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CSDR settlement discipline costs and how to reduce or avoid them

Author

Listed:
  • Meenaghan, Bill

    (Executive Director of Institutional Trade Processing, DTCC, UK)

Abstract

The European Union’s (EU) Central Securities Depositories Regulation (CSDR) entered into force on 17th September, 2014. CSDR contains a section (Chapter III) on ‘settlement discipline’, which includes measures to improve settlement efficiency, such as cash penalties for fails and the provision for mandatory buy-ins. The CSDR settlement discipline regime (SDR) is expected to apply from September 2020 and covers any global entity who settles a security in one of the European CSDs. This could be a very impactful regulation, so industry participants need to assess their current processes to make sure that they have the best chance of settling all of their trades. There are many parts to the trade life cycle, and ensuring a robust process for each part is essential. The trade life cycle covers • data handling and onboarding, • trade economics matching, • notification, • settlement management, and • data analytics. This article covers each of these parts with an aim of discussing how clients could achieve a highly efficient trade settlement process.

Suggested Citation

  • Meenaghan, Bill, 2020. "CSDR settlement discipline costs and how to reduce or avoid them," Journal of Securities Operations & Custody, Henry Stewart Publications, vol. 12(2), pages 128-134, March.
    • Handle: RePEc:aza:jsoc00:y:2020:v:12:i:2:p:128-134
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    More about this item

    Keywords

    European Union (EU); Central Securities Depository (CSD); Central Securities Depositories Regulation (CSDR); Settlement Discipline Regime (SDR); T+2; Target 2 Securities (T2S); Legal Entity Identifier (LEI); MiFID 2;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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