CSDR – SDR: Role of CCPs in collecting penalties

The coexistence of these two different channels (which may not even concern the same players since a clearing agent is not necessarily a CSD participant) had been identified by the entire industry as a source of complexity and additional costs. After consultation, ESMA¹ published in November 2022 a draft amendment to Article 19, which was taken up in the proposal for a delegated act published on 19 April 2023 by the European Commission (EC).

Unless the Parliament and/or the Council were opposed to this development, CSDs should therefore ensure the full treatment of penalties, whether they concern a CCP or not. The change would apply one year after the publication of the new text in the Official Journal of the Union.

CSDR also provides that a CCP cannot be penalised when it acts as a clearing house (buyer versus sellers, seller versus buyers). It therefore cannot bear the financial impact of CSDR penalties. The revision proposed by the EC therefore allows CCPs to reallocate any remaining balances (positive and negative) to their members.

As the period of non-objection by the European Parliament and the Council is of two months, the text could be published in the third quarter of 2023 and implemented one year later.

Find out more:

https://ec.europa.eu/transparency/documents-register/detail?ref=C(2023)2484&lang=en
ESMA proposes amendment to simplify cash penalties process for cleared transactions under CSDR (europa.eu)