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CSDR settlement discipline costs and how to reduce or avoid them
Journal of Securities Operations & Custody,
12
(2),
128-134
(2020)
Abstract
The European Union’s (EU) Central Securities Depositories Regulation (CSDR) entered into force on 17th September, 2014. CSDR contains a section (Chapter III) on ‘settlement discipline’, which includes measures to improve settlement efficiency, such as cash penalties for fails and the provision for mandatory buy-ins. The CSDR settlement discipline regime (SDR) is expected to apply from September 2020 and covers any global entity who settles a security in one of the European CSDs. This could be a very impactful regulation, so industry participants need to assess their current processes to make sure that they have the best chance of settling all of their trades. There are many parts to the trade life cycle, and ensuring a robust process for each part is essential. The trade life cycle covers
• data handling and onboarding,
• trade economics matching,
• notification,
• settlement management, and
• data analytics.
This article covers each of these parts with an aim of discussing how clients could achieve a highly efficient trade settlement process.
Keywords: European Union (EU); Central Securities Depository (CSD); Central Securities Depositories Regulation (CSDR); Settlement Discipline Regime (SDR); T+2; Target 2 Securities (T2S); Legal Entity Identifier (LEI); MiFID 2
The full article is available to subscribers to the journal.
Author's Biography
Bill Meenaghan is an Executive Director within DTCC’s Institutional Trade Processing (ITP) team. In his current role, Bill leads the No Touch Workflow initiative across all of ITP’s solutions. He joined Omgeo (fully acquired by DTCC in 2013) in 2009 from State Street Global Advisers, where he worked for five years, most recently as Trade Administration Manager. In this role, Bill ran the trade support teams for equity, fixed income, foreign exchange and money markets. Before this, he was an Investment Services Manager, responsible for the cash and money market and trade support teams. Earlier, Bill worked for State Street Bank and Trust, where he managed projects including an outsourcing deal with Investec and the conversion team following the acquisition of the Deutsche Bank custody business by State Street. Bill holds Business Administration (Hons) in Accounting and Finance from Nottingham Business School.
