On 23 October, the European Commission endorsed the proposed delay to the implementation of CSDR Settlement Discipline – via an amendment to Delegated Regulation (EU) 2018/1229 concerning the regulatory technical standards on settlement discipline – to 1st February 2022.
While a level of uncertainty will continue due to a number of key issues – for example, solving for asymmetrical payments, a pass-on mechanism and transaction scope – the proposed delay has been welcomed by industry associations and market participants. Concerns has been voiced over specific aspects of the Settlement Discipline Regime (SDR), notably the impact of mandatory buy-ins on market liquidity and a lack of overall industry readiness.
This delay should not prompt market participants to lose momentum or even cease their implementation efforts, but rather take the opportunity to think more strategically about their solutions. We believe that participants should look across their post trade processes beyond just the management of settlement fails. Their focus should be on improving operational efficiency and addressing legacy issues that in turn will address the requirements of CSDR at a global level, rather than just across EU markets.
In this article, we share the five themes that should remain a key focus for the industry.
For more information about CSDR, how your firm can use the delay-time most effectively, or about Capco’s solutions and offerings for post trade optimization, please contact Tej Patel, UK Partner.