CSDR settlement discipline costs and how to reduce or avoid them

Bill Meenaghan
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Bill Meenaghan: Executive Director of Institutional Trade Processing, DTCC, UK

Journal of Securities Operations & Custody, 2020, vol. 12, issue 2, 128-134

Abstract: The European Union’s (EU) Central Securities Depositories Regulation (CSDR) entered into force on 17th September, 2014. CSDR contains a section (Chapter III) on ‘settlement discipline’, which includes measures to improve settlement efficiency, such as cash penalties for fails and the provision for mandatory buy-ins. The CSDR settlement discipline regime (SDR) is expected to apply from September 2020 and covers any global entity who settles a security in one of the European CSDs. This could be a very impactful regulation, so industry participants need to assess their current processes to make sure that they have the best chance of settling all of their trades. There are many parts to the trade life cycle, and ensuring a robust process for each part is essential. The trade life cycle covers • data handling and onboarding, • trade economics matching, • notification, • settlement management, and • data analytics. This article covers each of these parts with an aim of discussing how clients could achieve a highly efficient trade settlement process.

Keywords: European Union (EU); Central Securities Depository (CSD); Central Securities Depositories Regulation (CSDR); Settlement Discipline Regime (SDR); T+2; Target 2 Securities (T2S); Legal Entity Identifier (LEI); MiFID 2 (search for similar items in EconPapers)
JEL-codes: E5 G2 K22 (search for similar items in EconPapers)
Date: 2020
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