The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

New Year’s resolution: fix my trade exceptions

The year 2020 is going to be a big one in the world of failed trades.

2020-time-clock-780.jpg

What price is worth paying to reduce failed trades? According to the European Union’s central securities depositories regulation (CSDR), quite a big one.

The regulation is scheduled to implement a new mandatory buy-in regime in September 2020, and although market participants expect this to be delayed, it is unlikely to be by more than a few months.

It matters because the proposed framework is set to hurt market-making willingness and therefore liquidity, particularly in sectors that are already less liquid.

Cleared markets tend to have their own rules around buy-ins, but for non-cleared markets, instead of the current regime of voluntary, contractual buy-ins, the regulation will impose a legal duty to issue a buy-in against the failing counterparty where a trade has failed to settle within seven days.



Market participants who have not yet taken steps to address this had better get a move on


Crucially, the new rules will create asymmetric treatment of parties. Rather than a buy-in resulting in the original counterparties being restored to the economic position they would have been in had the trade succeeded, buy-ins under CSDR only allow payments to be made from a seller to a buyer, meaning that a seller is penalized when a buyer is able to source a security cheaper through a buy-in.






You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree