Finadium’s Post

The European Securities and Markets Authority (ESMA) published its Final Report providing the assessment of the shortening of the settlement cycle in the European Union (EU). The report highlights that the increased efficiency and resilience of post-trade processes that should be prompted by a move to T+1 would facilitate achieving the objective of further promoting settlement efficiency in the EU, contributing to market integration and to the Savings and Investment Union objectives. More on #finadium: https://lnkd.in/emPXR6Ky

[📆 Capital Markets' #Chronicle] 28 September 1970: Creation of Cedel International (Clearstream), an International Central Securities Depository (ICSD) 📈 On this day, 54 years ago, Cedel International (Centrale de Livraison de Valeurs Mobilières) was founded in Luxembourg by 66 financial institutions from 11 countries, to reduce the costs and risks of settling securities in the Eurobond market.  ➡️ Following its merger with Deutsche Börse Clearing AG on 17 January 2000, it became Clearstream International S.A., a provider of settlement services for domestic and international securities transactions and the custody of securities. ➡️ Together with Euroclear (based in Belgium), Clearstream is one of the two international central securities depositories (ICSDs) located in the European Union and used for the Eurobond market, alongside domestic CSDs that were initially set up to serve their domestic market (e.g. OeKB CSD GmbH in Austria, Euroclear France S.A. in France, Clearstream Banking AG in Germany, Monte Titoli in Italy, Iberclear in Spain, etc.). ➡️ The core services provided by CSDs include (i) the initial registration of securities in a book-entry system to ensure that the number of securities created is at all times equal to the total number of securities in circulation ("notary service"), (ii) the provision and maintenance of securities accounts at the top tier level, for example to process corporate actions such as interest payments ("central maintenance service") and (iii) the operation of a securities settlement system to enable the settlement of securities transactions ("settlement service"). Central Securities Depositories (CSDs), together with Central Counterparties (CCPs), play an important role in maintaining the post-trade infrastructures that safeguard financial markets and provide market participants with confidence that securities transactions are executed in an orderly and timely manner. 📜 Due to their systemic importance for the functioning of securities markets, CSDs are regulated in the European Union in particular by Regulation (EU) No. 909/2014 of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories (the Central Securities Depositary Regulation - CSDR). #capitalmarkets #CSD #Clearstream

📣 The European Securities and Markets Authority (ESMA) published today the report on the feedback received to its #CallForEvidence on shortening the settlement cycle. Respondents highlighted:  ❗️Operational impacts of the reduction of the securities settlement cycle on the operations of market players. ‼️Wide range of both potential costs and benefits of a shortened cycle, with a support for a thorough impact assessment before deciding. Respondents provided suggestions around how and when a shorter settlement cycle could be achieved, with a strong demand for a clear signal from the regulatory front at the start of the work and clear coordination between regulators and the industry. On the international developments on settlement cycles and their impact on the Union’s capital market, stakeholders made clear the need for a proactive approach to adapt their own processes to the transition to T+1 in other jurisdictions.

"European Securities and Markets Authority (ESMA) recommends that the migration to T+1 occurs simultaneously across all relevant instruments and that it is achieved in Q4 2027. Considering the different elements assessed by ESMA, in particular the difficulties linked to the go-live of such a big project in November and December, and the challenges linked to the first Monday of October (just after the end of a quarter), ESMA recommends 11 October 2027 as the optimal date for the transition to T+1 in the EU" As ESMA outlines in the statement above, the shorting of the EU settlement cycle from T+2 to T+1 is a big project. The impact will not be limited to post-trade processes. It will require also changes in trading, position management, forecasting,... It will impact and require changes to the entire chain of processes linked to securities at every institution (financial and non-financial) which is involved or has a link with the securities industry. Even if it is now still a recommendation every institution (financial and non-financial) which is involved or has a link with the securities industry should start getting involved now and start the preparations for an in dept impact analysis...

It is also important to note that ESMA has stated that "settlement efficiency remains a top priority for ESMA", which is of course a common goal with CSDs and other industry players. The key element is to manage all issues with due proportionality.

