CSDs facing ‘double wave’ of regulations

While dealing with CSDR, firms are also set to face additional regulatory pressure from UCITS V.
By Paul Walsh

Central Securities Depositaries (CSDs) could face additional regulatory impact from rules such as UCITS V, according to Clearstream.

Speaking at the NeMa event in Dubrovnik, Atnaud Delestienne, the ‎executive vice president, head of core product management at Clearstream, spoke of several regulations may impact the space simultaneously. 

“We are systematically hit by a double wave of regulation of market infrastructures,” said Delestienne, adding that regulations will hit them on the collateral management side such as security finance transaction (SFT) regulations.

“There will also be extra challenges from other regulations including UCITS V which are not necessarily focused on CSD’s but could hit us on the hook,” he added

“It takes a lot of our time and expertise to contribute to a resolution to the problems that the industry faces on the hack of this.”

The Central Securities Depositaries Regulation (CSDR) is set to hit CSDRs with rules around the treatment of failed trades with other legislation around incentives, penalties and buy-in rules. 

European regulators are proposing a phase-in period and are still in a consultation phase over some rules which will come as a relief to CSDs which are being required to build extensive new reporting capabilities on the value and volume of failed trades.

Delestienne also detailed how participants could be affected by the regulatory impact on CSDs.

“There will be impact for participants so we need to work out the best possible solutions so changes should be expected,” he added.

“In order to reap the benefits that regulation is supposed to bring to the market there will be some adaptations in terms of settlements including discipline and functionality but there remains uncertainty between how the market and regulations are orchestrated.”