The European Securities and Markets Authority (ESMA) has launched a consultation on amendments to the regulatory technical standards (RTS) on settlement discipline. Conducted under the mandate of the Central Securities Depositories regulation (CSDR) refit, the amendments aim to introduce “additional measures and tools to enhance settlement efficiency”.
Given the strong link between a shorter settlement cycle and the improvement of settlement efficiency, the paper has also taken into account the potential transition to T+1 in the EU. It has considered the suggestions given in responses to ESMA’s call for evidence on the shortening of the settlement cycle.
Amendments proposed in the paper include the reduction of time frames for allocations and confirmations; the use of electronic, machine readable allocations and confirmations according to international standards; and the implementation of hold and release as well as partial settlement by all CSDs.
Although these RTS concern CSDs and their participants, ESMA emphasises that “in order to further improve settlement efficiency, all actors involved in the transaction and settlement chain need to be engaged in this exercise”. Pointing out that settlement carried out at CSD level is not always a single transaction settlement, the authority writes, “Some obligations applicable at CSD level can be fulfilled only if CSD participants, the intermediaries along the transaction and settlement chain and end clients provide the relevant information in due time.”
The deadline for submission of responses is 14 April 2025.