I recently spoke with Laura Noonan at the Financial Times about the upcoming changes to the EU's derivatives clearing rules. You can read the article here: https://lnkd.in/e2essyc9 #derivatives #clearing #regulation #emir

#WallStreet braces for faster trade settlement   U.S. trading moves to a shorter settlement on Tuesday, which regulators hope will reduce risk and improve efficiency in the world's largest markets, but is expected to temporarily increase transaction failure for investors.   To comply with a rule change the U.S. Securities and Exchange Commission (SEC) adopted last February, investors in U.S. equities, corporate and municipal bonds and other securities, must settle their transactions one business day after the trade instead of two as of May 28. Canada, Mexico and Argentina, will speed up their market transactions a day earlier, on Monday. The UK is expected to follow in 2027, and Europe is considering the change.   https://lnkd.in/gA8G3Upk   #SpartanCapital #InvestmentBanking #FinanceExpertise #BusinessGrowth #OurTeamOrNoTeam #WallStreet #TradeSettlement #FinanceNews #MarketEfficiency #SEC #TradingRisk #T1Settlement #StockMarket #USMarkets #GlobalMarkets #Investment #FinancialRegulation #MarketInfrastructure #CapitalMarkets #Liquidity #SecuritiesTrading #DTCC #Banking #AssetManagement #ForeignExchange #MarketTransition #EconomicNews Spartan Capital Securities, LLC John D. Lowry  

Dr. Apostolos Thomadakis, head of research at the European Capital Markets Institute, speaks exclusively to Lauren McAughtry on the tension between the EU and its member states when it comes to #derivatives clearing – why he does not believe the revised regulation will fulfil the regulator’s ambitions, and why a centralised #supervisory authority is urgently needed to reduce risk and encourage cross-border transactions.  #markets #regulation #posttrade #trading #finreg CEPS (Centre for European Policy Studies)

What is CSDR? CSDR stands for Central Securities Depository Regulation, a European Union (EU) regulation that aims to harmonize the settlement and depositary landscape across the EU. It applies to investment banks, broker-dealers, and other financial institutions that provide securities settlement and depositary services. CSDR seeks to: 1. Improve the safety and efficiency of securities settlement and depositary operations. 2. Enhance the protection of investors and the stability of the financial system. 3. Reduce the risk of the late matching & settlement failures and improve the resolution of failed settlements. 4. Increase transparency and reporting requirements. Key aspects of CSDR include: 1. Mandatory dematerialization of securities. 2. Settlement discipline regime (including fines for Late Matching & Settlement Fails). 3. Central securities depositories (CSDs) oversight and regulation. 4. Improved investor protection and asset segregation. 5. Enhanced reporting and transparency requirements. CSDR aims to create a more robust and efficient EU settlement landscape, reducing risks and protecting investors. Investment banks and broker-dealers must comply with CSDR to ensure seamless securities settlement and depositary services within the EU.

What is CSDR? CSDR stands for Central Securities Depository Regulation, a European Union (EU) regulation that aims to harmonize the settlement and depositary landscape across the EU. It applies to investment banks, broker-dealers, and other financial institutions that provide securities settlement and depositary services. CSDR seeks to: 1. Improve the safety and efficiency of securities settlement and depositary operations. 2. Enhance the protection of investors and the stability of the financial system. 3. Reduce the risk of the late matching & settlement failures and improve the resolution of failed settlements. 4. Increase transparency and reporting requirements. Key aspects of CSDR include: 1. Mandatory dematerialization of securities. 2. Settlement discipline regime (including fines for Late Matching & Settlement Fails). 3. Central securities depositories (CSDs) oversight and regulation. 4. Improved investor protection and asset segregation. 5. Enhanced reporting and transparency requirements. CSDR aims to create a more robust and efficient EU settlement landscape, reducing risks and protecting investors. Investment banks and broker-dealers must comply with CSDR to ensure seamless securities settlement and depositary services within the EU.