Pirum launches CSDR tool to show impact of settlement fines

The new service enables users to determine the impact of the settlement discipline regime (SDR) on their securities finance business.

By Joe Parsons

Pirum Systems has launched a new fails report for the Central Securities and Depositories Regulation (CSDR), enabling users to determine the impact of the settlement discipline regime (SDR) on their securities finance business and the associated costs.

The software provider said it believes clients could be facing fails fines of between €80-110 million per year, with an estimated fails management cost of €120 million and CSDR fines management costs of up to €85 million.

Under the SDR, market participants will be liable to pay daily penalties of one basis point (bps) for liquid shares against each transaction that fails to settle within the T+2 timeframe.

“We’re seeing an acceleration in the rollout of our real-time post trade services to help firms maximise the benefits of increased STP rates, whilst reducing fails,” said Phil Morgan, COO at Pirum Systems.

“This provides benefits immediately with both fails and exposure management but importantly helps firms prepare for the introduction of CSDR. Firms that have taken advantage of the process automation that Pirum offer, have seen fails reduce by nearly 80% across their securities lending and repo businesses, and we are committed to rolling out further services next year to help clients improve this further.”

Pirum has also enhanced its standing settlement instructions (SSIs) enrichment services – allowing firms to enrich and reconcile SSIs at the trade level, in order to prioritise and minimise fails from mis-matching settlement instructions.

The firm said over 35 firms are now using the service to enhance their trade files with over 100,000 SSIs and gain a real-time view of SSI instruction problems across all markets, including Europe. 

“Following feedback from our CSDR working group, we are introducing a new CSDR fails report that includes estimated CSDR cost – to enable firms to see what the impact is today, in order to remediate their processes ahead of the go-live date,” added Robert Frost, head of product development and client services at Pirum Systems.