CSDR: The 1st of February 2021 finally adopted by the European commission!
The European commission has agreed on the 8th of May about an entry into force of the settlement discipline regime on the 1st of February 2021 instead of the 14th of September 2020.
This regime in particular encompasses for failing settlements the application of penalties and the obligation to trigger a buy-in. It now remains to be hoped that the Parliament and the Council (by not objecting) will rapidly transform this proposal into an official date.
This is good news for post-trade stakeholders since it would give them a few more months – most welcome due to the current situation - to finalise their preparations for penalty management. On the other hand, it does not in any way put an end to the deep concerns raised by the principle of the mandatory buy-in. On this topic a lot of questions asked by trade associations to ESMA remain unanswered, impeding the industry from moving forward on the operational implementation of any future buy-in process. Beyond that, it is all the direct or indirect consequences on the markets (effect on the liquidity, prices and therefore the cost of a transaction, on the supply of markets makers, etc.) that are pointed at by all actors.
This is why the professional associations will continue their action with legislators and regulators, pleading the cause of a settlement discipline regime in two stages: implement the new penalty regime and see its impact on the quality of the settlements then, if necessary, implement the mandatory buy-in.