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This is against the backdrop of CSDR, which is due to come into force in September 2020* and will introduce penalties for trades that fail to settle. Therefore, any measures to improve settlement rates will help to lessen these negative impacts to firms of CSDR.
Stephen Burton, Managing Director, Post Trade at AFME, said: “The increased adoption of partial settlement is one example of how the industry can improve settlement efficiency. Particularly, at a time when the mandatory buy-in regime under CSDR is due to be implemented later this year, improving settlement rates will help to mitigate the possible negative impacts, including reduced liquidity and greater volatility, when investing in European securities.”
The market practice document is aimed at all market participants including buy-side clients, brokers and service providers such as intermediaries, central counterparties, custodians, banks and local agents.
The set of recommendations fall under the following three areas:
Partial Hold and Release
Auto-Partial Settlement
Manual Partials