CSDR Refit: the text has entered into force!


Officially adopted on 13 December 2023 and published in the Official Journal of the European Union (EU) on 27 December, CSDR Refit (2023/2845) entered into force on 16 January 2024.

Three years after the start of the CSDR review process, different parts of the original text are amended, and in particular the settlement disciplines:

  • The buy-in obligation (MBI1) may only target certain types of financial instruments and/or types of transactions among those eligible for the MBI and, above all, the European Commission (EC) will only be able to open discussions on the merits of its implementation if the system of penalties is not sufficiently effective and if the level of suspensions may impact EU financial stability.

  • The penalty system could also benefit from exemptions, in particular for transactions that would not be considered “trading”.

The regulation sets 17 January 2025 as the deadline for ESMA to provide its “draft regulatory technical standards” (RTS), which will be used to draw up the delegated texts necessary to specify the outline of the measures.

CSDR Refit introduces for the first time in European regulations a potential shortening of the settlement cycle by mandating the European regulator (ESMA) to, no later than 17 January 2025 and every two years thereafter, draw up a report detailing the opportunity, costs and benefits and the modalities for implementing a shortened settlement cycle.

As early as September 2023, ESMA had announced the future publication of several consultations. After the “Call for Evidence” regarding a potential transition to T+1, a new consultation is underway. It addresses the penalty system and proposes strong measures such as a six-fold increase in the current penalty rates and a maximum increase to a 25-fold increase starting at the 6th day of failing settlement.

The monitoring and reporting of fails as well as the measures to prevent their appearance will be the subject of consultations announced for the second quarter of 2024.

CSDR Refit (2023/2845)

Call for Evidence on shortening the settlement cycle

Consultation on penalties

1 MBI : Mandatory Buy-In