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Dear Commissioner McGuinness,
Having regard to the European Commission’s current review of Regulation (EU) No 909/2014
on improving securities settlement in the European Union and on central securities
depositories (CSDR), I am writing to you to highlight ESMA’s views on the need to provide
clarity in a timely manner to market participants in order to ensure an orderly implementation
of the CSDR settlement discipline regime.
ESMA welcomed the publication by the European Commission of its report on the CSDR
targeted review on 1st July 2021, which included high level statements on the way forward on
various topics covered in its public consultation, hinting at possible changes to the settlement
discipline regime and in particular to the mandatory buy-in regime.
ESMA is also very much looking forward to the publication of the European Commission
legislative proposal, which we understand is expected by the end of the year. However, this
timing will collide with the expected entry into force of the current CSDR settlement discipline
regime on 1st February 2022.
While ESMA understands that market participants are largely ready to implement two of the
key components of the settlement discipline regime (settlement fails reporting and cash
penalties) on the scheduled date, ESMA is aware of market participants’ serious difficulties
regarding the implementation of the buy-in regime.
In particular, on settlement fails reporting and cash penalties, although some clarifications are
still pending, there seems to be no need to delay their implementation. Furthermore, the timely
implementation of these two components will also positively contribute to improving settlement
efficiency and the transparency around it in the EU....
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