The European Securities and Markets Authority (ESMA) published a Consultation Paper on Technical Advice to the European Commission on the Central Securities Depositories Regulation (CSDR) penalty mechanism. The consultation runs until 29 February 2024.
The aim of the consultation is to collect evidence and data from stakeholders on the effectiveness of the current penalty mechanism in discouraging settlement fails and incentivizing their rapid resolution.
In addition, it seeks feedback on ESMA’s preliminary proposals regarding:
- alternative parameters, when the official interest rate for overnight credit charged by the central bank issuing the settlement currency, is not available;
- the treatment of historical reference data for the calculation of late matching fail penalties; and
- alternative methods for calculating cash penalties, including progressive penalty rates.