CSDR Compliance: Central Securities Depositories Regulation
Regulation (EU) 909/2014 improves EU securities settlement through a settlement-discipline regime: cash penalties in force since 1 February 2022 and a mandatory buy-in currently deferred to 2 November 2025. Together with CSD authorisation rules, CSDR drives faster, safer post-trade across Europe.
What is CSDR?
The Central Securities Depositories Regulation (CSDR) establishes common standards for CSD authorisation, settlement cycles and discipline in the EU.It caps settlement at T+2, obliges CSDs to meet prudential and operational requirements, and introduces a settlement-discipline regime (SDR) of daily cash penalties for late settlement plus a mandatory buy-in for fails aged beyond a grace period (now slated for 2 Nov 2025).The forthcoming CSDR Refit will refine buy-in triggers and lighten reporting, but cash-penalty processing and internalised-settlement reporting remain live.
Key Features of CSDR
The CSDR introduces critical features aimed at enhancing the standardisation of securities settlements and infrastructures across EU:
Standardized Operational Requirements for CSDs
The Regulatory Technical Standards (RTS) are a set of guidelines developed for CSDs, which outline prudential requirements. The exact requirements can vary, but they typically include maintaining certain levels of capital, implementing risk management practices, and following specific operational procedures.
Settlement Discipline Regime to address settlement fails
CSDR introduced a Settlement Discipline Regime to penalize participants that fail to fulfill their obligations. This regime operates by implementing an ad valorem charge, which is applied to the value of any securities. The value of this charge is not fixed and ranges from one basis point to a tenth of a basis point. The amount is determined by the liquidity and type of instrument.
Measures for the Safety and Efficiency of securities settlement
The regulation provides a set of stringent requirements for CSDs to adhere to. These measures include risk management procedures, operational standards, and strict record-keeping. The regulation also mandates participant discipline to prevent settlement fails and introduces a settlement penalty mechanism.
Enhanced Regulatory Oversight and supervision of CSDs
This is achieved by fostering improved cooperation between supervisors. In scenarios where a CSD operates in more than one EU member state, the regulation ensures the establishment of a college of supervisors to collectively supervise the CSD. These changes aim to maintain high levels of investor protection and market integrity.
Implications of CSDR
CSDs, brokers and custodians must calculate cash-penalties, update SSI workflows, collect/redistribute fees and monitor fails daily. Firms should also budget system changes for the 2025 buy-in go-live and follow CSDR Refit negotiations to adjust procedures promptly.
Grand: Enhancing DORA Compliance
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How Grand Helps
Each module in Grand.io's GRC software suite is meticulously designed to ensure thorough compliance with the CSDR regulation, addressing critical aspects such as standardized operational requirements for CSDs, the settlement discipline regime, measures to enhance the safety and efficiency of securities settlement, and reinforced regulatory oversight and supervision of CSDs.
Frequently Asked Questions
EU Regulation 909/2014 harmonising CSD authorisation, T+2 settlement and a settlement-discipline regime across Europe.
EU CSDs directly; but cash-penalties and buy-in rules hit all trading parties settling in an EEA CSD, regardless of domicile.
Daily cash penalties, calculated by CSDs, on fails from day one; rates vary by asset-class liquidity.
Current EU law defers buy-ins to 2 November 2025, subject to final CSDR Refit confirmation.
