Following the 2008 financial crisis, the European Commission decided that national Central Securities Depositories (CSDs), in their position as key institutions performing the vital post-trade process of securities settlement, as well as maintaining records of securities accounts and transactions, needed to harmonise their practices and improve the safety and efficiency of transaction settlement. The Central Securities Depository Regulation (CSDR) subsequently aimed to increase the efficiency of settlements and ensure settlement failures are resolved promptly, on EEA Central Securities Depositaries.
The key CSDR provisions pertaining to the Settlement Discipline Regime (SDR) that are due to come into force on 1 February 2022 relate to:
- Penalties for failing/late settlements
- Mandatory Buy-In Regime*
- Allocation and Confirmations
*As agreed by the European Council and European Commission on 24 November 2021, the mandatory buy ins will be decoupled / delayed from February 2022 Go Live. ESMA will release a statement to clarify the next steps.