AFME Publishes Recommendations For CSDR Partial Settlement
The Association for Financial Markets in Europe (AFME) has published recommendations for partial settlement in view of the impending Central Securities Depository Regulation (CSDR).
Today, in order to help improve industry settlement efficiency, AFME published its recommendations for partial settlement ahead of the implementation of #CSDR.
Read our release: https://t.co/hx28hkyBON
— AFME (@AFME_EU) March 4, 2020
The recommendations aim to encourage greater and more harmonised use of partial settlement across the industry as a way of improving settlement rates. This is against the backdrop of CSDR, which is due to come into force in September 2020* and will introduce penalties for trades that fail to settle. Therefore, any measures to improve settlement rates will help to lessen these negative impacts to firms of CSDR.
Stephen Burton, Managing Director, Post Trade at AFME, said: “The increased adoption of partial settlement is one example of how the industry can improve settlement efficiency. Particularly, at a time when the mandatory buy-in regime under CSDR is due to be implemented later this year, improving settlement rates will help to mitigate the possible negative impacts, including reduced liquidity and greater volatility, when investing in European securities.”
The market practice document is aimed at all market participants including buy-side clients, brokers and service providers such as intermediaries, central counterparties, custodians, banks and local agents.
The set of recommendations fall under the following three areas:
- Partial Hold and Release
- Auto-Partial Settlement
- Manual Partials
The full recommendations can be downloaded here.
Following the publishing of AFME’s recommendations for partial settlement, Sachin Mohindra, Executive Director at @GoldmanSachs and Co-Chair of the AFME #CSDR Task Force, identifies the background of the paper and industry #nextsteps.
— AFME (@AFME_EU) March 5, 2020
The settlement discipline regime will be implemented in February 2022.
CSDR settlement discipline measures are due to be implemented in February 2022.
CSDR buy-in requirements are scheduled to go live on 1 February 2022.
CSDR introduces cash penalties and buy-ins for securities transactions which fail to settle.
The Central Securities Depositories Regulation had a mandatory buy-in regime.