Flashnews: CSDR – SDR Mandatory buy-in will not start next February

This key measure (with the application of penalties) of the “settlement disciplines regime” package introduced by the CSDR regulation had been the subject of considerable criticism. Click here to understand the history of the subject with the video of Sylvie Bonduelle.

The possibility of defining different dates for the application of settlement disciplines (SDR) was made possible by the addition, in the Pilot Regime regulation, of a specific article. In addition to opening the door at different dates, this article maintains the current CCP* buy-in regime (as defined in the short-selling regulation).

Although the text on the Pilot Regime should be adopted very quickly, it is not certain that the postponement of the mandatory buy-in will be official before the deadline of 1 February next year. Indeed, ESMA will have to propose an amendment to delegated act 2018/1229, which defines the SDR, to introduce different dates and sufficiently delay that of the buy-in (the industry argues for a postponement of 36 months). This draft will then have to be adopted by the EC (European Commission) and not rejected by Parliament and the Council. Therefore, ESMA is expected to issue a letter to the local regulators inviting them not to focus their controls on the proper application of this measure pending publication of the amendment in the Official Journal of the Union.

This is an essential step forward for the industry and the culmination of several years in which we have advocated for the removal of this measure. The proposed revision of the CSDR is expected to be published by the EC in late 2021/early 2022. We will then hear her suggestions regarding the buy-in regime. It will also be an opportunity for the professional associations to participate in the reflections that will not fail to be led by ESMA.

*CCP: Central Counterparty