On 13 October 2025, the European Securities and Markets Authority (ESMA) issued a Final Report on amendments to Commission Delegated Regulation (EU) 2018/1229 (the Regulatory Technical Standards (RTS) on settlement discipline) which supplements the Central Securities Depositories Regulation (CSDR).

Background

Regulation (EU) 2023/2845 (CSDR Refit) has made targeted amendments to Articles 6(5) and 7(10) of the CSDR. ESMA has also been mandated to develop RTS related to settlement discipline measures and tools aimed at improving settlement efficiency.

On 13 February 2025, ESMA issued a consultation paper on amendments to the RTS on settlement discipline. The consultation closed on 14 April 2025.

Final Report

Section 3 of the Final Report sets out ESMA’s proposed amendments to the RTS on settlement discipline.

ESMA:

  • Introduces a requirement for investment firms to ensure that professional clients submit allocation and confirmation details by 23:00 CET on the trade date, aligning operational timelines with settlement cycles (section 3.1).
  • Mandates the use of electronic standardised communication methods in a standardised, electronic format, structured so that software applications can easily identify and extract specific data for the exchange of allocations and confirmations, with exceptions only allowed in the event of documented disruptions (section 3.2).
  • Establishes the compulsory use of international open communication standards and procedures (section 3.3).
  • Assigns the responsibility to investment firms to require their professional clients to provide all reference data necessary to settle a trade in standardised, electronic, machine-readable formats and to keep that information updated sufficiently in advance to ensure timely settlement of transactions (section 3.4).
  • Addresses the mandatory fields of allocations, further aligning them with the matching fields of settlement instructions (SIs) and introducing a mandatory field to indicate the place of settlement (sections 3.5 and 3.6).
  • Introduces the requirement to identify, where applicable, buy-sell back or sell-buy back transactions. This is due to the expected exemption of securities financing transactions from Article 5(2) of CSDR (section 3.7).
  • Sets the obligation to submit settlement instructions to the securities settlement system as soon as possible, with an ultimate deadline of 23:59 CET on trade date (section 3.8).
  • Repeals Article 12 of the RTS on settlement discipline, making auto-partial settlement and hold and release mandatory functionalities for all central securities depositories (CSDs) (section 3.9).
  • Regulates the provision of automatic partial settlement, which should be the default setting unless one of the participants opts out (section 3.10).
  • Requires CSDs to facilitate access to automated intra-day credit via auto-collateralisation, unless they hold a banking license and provide such services directly (section 3.11).
  • Requires CSDs to provide real-time gross settlement (RTGS) and/or at least three daily batch settlement services (section 3.12).
  • Replaces the requirement for CSDs to report top failing participants in absolute terms by covering the systemically important participants (section 3.13).
  • Clarifies that CSD participants should provide information to CSDs on the reasons for settlement fails, which CSDs can use for monitoring and reporting purposes (section 3.14).
  • Introduces new disclosure rules for the publication of settlement fails data by CSDs by financial instrument type and the requirement to include the main reasons for settlement fails and proposed measures to address them, aiming to improve market transparency (section 3.15).
  • Requires disaggregation of settlement fails data based on the place of trading, enabling more granular monitoring and reporting to regulators (section 3.16).
  • Amends Field 41 of Annex I to require reporting on the average duration of settlement fails, weighted by value and disaggregated by instrument type, to support improved monitoring and efficiency (section 3.17).
  • Specifies that the requirement for CSDs to submit annual reports on settlement fails should be removed, given that the information is already covered in the monthly reports that CSDs have to submit (section 3.18).

Phased approach

In section 4 ESMA proposes a phased implementation of its amendments to the RTS on settlement discipline. This is intended to help reduce the burden on market participants and financial market infrastructures.

In particular, ESMA believes that more time should be allocated for the application of several requirements that involve IT developments, such as CSDs’ functionalities aimed at enhancing settlement efficiency. ESMA proposes that these requirements shall apply as of 11 October 2027, the date of the move to T+1.

At the same time, ESMA proposes that provisions introducing shorter timeframes for pre-settlement processes that support the transition to a T+1 settlement cycle should apply as of 7 December 2026. This is to give market participants sufficient time for testing, in advance of the move to T+1.

As for other amendments, such as those related to the reporting and disclosure of settlement fails data by CSDs, ESMA proposes that these should enter into force a few months ahead of the move to T+1, given the proposed amendments to CSDR in the context of the move to T+1.

ESMA shall, upon request from the European Commission (Commission), report on settlement efficiency by providing adequate information on settlement fails both before and after the transition to T+1. ESMA proposes that these requirements shall apply as of 1 July 2027.

Next steps

The draft RTS have been submitted to the Commission, which has three months to decide on their adoption.