08 June 2022

ESMA: Final Report CSDR RTS on Settlement Discipline – Suspension of buy-in

..the application dates of the settlement discipline measures has now been officially published, ESMA presents a proposal for the amendment of the RTS on settlement discipline in order to formally suspend the application of the provisions on the buy-in regime for three years..

Executive Summary

Reasons for publication

This final report presents a draft regulatory technical standard (‘RTS’) suspending the
application of the mandatory buy-in rules provided in Commission Delegated Regulation
(EU) 2018/1229 of 25 May 2018 supplementing Regulation (EU) No 909/2014 of the
European Parliament and of the Council with regard to regulatory technical standards on
settlement discipline1 (‘RTS on settlement discipline’).

The initial date of entry into force of the RTS on settlement discipline was 13 September
2020. The entry into force of Delegated Regulation (EU) 2018/1229 was deferred until 1
February 2021 according to Delegated Regulation (EU) 2020/12122 and then, according to
Delegated Regulation (EU) 2021/703, to 1 February 2022, when it has started applying.
However, market participants have conveyed their concerns about having serious difficulties
to implement the mandatory buy-in regime on the scheduled date due to: (i) the absence of
clarity regarding some open questions necessary for the implementation of the buy-in
requirements, and (ii) the uncertainty as to whether the European Commission’s legislative
proposal on amending Regulation (EU) No 909/2014 of the European Parliament and of the
Council (‘CSDR’) would include amendments to the mandatory buy-in rules and the extent
of any potential amendments.

As the legislative provision modifying CSDR to allow decoupling the application dates of the
settlement discipline measures has now been officially published4, ESMA hereby presents a
proposal for the amendment of the RTS on settlement discipline in order to formally suspend
the application of the provisions on the buy-in regime for three years, to allow the European
Commission and the co-legislators additional time to determine the best way forward to
improve settlement efficiency while avoiding potential duplicative implementation costs for
market participants in case extensive changes would be made to the existing buy-in
measures.

Given that the proposed amendment is limited in scope, as well as the urgency to have legal
certainty as to the implementation and enforcement of the CSDR buy-in regime, ESMA has
not conducted an open public consultation in accordance with the third subparagraph of
Article 10(1) of Regulation (EU) No 1095/2010 (‘ESMA Regulation’)5. However, ESMA has
consulted the Securities and Markets Stakeholder Group (‘SMSG’) and has conducted a
high-level analysis of the costs and benefits. ESMA has also cooperated closely with the
members of the European System of Central Banks (‘ESCB’)...

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