Deutsche Bank gears securities industry up for new settlement regime with updated CSDR client toolkit

The bank calls on industry to dig deep, clean up aged fails and improve operational processes to ensure the new settlement regime is a success.

By Wesley Bray

Deutsche Bank has released an updated version of its CSDR settlement discipline regime toolkit, which aims to give clients information on how to prepare ahead of the Central Securities Depositories Regulation’s (CSDR) Settlement Discipline Regime (SDR) on 1 February 2022.

The bank originally published its first client toolkit in September 2019, however, the road to CSDR has been met with several challenges.

The implementation date for CSDR has changed twice, with the omission of the mandatory buy-in rules most recently confirmed on 24 November via the passage of the DLT Pilot Regime.

As the CSDR implementation date approaches, Deutsche Bank’s new toolkit looks to help clients and market participants with their final preparations.

All actors in the securities lifecycle will be impacted by the SDR, ranging from investors to central securities depositories (CSDs).

The new regulation hopes to improve the safety and efficiency of securities settlement in the European Economic Area (EEA) through the introduction of a set of measures to prevent and address failures in the settlement of securities transactions.

“Much is at stake for the securities industry if we are to collectively improve efficiency in securities trade through to post-trade and to help protect and promote the European capital markets, which will be critical to the post-Covid recovery,” said Paul Maley, global head of securities services and regional head of Corporate Bank UK and Ireland, Deutsche Bank.

Deutsche Bank said there is much at stake: The CSDR SDR is more than just a compliance exercise, it said. Reputations and businesses will also be at stake.

To ensure the regime’s success and to avoid more disciplinary outcomes such as a mandatory buy-in regime, Deutsche Bank said market participants ranging from securities trade through to post-trade, have an integral role to play.

An overhaul of market participants front-to-back operational processes, communication and escalation will have to be carried out, while gaining a wider understanding of the regulation and how it impacts business and operational processes.

In addition, the bank recommends that market participants clean up aged fails and look to optimise and embed new, improved operational processes. Static data should be reviewed by market participants, with a target of straight-through processing.

To make sure operational processes have the appropriate focus, risk oversight and management information, Deutsche Bank also recommends that key operating procedures (KOPs) and key performance indicators (KPIs) should also be reviewed.

“With so much to do, and so little time to do it, now is the time for the industry to dig deep to cross the finish line,” said Emma Johnson, director, market advocacy, securities services Europe, Deutsche Bank.

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