CSDR – SDR: Role of CCPs in collecting penalties
Article 19 of Delegated Regulation 2018/1229 had entrusted CCPs* with the task of collecting (and redistributing) from their clearing members the penalties calculated by CSDs**. This specific process - dedicated to settlements directly against a CCP - diverged from the standard mode in which the CSD is responsible for the entire process (calculation, information, collection, and distribution).
The coexistence of these two different channels (which may not even concern the same players since a clearing agent is not necessarily a CSD participant) had been identified by the entire industry as a source of complexity and additional costs. After consultation, ESMA1 published in November 2022 a draft amendment to Article 19, which was taken up in the proposal for a delegated act published on 19 April 2023 by the European Commission (EC).
Unless the Parliament and/or the Council were opposed to this development, CSDs should therefore ensure the full treatment of penalties, whether they concern a CCP or not. The change would apply one year after the publication of the new text in the Official Journal of the Union.
CSDR also provides that a CCP cannot be penalised when it acts as a clearing house (buyer versus sellers, seller versus buyers). It therefore cannot bear the financial impact of CSDR penalties. The revision proposed by the EC therefore allows CCPs to reallocate any remaining balances (positive and negative) to their members.
As the period of non-objection by the European Parliament and the Council is of two months, the text could be published in the third quarter of 2023 and implemented one year later.
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* CCP: Central Counterparty
** CSD: Central Securities Depository
(1) ESMA: European Securities and Market Authority