CSDR Refit - SDR: Parliament adopts its amendments


After the Council, which voted last December to amend the European Commission's (EC) proposal, it is up to Parliament (EP) to formalise its vision of the future CSDR Refit*.

The version adopted on March 1st, 2023 does not, in the end, go as far as the Rapporteur proposed last October - which was in line with the European Central Bank (ECB)’s opinion1. In fact, the Parliament (EP) has decided to maintain the mandatory buy-in (MBI) obligation as a tool at the disposal of the EC. On the other hand, like the Council, it strengthens the conditions for its implementation; for example, only two of the three conditions proposed by the EC are retained and, moreover, become cumulative.

Another notable point in the EP proposals is that the assessment of the settlement efficiency in the EU (which is a prerequisite to any introduction of MBI) will have to be done at the end of the Extension Period2. This was a strong demand from trade associations because deciding on the implementation of the MBI based on what has not been settled at the intended settlement date is tantamount to ignoring that almost all these fails are resolved in the very first days and, therefore, to imposing the consequences of the MBI (contractual impacts, liquidity impacts, etc.) on all transactions to only a few residual cases.

The legislative process will now enter the next phase (the so-called Trilogue phase), during which the three European bodies will confront their positions and reach a consensus. The start date for the debates is not yet known but could be around April - May 2023.

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*CSDR Refit: review of CSDR (909/2014) on Central Securities Depositories (CSDs)
1Read the related Flash News: CSDR Refit - SDR: Parliament formalises its first proposals
2Extension Period: number of days (generally 4 or 7) between the intended settlement date and the initiation of a buy-in