Insights Blog

ESMA is consulting on potential changes to the CSDR Delegated Regulation on Settlement Discipline to simplify how cash penalties for settlement fails are collected and distributed.  Under ESMA’s proposal, responsibility for the entire process of collecting and distributing penalties for settlement fails on cleared transactions would move from CCPs to CSDs. 

The proposal reflects feedback received by the Commission to its targeted review of CSDR. Industry participants (in particular CCPs) view the existence of parallel processes under Article 17 of the Delegated Regulation (under which CSDs are generally responsible for collection and distribution) and Article 19 of the Delegated Regulation (under which CCPs are responsible for collection and distribution for cleared transactions) as adding additional cost, complexity and operational risk.

The consultation closes on 9 September 2022, and ESMA plans to submit a draft amending Delegated Regulation to the Commission during Q4. 

The CSDR reporting requirements for settlement fails, and the cash penalties regime, have been in place since 1 February 2022.  For more information on other key CSDR-related developments, such as the targeted changes proposed by the Commission, and the proposed 3-year delay to the application of the mandatory buy-in rules, read our other recent updates here:

CSDR Mandatory Buy-in Update 

CSDR: Commission proposes targeted changes; Countdown to application of Article 3