Lead time has been identified as the most common lesson learned from Central Securities Depositories Regulation (CSDR) implementation, according to a new industry report.
The ‘Navigating the CSDR Landscape’ report, conducted by Funds Europe in association with RBC Investor & Treasury Services found “lead time” to be the most popular response from buy side (24%) and sell side (23%) respondents when asked to indicate what they learned from implementing the regulation.
Operational readiness was in second place for the buy side (20%), while “risk” was the second spot for the sell side (19%). “Risk” was selected by 13% of buy side participants.
A further 15% of buy side and 17% of sell side responses indicated that lessons learned from “technology requirements” would assist with other settlement regime changes.
Dean Rook, head of middle office operations at RBC I&TS, explained that CSDR’s implementation could offer valuable lessons for other settlement regime changes, such as the move to T+1 in the US and Canada.
“It’s not surprising that lead time and operational readiness are deemed to be key lessons learned given the implementation delays,” says Rook
“Participants generally didn’t have a sufficient window to make operational changes that were required once the practical day-to-day workings of the penalty regime had been published by the CSDs.
“One of the reasons for the move from T+2 to T+1 is to reduce settlement risk. The reduction in the timeframe means that investments into technology and exception-based operating models are required to meet T+1, which ultimately reduces this risk,” Rook said.
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