ESMA confirms preparations to further delay CSDR
28 July 2020 Brussels
Image: lassedesignen/Shutterstock
The European Securities and Markets Authority (ESMA) has confirmed it is working on a proposal to possibly delay the entry into force of the Central Securities Depositories Regulation (CSDR) settlement discipline regime until 1 February 2022.
The delay is due to the impact of the ongoing COVID-19 pandemic on the implementation of regulatory projects and IT deliveries by central securities depositories (CSDs) and came as a request from the European Commission.
ESMA’s proposal would be an extension to the delay foreseen in the ESMA Final Report on the regulatory technical standards (RTS) on postponing the date of entry into force of the Commission Delegated Regulation (EU) 2018/1229 (RTS on settlement discipline) until 1 February 2021.
It explained that this was endorsed by the European Commission on 8 May 2020 and it is subject to the non-objection of the European Parliament and of the Council until 8 August 2020.
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 settlement fails.
In terms of its next steps, ESMA said it aims to publish the final report on further postponing the date of entry into force of the RTS on settlement discipline by September.
Following the endorsement of the RTS by the European Commission, the Commission Delegated Regulation will then be subject to the non-objection of the European Parliament and of the Council.
Commenting on ESMA’s proposal, the International Securities Lending Association (ISLA) said: “From an ISLA perspective, we have already shared these recent developments with our CSDR working groups and streams, and will continue to monitor the situation closely as we appreciate the sensitivities around managing further implementation delays for our member firms and the broader industry.”
The announcement from ESMA follows Euroclear’s recent memo to clients highlighting that ESMA is expected to publish an amendment proposing the delay to the current February 2021 deadline, after the summer holiday period.
Of the proposed delay, Paul Baybutt, senior product manager at HSBC Securities Services, said: “While a level of uncertainty will continue until the proposal is approved, a further delay would be welcomed by the industry, giving more time to address the open issues and ensure the effective implementation of the regulation.”
One exception is Euroclear which said it was reviewing the implementation of its settlement discipline projects in line with the new expected date of entry into force (1 February 2022).
“We can already confirm that our release planned for October this year (matching changes and new functionality for Bridge and internal settlement instructions) will be postponed until 2021,” Euroclear said, adding that “participant testing related to the penalties and buy-ins processes, will also be postponed to 2021".
The post-trade services provider plans to share a new timetable with clients in the coming weeks.
Read more on CSDR in the latest issue of Asset Servicing Times.
The delay is due to the impact of the ongoing COVID-19 pandemic on the implementation of regulatory projects and IT deliveries by central securities depositories (CSDs) and came as a request from the European Commission.
ESMA’s proposal would be an extension to the delay foreseen in the ESMA Final Report on the regulatory technical standards (RTS) on postponing the date of entry into force of the Commission Delegated Regulation (EU) 2018/1229 (RTS on settlement discipline) until 1 February 2021.
It explained that this was endorsed by the European Commission on 8 May 2020 and it is subject to the non-objection of the European Parliament and of the Council until 8 August 2020.
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 settlement fails.
In terms of its next steps, ESMA said it aims to publish the final report on further postponing the date of entry into force of the RTS on settlement discipline by September.
Following the endorsement of the RTS by the European Commission, the Commission Delegated Regulation will then be subject to the non-objection of the European Parliament and of the Council.
Commenting on ESMA’s proposal, the International Securities Lending Association (ISLA) said: “From an ISLA perspective, we have already shared these recent developments with our CSDR working groups and streams, and will continue to monitor the situation closely as we appreciate the sensitivities around managing further implementation delays for our member firms and the broader industry.”
The announcement from ESMA follows Euroclear’s recent memo to clients highlighting that ESMA is expected to publish an amendment proposing the delay to the current February 2021 deadline, after the summer holiday period.
Of the proposed delay, Paul Baybutt, senior product manager at HSBC Securities Services, said: “While a level of uncertainty will continue until the proposal is approved, a further delay would be welcomed by the industry, giving more time to address the open issues and ensure the effective implementation of the regulation.”
One exception is Euroclear which said it was reviewing the implementation of its settlement discipline projects in line with the new expected date of entry into force (1 February 2022).
“We can already confirm that our release planned for October this year (matching changes and new functionality for Bridge and internal settlement instructions) will be postponed until 2021,” Euroclear said, adding that “participant testing related to the penalties and buy-ins processes, will also be postponed to 2021".
The post-trade services provider plans to share a new timetable with clients in the coming weeks.
Read more on CSDR in the latest issue of Asset Servicing Times.
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