On 17 February 2020, the European Securities and Markets Authority (ESMA) updated its Q&As regarding the implementation of the Central Securities Depositories Regulation (CSDR). Additional Q&As have been added in order to clarify the implementation of the settlement discipline regime, as follows:
- the costs of the penalty mechanism that are charged to participants by a central security depository (CSD) should not be allocated on the basis of the number or value of penalties applied to participants;
- with respect to the settlement instructions sent by central counterparties (CCPs):
- such instructions can stem from the netting of transactions with various trade dates, subject to the CCP being able to retrieve the original trade dates;
- such instructions can stem from the netting of various types of transactions, subject to the CCP being able to retrieve the original transaction type;
- there is no obligation under CSDR for CSDs to provide for a field to be populated with the “place of trading” of the transactions, but a CSD can provide such a field for it to be populated;
- such instructions can stem from the netting of transactions traded on various trading places, subject to the CCP being able to retrieve the original trading places of each netted transaction and to the trading place indicated in the instruction being the trading place of at least one of the netted transactions. It is also clarified that to benefit from the penalty rate applicable to SME growth market transactions, such transactions should not be netted with others;
- a CSD’s responsibility in respect of collection of information for the purpose of monitoring settlement fails is limited to the information included by the participant in the settlement instruction; and
- in respect of the buy-in process, the length of the extension period should be determined based on the liquidity classification of the relevant financial instrument as of the intended settlement date of the transaction.
