessary as there is no operational or risk-based justification for having a separate collection and distribution mechanisms for penalties originating from failed cleared transactions and penalties originating from failed non-cleared transactions.
EACH affirmed that it will continue advocating for the removal of Article 19 SDR at the latest with a review of CSDR’s SDR.
Meanwhile, the updated section on penalties includes EACH members alignment with CSDs on penalty calendars, as well as new positions on penalties mismatch scenarios.
Additionally, the section on reporting includes updated positions on penalties daily reporting and monthly reporting.
“EACH members have agreed to align the management of penalties to ECSDA’s monthly
timetable as described in Chapter 2 of the ECSDA CSDR Penalties Framework where possible,” EACH cited.
The association continued: “CCPs will, therefore, trigger the reporting, collection and redistribution of penalties as follows: 14th business day: Monthly report of aggregated penalty amounts will be delivered; 17th business day: Aggregated penalty amounts will be charged and redistributed to the relevant clearing members.”
The latest version contains updates based on feedback received from industry participants and the authorities.
CSDR aims to harmonise certain aspects of the settlement cycle and settlement discipline and to provide a set of common requirements for central securities depositories (CSDs) for both domestic and cross-border transactions.
EACH highlighted that one of the main objectives of CSDR is to improve the safety and efficiency of securities settlement by ensuring that buyers and sellers receive their securities and money on time and without undue risk.
Included in the new version is an updated EACH position on Article 19 SDR, which requires CSDs to ensure that CCPs receive all relevant cash penalty calculations for failed cleared transactions and duly collect and distribute these penalties to their clearing members.
CCPs are planning to go ahead with the implementation of Article 19, unless another solution presents itself prior to the implementation date.
EACH said it continues to believe that Article 19 SDR is unnecessary as there is no operational or risk-based justification for having a separate collection and distribution mechanisms for penalties originating from failed cleared transactions and penalties originating from failed non-cleared transactions.
EACH affirmed that it will continue advocating for the removal of Article 19 SDR at the latest with a review of CSDR’s SDR.
Meanwhile, the updated section on penalties includes EACH members alignment with CSDs on penalty calendars, as well as new positions on penalties mismatch scenarios.
Additionally, the section on reporting includes updated positions on penalties daily reporting and monthly reporting.
“EACH members have agreed to align the management of penalties to ECSDA’s monthly
timetable as described in Chapter 2 of the ECSDA CSDR Penalties Framework where possible,” EACH cited.
The association continued: “CCPs will, therefore, trigger the reporting, collection and redistribution of penalties as follows: 14th business day: Monthly report of aggregated penalty amounts will be delivered; 17th business day: Aggregated penalty amounts will be charged and redistributed to the relevant clearing members.”
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