Trade associations warn EU regulators of CSDR mandatory buy-in regime’s damaging impacts to EU markets

Joint Trade Association Letter regarding Implementation of the CSDR Settlement Discipline Regime

We support the imposition of a penalty regime under CSDR as an important step towards improving settlement efficiency in European capital markets. However, we continue to be concerned that the impact of a mandatory buy-in regime will have negative consequences that are damaging to market liquidity and efficiency and restrict the growth of capital markets in Europe.

We respectfully request the authorities to consider a cautious, phased-in approach to ensure the successful implementation of the cash penalty regime and reconsider the mandatory nature of the buy in.

  1. Introduce cash penalties once market infrastructures, banks and their clients have built and tested the required new messaging and technology.
  2. Deferral of the mandatory buy-in regime until the effects of penalties and other measures (e.g. prompt allocation/confirmation processes) to promote settlement efficiency are implemented. An in-depth impact analysis should be undertaken by the Commission during this period on the potential impact of introducing a mandatory buy-in.
  3. Implement monitoring processes to measure the impact of the penalty regime on settlement efficiency.
  4. Replace the mandatory nature of the buy-in with an optional right of the receiving party, underpinned by law, to allow a buy-in of a non-delivering counterparty. Address the asymmetrical issues relating to buy in costs. The topic of cash compensation should be thoroughly reassessed.

The full letter is available at

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