European Association of CCP Clearinghouses (EACH) published its updated CSDR Settlement Discipline Framework, to help ensure that market participants and infrastructure are aware of the updated central counterparty (CCP) practices in the field of the Settlement Discipline Regime (SDR). This revised framework reflects the amendments to the Central Securities Depository Regulation (CSDR) via CSDR Review, and those stemming from the amendment of penalties mechanism under Article 19 of the CSDR Settlement Discipline Regime.
Summary of the changes:
- Amendment of penalties collection & distribution – The amendment of the cash penalties mechanism under Article 19, meaning that all penalties collection and distribution is done by central securities depositories (CSDs) starting September 2024.
- Reintroduction of Buy-ins under EU Short selling Regulation (SSR) – Given that the CSDR review has put the proposed mandatory buy-ins on hold, the pre-existing buy-ins for cleared share fails have been re-introduced into the EU Short Selling Regulation. In addition to this, the updated framework reflects the suspension of the CSDR mandatory buy-ins.
- Recovering losses from imbalances – A CCP may establish in its rules a mechanism to cover losses that it could incur resulting from imbalances from the penalties mechanism.