CSDR Settlement Discipline

Chapter III of the CSDR Settlement Discipline regulations introduces several measures, to prevent and address settlement fails and encourage market participants to settle transactions on the intended settlement date.

This new regime will require new processes that will result in cost, liquidity and risk challenges. This is where Euroclear, as the largest group of CSDs in the EU has always brought value to its clients. CSDR Settlement Discipline will be no different.

What is the scope?

These measures include a harmonised settlement penalties regime, mandatory buy-ins*, and common settlement features across the EU such as partial settlement and hold and release.

The Settlement Discipline Regime (SDR) will apply to all transactions intended to settle on an EEA CSD which are traded on a EU trading venue or cleared by a EU CCP.

Such transactions can be in transferable securities, money-market instruments, units in collective investment undertakings, and emissions allowances. Shares with a principle trading venue located in a 3rd country are excluded.

It will apply to all trading level entities - regardless of domicile - whether directly as CSD participants, or indirectly via a settlement or clearing agent.

For Euroclear UK & International clients, only the cross-border transactions direct with participants in Euroclear Bank, and those via Euroclear Bank with participants in the other EEA CSDs, will be subject to the regime.

*On 24 November 2021, the European Parliament and Council have agreed to postpone the implementation of mandatory buy-ins under the CSDR Settlement Discipline Regime. As a result, we will adapt the timing of our mandatory buy-in related developments as and when more information becomes available.