ESMA postpones CSDR settlement discipline until February 2022

This final report presents a new draft regulatory technical standard (‘RTS’) on postponing the date of entry into force of Commission Delegated Regulation (EU) 2018/1229 of 25 May 2018 supplementing Regulation (EU) No 909/2014 of the European Parliament and of the Council with regard to regulatory technical standards on settlement discipline (‘RTS on settlement discipline’).

The initial date of entry into force of the RTS on settlement discipline was 13 September 2020. On 4 February 2020, ESMA adopted a report suggesting to the European Commission the postponement of the entry into force of the RTS on settlement discipline until 1 February 2021. To this effect, ESMA proposed an amendment to the RTS on settlement discipline and on 8 May 2020, the European Commission adopted Commission Delegated Regulation (EU) 2020/1212 supplementing Regulation (EU) No 909/2014 of the European Parliament and of the Council with regard to regulatory technical standards on settlement discipline, which has now been published in the Official Journal of the EU.

Having regard to the severe impact of the COVID-19 pandemic on the overall implementation of regulatory and IT projects by CSDs and their participants, as well as by other financial market infrastructures, it appears that it would be extremely difficult for these market stakeholders to comply with the requirements of the RTS on settlement discipline by 1 February 2021.
On 24 June 2020, in light of the stakeholders’ representations about the impact of COVID- 19, the European Commission invited ESMA to consider whether a further postponement of the date of entry into force of the RTS on settlement discipline would be appropriate and, if that was the case, to present a proposal for amendment of the relevant RTS in this respect to the European Commission.

Having regard to the arguments put forth by stakeholders, ESMA considers that a further postponement of the date of entry into force of the RTS on settlement discipline would be appropriate, and hereby presents a proposal for a new amendment of the relevant RTS in order to postpone its entry into force until 1 February 2022.

Given that the proposed amendment is limited in scope and reflects the input provided by market participants calling for this delay, as well as the urgency to have legal certainty as to the new date of entry into force of the settlement discipline regime in order for market participants to prepare for the implementation accordingly, ESMA has not conducted any open public consultation in accordance with the third subparagraph of Article 10(1) of Regulation (EU) No 1095/2010 (ESMA Regulation). However, ESMA has consulted the Securities and Markets Stakeholder Group (‘SMSG’) and has conducted a high-level analysis of the costs and benefits. ESMA has also cooperated closely with the members of the European System of Central Banks (‘ESCB’).

The full report is available at https://www.esma.europa.eu/sites/default/files/library/esma70-156-3490_final_report_-_csdr_rts_on_settlement_discipline_-_postponement_until_1_february_2022.pdf

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