On 8 July 2020, the European Securities and Markets Authority updated its Q&As on the Regulation on improving securities settlement in the EU and on central securities depositories.

Part III of the Q&As dealing with settlement discipline have been updated with the addition of a new item in Q&A 7 dealing with buy-in timeframes. The new item provides an answer to the following question:

According to Articles 26, 27(1), 28, 29(1), 30 and 31(1) of the RTS on Settlement Discipline, a buy-in process should be initiated “on the business day following the expiry of the extension period”. By when, on the business day following the extension period, should the buy-in process be started by the party in charge of it?

In response the Q&A states:

Article 2(1)(14) of CSDR refers to the definition of “business day” that is provided in point (n) of Article 2 of SFD: it “shall cover both day and night-time settlement and shall encompass all events happening during the business cycle of a system”. For the purposes of conducting a buy-in process, the relevant system is the securities settlement system where the settlement fail occurred. Therefore, should the buy-in process be considered effective according to Article 22 of the RTS on Settlement Discipline, the party in charge of the buy-in should initiate the process (i.e. check if a buy-in is possible and, if it is the case, launch an auction or appoint a buy-in agent, as the case may be) at any time during the business day (as defined in the rules of the securities settlement system where the settlement fail occurred) following the expiry of the extension period, and not necessarily at the start of that business day.