European funds association Efama has called on the European Commission to change the implementation date for reforms of the securities settlement process.
The Commission’s Settlement Discipline Regime (SDR) is intended to make the post-trade environment in Europe more efficient by harmonising rules and processes. However, the regulation’s progress has been hampered by postponements.
The Central Securities Depositories Regulation (CSDR), the third phase of the EU’s settlement discipline regime initiative, had already been delayed until February 2022.
That was prompted by the UK’s announcement in June 2020 that it would not implement the EU’s changes and would carry on applying the current “industry-led” settlement framework.
Efama’s call for a delay follows the EC’s announcement of a review into the SDR. While the association welcomes the review, it is also seeking more clarity around the implementation schedule. One area of concern is the use of mandatory buy-ins (MBIs) by neutral agents in the event of a securities delivery failure beyond a certain point.
Buy-side firms, such as fund managers, will have to appoint buy-in agents and other third parties in order to meet the expanded requirements of the SDR. However, firms will not know what their requirement are until the review is completed, argued Efama.
“We are faced with the major burden of implementing requirements under the MBI regime as of February 2022 knowing these are likely to change as a result of the impact assessment that the EC is conducting following the conclusions of their report,” stated Susan Yavari, regulatory affairs adviser at Efama.
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