Over the next eight months, trading firms of every description, from asset managers to corporate treasury vehicles, will need to prepare for the implementation of settlement discipline rules set to be phased in under the Central Securities Depositories Regulation ("CSDR"). From 1 February 2021, any entity that settles trades on an EU Central Securities Depository ("CSD") will fall within scope of these new rules, whether directly or indirectly (i.e. through contractual measures imposed by others in the settlement chain).

Whilst the UK has now confirmed that it will not be implementing the settlement discipline regime, the effect of this decision will be limited to trades settling through UK settlement systems. Thus, without further relief from EU regulators, the market is now on a tight timescale to put in place the documentation and operational adjustments required for compliance with the new rules, and we expect proposed documentary amendments from custodians and others to emerge in the coming weeks and months.

In order to help firms navigate this new regime and required documentary updates, we have set out in this briefing paper:

  • background and scope of application relating to the settlement discipline rules;
  • the timelines and triggers that apply to each aspect of the rules;
  • some tips on structuring a compliance plan and approaching documentary amendments; and
  • a deeper dive into issues around buy-ins and the key ways in which the mandatory buy-in regime under the CSDR will diverge from traditional buy-ins.


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