The regulation on central securities depositories and securities settlement (otherwise known as CSDR) establishes a framework designed to enhance settlement discipline (Article 7), including the provision for penalties for settlement fails and a mechanism for executing mandatory buy-ins against failing transactions in financial securities. The text provides that buy-ins should be initiated in the event of a transaction failing for 4 business days (the ‘extension period’), with the scope for this to be increased up to 7 business days ‘where a shorter extension period would affect the smooth and orderly functioning of the financial markets concerned’.
This briefing note covers existing remedies for failing SFTs; SFTs and secondary market liquidity; collateral fluidity; CSDR mandatory buy-ins and SFTs; and the ICMA ERC position on mandatory buy-ins and SFTs.