Tag: settlement fails reporting

ECSDA details further the implementation of fails penalties

ECSDA details further the implementation of fails penalties

On 9 March 2021, ECSDA published the updated version of the ECSDA CSDR Settlement Fails Penalties Framework.

Cash penalties are required by the EU legislators to be imposed by CSDs and aim at increasing settlement efficiency rates. The requirements are outlined in the CSD Regulation (EU 909/2014) and its underlying Standards.

The document can be used by Central Securities Depositories (CSDs) and their participants as a market practice on how CSDs should develop harmonised settlement fail penalties mechanisms. The document is meant to be evolving, along with the evolution of the views of the competent authorities on the matters under their review. It can be used by the CSDs and their participants to start their IT developments to comply with CSDR Settlement Fail penalties-related requirements.

This version of the document provides the changes in comparison with the previous version in grey and the pending assumptions in yellow.

The ECSDA Framework can be found here.

Earlier, ECSDA also made public the responses to the practical questions on CSDR Cash penalties implementation.

You will see that this document will be updated regularly while some answers to the questions will continue to arrive and CSDs will advance further in their implementation. It represents a centralised view on the CSDs practices. (The advancements of CSDs’ views may be made available even quicker to their direct participants in CSD’s own communication.)

ECSDA response to practical questions of CSD participants on CSDR penalties implementation Рupdated version 10/11/2020


ECSDA updates the draft CSDR Settlement Discipline Penalties Framework

ECSDA updates the draft CSDR Settlement Discipline Penalties Framework

On 3 July 2019, ECSDA published the updated version of the draft ECSDA CSDR Settlement Discipline Penalties Framework. The updated version of document can be found here.

The main chapters in the ECSDA Draft CSDR Settlement Discipline Penalties Framework include:

  1. ECSDA CSDR SDR Penalties Framework key considerations
  2. Penalties lifecycle and business days calendar
  3. Penalties scope
  4. Identification of the party to be penalised
  5. Reference/static data required for penalty calculations
  6. Penalties currencies conversion needs
  7. Calculation methods of the cash penalties
  8. Changes to previously calculated penalties
  9. Cross-CSD settlement fails
  10. Collection & Redistribution of penalties (Payment)
  11. Reporting

Other supporting information is also provided in the framework.

ECSDA answers ESMA on settlement fails reporting

ECSDA answers ESMA on settlement fails reporting

The European Central Securities Depository Association (ECSDA) welcomes the issuance of this Consultation Paper on the guidelines of Fails reporting under Article 7(1).

As we share the need of addressing some discrepancies and pitfalls in the fails reporting, we thank ESMA for having taken this initiative of harmonising the fails reporting requirements. Beyond the mere purposes of the settlement fails reporting, the proposed guidelines also influence certain provisions related to settlement discipline measures.

We would like to use the opportunity of the consultation:
1. to provide feedback on the most important aspects of the regulatory reporting, as well as
2. to stress the relevance of some issues, which are not tackled in the consultation paper.

Main points on the regulatory reporting:

I. We would generally advise to carefully balance costs vs. benefits of the reporting and limit the granularity of the information to what is fundamentally necessary for further actions of competent authorities.

II. We stress the fundamental importance of having more clarity on the instrument and instruction scope of the fails reporting, as well as the scope of other settlement discipline measures.

III. We believe that the scope of the requirements should be limited to transactions in financial instruments which the parties settle in an EU CSD. Hence, transactions where the actual place of settlement is outside of an EU CSD should be considered as out of scope of the reporting by EU (Investor-)CSDs.

IV. We would kindly ask for providing the definition of the ISO 20022 or XML message (draft) format to be used for reporting, as soon as possible and ahead of the issuance of the final version of these guidelines. Else, we fear that the timely compliance with the guidelines would be at risk.

Read the full document.