Despite the one-year delay to the implementation of the 结算 Discipline Regime (SDR) of the Central Securities Depositories Regulation (CSDR), 大多数公司都保持在正轨上. The delay was in response to the impact of Covid-19, providing some extra time for firms to make informed decisions about their compliance plans and put the requisite 帖子-trade processes in place. 现在, several weeks following the announcement of the regulatory relief, most firms have retained their CSDR project teams and are keeping it at the forefront of their regulatory preparation plans.
Firms that were close to deciding what platforms and service providers they would use to help improve their operational processes in readiness for SDR now have more time to evaluate and are unlikely to make final decisions before Q1 2021. There is also additional time to consider which processes firms will conduct in-house and which they will outsource to third parties and external providers.
It is likely the expanded preparatory period will result in increased focus on improving operational efficiency and workflows to improve trade affirmation rates and prevent settlement fails. SDR mandates penalties and mandatory buy-ins for failed trades and so the capability to quickly capture, assess and resolve failed trades is a critical component of compliance. This priority is supported by data from the European Central Bank’s (ECB) T2S annual report, 2019年6月出版, indicating that the trade fail rate increased in 2019 versus 2018. 尽管增长幅度不大, it means a rise in costs due to SDR’s failed trade penalty regime. 而且, market volatility generated by the emergence of Covid-19 highlighted existing shortfalls in 帖子-trade systems, as record trade volumes resulted in record trade exceptions and settlement fails occurred.
The downside of a failed trade is not limited to costs or administrative burdens – a failure can also have a detrimental impact on relationships in the market. SDR mandates that a counterparty must take responsibility for the failure, which could lead to some difficult conversations between clients and their 代理s and custodians regarding who should cover the cost of a failed trade.
The best approach for firms to prepare for SDR and avoid financial penalties and costly buy-ins is to ascertain why a trade has failed. Often, failures are the result of error-prone manual processing. 因此, preparations should focus on automating the 帖子-trade process and leveraging standardised protocols, 例如使用经过验证的ssi, automated trade confirmation and matching and leveraging additional data sources such as place of settlement and 法律 Entity Identifiers (LEIs) into their 帖子-trade process. Not only will this support compliance with a key component of CSDR, but automation facilitates wider benefits, such as increased operational efficiency and risk mitigation.
最近几个月, 存 has been working diligently to move the industry forward in preparation for the upcoming CSDR mandate. 例如, 存 now supports 11 global custodians who directly submit their exceptions data to 存’s Exception Manager platform, 整合了托管人, 代理, 存储数据. This enables buy-side clients to manage exceptions from a centralised location and subsequently reduce any delays in settlement.
The European financial services industry is no stranger to the prospect and impact of delays to regulatory mandates. 最近, the industry welcomed a three-month delay to reporting under the Securities Financing Transactions Regulation (SFTR), 四月至七月, which was also in response to the impact of Covid-19. This relief provided additional time to undertake extra testing and collaborate with the industry to ensure readiness, resulting in a smooth implementation. Market participants should follow suit and spend the next 18 months continuing to prioritise their preparations for SDR.
This article was originally published in 全球投资者集团的ISF.