The existing regulatory technical standards (RTS) on settlement discipline under the Central Securities Depositories Regulation (CSDR) have been amended following the publication of Commission Delegated Regulation (EU) 2023/1626 in the Official Journal.
The change will move responsibility for the process of collecting and distributing penalties for settlement fails on cleared transactions from central counterparties (CCPs) to central securities depositories (CSDs).
The change follows a consultation by ESMA last year (read our insights on that consultation here: CSDR Update: Simplifying Collection and Distribution of Cash Penalties). ESMA's consultation followed feedback received by the Commission from industry participants, in particular CCPs, that the existence of parallel processes under Article 17 of the existing RTS (under which CSDs were generally responsible for collection and distribution) and Article 19 of the existing RTS (under which CCPs were responsible for collection and distribution for cleared transactions) addS additional cost, complexity and operational risk.
The changes (to Article 19 of the existing RTS) will apply from 2 September 2024 to give CCPs and CSDs time to put the necessary technological changes in place.
Article 19 in its existing form will continue to apply to settlement fails that occur before 2 September 2024.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.
