The European Central Securities Depositories Association (ECSDA) issues the 2023 calendar, which can be found below.
In the calendar, you will find highlighted the key dates of the penalties life cycle as follows:
End of appeal period – 10th PBD
Monthly report – 14th PBD
Payment date: a. 17th PBD until February penalties, e.g., March payment b. 18th PBD from March penalties, e.g., April payment
The payment date will be postponed by 1 PBD, from March penalties, e.g., April payment, as a result of the activity in the Calendar TF with industry associations.
We take the opportunity to thank AFME, EACH, AGC, EFAMA, IA Members, and other associations participating in the Industry Settlement Fails Penalties Calendar task force and look forward to working with you in the future.
We wish you a happy year-end holiday!
The ECSDA team
CSDs activate their settlement penalties mechanisms
1 February 2022 is the day of the entry into force of the Central Securities Depositories (CSD) Regulation (Regulation (EU) 909/2014) settlement penalties requirements. The requirements can be found on the website of the European Securities and Markets Authority. Most European CSDs are activating the mechanism on that day.
Many answers to the CSD participants’ questions on how the requirements will be implemented by CSDs can be found in the ECSDA Penalties Framework. Its version dated 5 October 2021 will be used for the set-up of the CSDs’ mechanisms as of 1 February 2022 and provides many answers to the frequently raised questions. More information about how the individual CSDs are applying settlement penalties requirements is provided by their website.
ECSDA uses the opportunity to remind the key milestones of the monthly reporting and collection/distribution process.
To ensure that the penalties processes are running smoothly, CSDs will be following the indicative timeline of the monthly process outlined below. Should the monthly reports be delayed for some reasons (e.g. a delay on the CSD side for a technical reason or a T2S delay), the CSD will only proceed with the subsequent steps of the monthly process after the participants receive the monthly reports. Section 12.2 of the Framework describes the handling of exceptions.
Source: ECSDA Penalties framework.
If an appeal based on a daily report is required, it should be addressed to the CSD as soon as practically possible, to be taken into account on time before the monthly payment request is sent to a participant. (For T2S CSDs, no change is possible after the 10th Penalties Business Day. The end of appeal for cross-CSD penalties is also be shorter than for intra-CSD; please refer to the communication of the individual CSD.) The amounts mentioned in the monthly report must be the ones collected and distributed. Penalties subject to an appeal submitted on time will be removed before the monthly report is sent, thus these will not appear on the penalties monthly reports. After the monthly process has been concluded, no further adjustments for the penalties received and distributed should be done by CSDs.
We encourage CSD participants to refer to the basics of the appeal mechanism, e.g. in the ECSDA Framework and the individual CSDs´ governing documents to limit queries and appeals to the extent possible. CSDs particularly ask the participants to verify the validity of reason for appeal before submitting it. This would avoid drawing upon the highly solicited CSD expert attention without a valid reason and ensure more efficient treatment of valid appeals.
ESMA suggests to postpone Settlement Discipline Standards until 1 February 2022
On 26 August 2020, ESMA released its Final Report CSDR RTS on Settlement Discipline that provides explanations for the proposal to postpone the entry into force of the RTS on settlement discipline until 1 February 2022.
It is sent to the European Commission, and ESMA is submitting the draft RTS presented in Annex IV for endorsement in the form of a Commission Delegated Regulation, i.e. a legally binding instrument applicable in all Member States of the European Union. Following the endorsement of the draft RTS by the European Commission, the Commission Delegated Regulation will then be subject to the non-objection of the European Parliament and of the Council.
The report provides explanations for the proposal of delay of the implementation of the RTS on settlement discipline, initially foreseen on 13 September 2020.
ESMA acknowledges the need for relevant stakeholders to be provided with more time to prepare the implementation of the Settlement Discipline.
This is due in particular to:
New developments needed for the go live of the T2S penalty mechanism (22 November 2020)
Necessary IT system changes for the updating of ISO messages (22 November 2020)
Market testing
Adjustments to legal arrangements between the parties concerned (see Article 20 of RTS)
Developments related to the implementation of the mandatory buy-in process, foreseen by the CSDR settlement discipline
Considering all the above-mentioned elements, ESMA officially proposes (see Annex II of the report) the postponement of the date of entry into force of the RTS on settlement discipline until 1 February 2021.
Next steps:
This amendment to the RTS will be submitted to the European Commission for review and endorsement.
This will be followed by the non-objection period by the European Parliament and Council before the publication in the EU Official Journal and subsequently entry into force.
