The European Securities and Markets Authority (ESMA)’s Central Securities Depositories Regulation (CSDR) on securities lending, which was implemented in February, will introduce cash penalties and mandatory buy-ins to transactions that fail beyond intended or contractual settlement dates.
Industry lobbying over unclear elements of the regulation as it relates to securities finance transactions resulted in its introduction being delayed by 12 months. Despite this delay, however, there is still uncertainty over the short-term impact of the regulation.
Paola-Maria Deantoni, public affairs officer at Societe Generale Securities Services, says that the test period prior to implementation highlighted the absence of a single data feed to pick up common elements for the calculation of penalties.
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