AFME Calls for Action on Mandatory Buy-Ins
Following the publication of the European Commission reportÂ confirming the settlement discipline regime will be reviewed,Â Pete Tomlinson, Director of Post TradeÂ at AFME, said:
â€śIt is helpful that the Commission has stated its intention to consider amendments to the mandatory buy-in regime, subject to an impact assessment. Given that amendments may now be made at a later date, it does not make sense for the current rules to be implemented and enforced on 1 February 2022.
The @EU_Commission has confirmed that the settlement discipline regime will be reviewed. Pete Tomlinson, AFME, comments on this helpful development.
— AFME (@AFME_EU) June 30, 2021
â€śAFME strongly recommends that the Commission and ESMA take action to decouple the implementation of the mandatory buy-in rules from all other aspects of the settlement discipline regime. This would allow other measures, such as the penalties regime, to take effect as planned in February 2022, but avoid implementation of the current buy-in rules, which have been widely acknowledged as being flawed.
â€śThis action should be taken as soon as possible, in order to provide much-needed clarity to all market participants.â€ť
CSDR settlement discipline regime has mandatory buy-in rules.
Participants need to avoid penalties when CSDR when it comes into full effect in 2022.
The European Association of Clearing Houses said provisions are inaccurate, redundant and burdensome.
The change ensures compliance with CSDR after Brexit.
The mandatory buy-in provisions will adversely affect liquidity, especially for less-liquid securities.