Central Securities Depositories Regulation (CSDR) – what you need to know
- The Central Securities Depositories Regulation (CSDR) is a European Union regulation set up to improve the safety and efficiency of securities settlement and settlement infrastructures within the European Economic Area (EEA).
- The scope of CSDR is extraterritorial in nature: the regulation applies to transactions in instruments intended to settle in any of the EEA Central Securities Depositories (CSDs), i.e. authorised entities that operate settlement systems, such as Euroclear (Belgium), Clearstream (Luxembourg) or Monte Titoli (Italy).
- The CSDR is a phased regulation and most of its provisions have already been implemented since it was first introduced in 2014.
Settlement Discipline Regime (SDR)
Second phase of CSDR defines a Settlement Discipline Regime (SDR) and came into force on 1 February 2022. Its main objective is to incentivise timely settlements by introducing a set of measures to prevent, monitor and address settlement fails. This may include the following:
- Process and system enhancements across the EEA CSDs and market participants;
- The introduction of cash penalties against parties causing settlement fails;
The application of the third measure, mandatory buy-ins, whereby buying parties whose instruments have not been delivered for a set number of days are to be restored to the economic position as if the transaction had settled on time has been postponed until 2 November 2025.
To find out more, please read the information below and FAQs to understand the potential implications of CSDR SDR for our HSBC and Global Private Banking clients.