Introduction

Central Securities Depositories Regulation (CSDR) regulates settlement of financial instruments in the European Union, particularly cross-border settlements. It aims at harmonized settlement cycles, better settlement discipline and common requirements across central securities depositories (CSDs). It requires firms to put in place measures to mitigate settlement delays and endorse straight through processing (STP) to maintain high settlement rates.

It also sets out rules aimed at reducing settlement failure rates and improving settlement discipline. For trades that do fail, CSDR will impose daily penalties or charges as well as mandatory buy-ins.

The main objective of the regulation is to increase the safety and efficiency of securities settlement and settlement infrastructures in the EU.

Transact is enhanced to comply with CSDR and will support the following:

• STP Settlement within tolerance
• Bilateral Cancellation
• Hold & Release of Settlement instructions
• Cash Penalties
  • Late Matching Fail Penalties (LMFP)
  • Settlement Fail Penalty (SFP)

Product Configuration

Parameter records contain critical settings that the system uses for various functionalities. The SC.CSDR.PARAMETER application needs to be setup to support the CSDR functionality within Transact. The ID of the record is a valid COMPANY id.

Illustrating Model Parameters

The SC.CSDR.PARAMETER application is a company level parameter to define the tolerance amount, which is to be linked with the settlement amount, depository wise.

Based on the settlement amount, the system applies tolerance check and process the settlement if the difference between the settlement amount in the confirmation and the intended settlement is within the tolerance range.

The difference is posted to P&L or internal suspense account defined in SC.PARAMETER.

• Depository – The ID of the depository for which the tolerance check is required.
• Transaction Amount – The actual transaction amount of the trade.
• Tolerance Amount – The tolerance range to apply the tolerance check.
• Bilateral Cancellation – To denote whether bilateral cancellation is applicable for this depository.

Illustrating Model Products

Model products are not applicable for this module.