A-Team Insight Blogs

AFME Publishes Recommendations to Improve CSDR Settlement Rates

The Association for Financial Markets in Europe (AFME) has published recommendations for partial settlement in view of the impending Central Securities Depository Regulation (CSDR), currently due to come into force in September this year but widely expected to be delayed until February 2021.

The recommendations aim to encourage greater and more harmonised use of partial settlement across the industry as a way of improving settlement rates, and are designed to support the rigorous new CSDR framework, which will introduce penalties for trades that fail to settle – with the goal of lessening the negative impact to firms.

“The increased adoption of partial settlement is one example of how the industry can improve settlement efficiency,” notes Stephen Burton, Managing Director, Post Trade at AFME. “Particularly at a time when the mandatory buy-in regime under CSDR is due to be implemented later this year, improving settlement rates will help to mitigate the possible negative impacts, including reduced liquidity and greater volatility, when investing in European securities.”

The market practice document is aimed at all market participants including buy-side clients, brokers and service providers such as intermediaries, central counterparties, custodians, banks and local agents. They cover three key areas including partial hold and release, auto-partial settlement, and manual partials.

For partial hold and release, AFME recommends that intermediaries provide client support including automated communication and messaging, along with options to opt in or out. For auto-partial settlement, the association highlights that all trading parties and market participants must agree to use, with intermediaries again providing support using ISO/SMPG standards – and that all receipt instructions should be auto-partial enabled, regardless of account structure. The association stresses that manual partials should be the least favoured option, due to inefficiencies around cancelling, resending and re-matching settlement instructions.

To learn more about the impact of CSDR, check back in next week for an in-depth interview with Broadridge’s Paul Clark on just why this upcoming regulation is so important.

Related content

WEBINAR

Recorded Webinar: Managing LIBOR transition

The clock is ticking on the decommissioning of LIBOR towards the end of this year, leaving financial institutions with little time to identify where LIBOR is embedded in their processes, assess alternative benchmarks and reference rates, and ensure a smooth transition. Some will be ahead of others, but the challenges are significant for all as...

BLOG

ACA Group Adds Marketing Materials Checks in ComplianceAlpha Release

With an eye on the SEC’s new Market Rule, GRC fintech ACA Group has added a series of features addressing the verity of regulated firms’ marketing materials in a new release to its ComplianceAlpha compliance platform. This is augmented in the release by a new eLearning Solution aimed at helping firms train staff in compliance-related...

EVENT

RegTech Summit Virtual

The RegTech Summit Virtual is a global online event that brings together an exceptional guest speaker line up of RegTech practitioners, regulators, start-ups and solution providers to collaborate and discuss innovative and effective approaches for building a better regulatory environment.

GUIDE

ESG Handbook 2021

A-Team Group’s ESG Handbook 2021 is a ‘must read’ for all capital markets participants, data vendors and solutions providers involved in Environmental, Social and Governance (ESG) investing and product development. It includes extensive coverage of all elements of ESG, from an initial definition and why ESG is important, to existing and emerging regulations, data challenges...