The CSDR Regulation (No. 909/2014) on enhancing securities settlement in the European Union and central securities depositories (CSDs) is one of the legacies of the banking and financial crisis that hit the world in 2008. Seeking to strengthen the resilience of the internal market and recognising the systemic role of CSDs, the European institutions have chosen, by adopting this Regulation on 23 July 2014, to accelerate the convergence of EU standards on CSDs and to enhance the safety and efficiency of settlement processes. The regulation entered into force on 17 September 2014 in all Member States.
Objectives of this Regulation
- To provide a set of common requirements for Central Securities Depositories operating securities settlement systems in the EU.
- To harmonise certain aspects of the settlement cycle by enhancing the safety and efficiency of the settlement of financial instruments within the EU.
The CSDR Regulation mainly provides for:
- Shorter settlement/delivery times;
- Disciplinary measures for settlement (mandatory cash penalties and "buy-in" in case of settlement failure);
- A dematerialisation requirement for most securities (particularly in the UK and Ireland, where the possibility to hold physical securities was maintained);
- The strengthening of prudential and supervisory requirements for Central Securities Depositaries (CSDs) - including the introduction of a European passport - and other institutions providing banking services ancillary to securities settlement.
Challenges and opportunities
The CSDR Regulation introduces measures that impact all actors involved in settlement, particularly the settlement discipline, containing:
- A prevention axis with confirmation/allocation procedures between investment firms and their professional clients and settlement functionalities, in order to facilitate the process and thus encourage a timely settlement;
- Remedial measures, including financial penalties and the buy-in procedure to encourage smooth settlement.
CACEIS has launched a project consisting of a set of actions and services based on these two areas, and is continuing discussions with its clients to assist them in adapting to the CSDR Regulation.
23 July 2014
Adoption of Regulation n° 909/2014Regulation n° 909/2014
17 December 2014
Entry into application of Regulation n° 909/2014
23 June 2016
25 May 2018
4 February 2020
ESMA proposes to postpone the entry into force of the obligations in terms of settlement discipline - scheduled for 13 September 2020 - to 1 February 2021. The Commission agrees with the opinion of the European Securities and Markets Authority and endorses this postponement by the delegated regulation of 8 May 2020.
28 août 2020
Further postponement requested by ESMA on the implementation of the obligations contained in the Regulation due to the impact of the Covid-19 pandemic.
1 February 2022
Entry into force of settlement discipline obligations