CSDR Refit Commission formalises proposals for amendments


On 16 March 2022, the European Commission (EC) published its draft revision of the CSDs Regulation (CSDR 909/2014).

On 16 March 2022, the European Commission (EC) published its draft revision of the CSDs Regulation (CSDR 909/2014). This proposal follows the publication in the summer of 2021 by the EC of a report containing the various contributions to the consultation conducted at the end of 2020; at that time, six domains were selected by the EC as subject to change.

Concerning the most problematic measure because of its strongly negative consequences, namely the obligation to initiate a buy-in for any failing settlement, the new version of CSDR conditions its implementation to at least one of these three criteria:

  • the application of the penalties alone does not allow a satisfactory improvement of the settlement on the correct date,

  • the settlement rate is lower than what can be observed in other regions,

  • the suspension rate may impact/impact the Union’s financial stability

The EC is also reviewing the scope of application of the mandatory buy-in. This would no longer apply in cases where the “settlement fails are caused by factors not attributable to the participants to the transaction or for operations that do not involve two trading parties”. Another important point, the text introduces the so-called “pass-on” mechanism to avoid triggering unnecessary buy-ins. Finally, the mandatory buy-in could be limited to types of financial instruments or transactions or could be suspended in case of a major impact on the functioning of the markets.

The text will now be examined by Parliament and the Council. In parallel, a public consultation is open until 18 May.

Head of Knowledge Management Strategy and Market Infrastructure - SGSS