BME implements European regulation that harmonises securities settlement and aims to improve its efficiency

31 January, 2022
  • The Settlement Discipline Regime (SDR)’s penalty regime comes into force tomorrow.
  • The European regulation implies the implementation of a system for monitoring fails in the settlement of financial instruments and penalty mechanisms.

As of tomorrow, BME, through Iberclear, its central securities depository, will implement the Settlement Discipline Regime, known as SDR, linked to the European Regulation on the improvement of EU securities settlement.

The aim of this regulation is to establish uniform requirements for settlement in securities markets and to harmonise measures within the European Union to prevent and correct settlement fails.

A system will be implemented to monitor settlement fails in transactions with tradable securities.

BME already has procedures in place to facilitate the settlement of trades in these financial instruments on their settlement date. Under the new regulation, a penalty mechanism has been established for participants that cause settlement fails. Sanctions will be distributed among the participants affected by fails.

These measures are intended to facilitate and incentivise settlement on the intended settlement date.

Regulations mentioned:

  • European Regulation 909/2014 on improving securities settlement in the EU and central securities depositories (CSDR or Central Securities Depositories Regulation).
  • Delegated Regulation 2018/1229 which complements the afore mentioned regulation regarding regulatory technical standards on settlement discipline.
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