On 13 February 2025, the European Securities and Markets Authority (ESMA) issued a consultation paper on amendments to the regulatory technical standards (RTS) on settlement discipline.

Background

The Central Securities Depositories Regulation (CSDR) Refit (Regulation 2023/2845) introduced certain amendments to Article 6(5) and 7(10) of the CSDR mandating ESMA to develop draft RTS in relation to settlement discipline measures and tools to improve settlement efficiency. In ESMA’s view, this requires an amendment of the existing RTS on settlement discipline, i.e. Commission Delegated Regulation (EU) 2018/1229 on Settlement Discipline (CDR 2018/1229).

Proposed changes

In the consultation paper ESMA sets out proposals to amend Commission Delegated Regulation (EU) 2018/1229, such as on timing and means for sending allocations and confirmations, on requiring all central securities depositories (CSDs) to  offer hold and release and partial settlement functionalities and to enable automated use of intraday cash credit secured with collateral, as well as on the requirements for CSDs to report top failing participants, and the information on settlement fails to be published by CSDs.

ESMA also explores additional tools to improve settlement efficiency, for which ESMA’s preliminary view is that no regulatory action is required, but on which ESMA would nevertheless like to receive stakeholders’ views. These include topics such as the CSD business day schedule, the Standard Settlement Instructions format, the Unique Transaction Identifier, Place of Settlement and Place of Safekeeping.

Next steps

The deadline for comments on the consultation is 14 April 2025.

ESMA intends to submit draft RTS to the European Commission by October 2025.