ESMA issues final report on amending settlement discipline RTS under CSDR

The European Securities and Markets Authority (ESMA) has published a final report setting out its proposed amendments to the regulatory technical standards (RTS) on settlement discipline (Commission Delegated Regulation (EU) 2018/1229) which supplements the Central Securities Depositories Regulation (Regulation (EU) No 909/2014) (CSDR). The final draft RTS aim to improve settlement efficiency across the EU and support the transition to a T+1 settlement cycle by 11 October 2027. Key proposals include: (i) same-day, trade date, timing for trade allocations and settlement instructions, whereby investment firms must ensure professional clients submit allocation and confirmation details by 23:00 CET on the trade date; (ii) machine-readable formats, where allocations and confirmations must be exchanged using standardised, electronic formats that software can easily process; (iii) mandatory implementation of functionalities, including hold and release, auto-partial settlement and auto-collateralisation; (iv) updated provisions for the monitoring and reporting of settlement fails; and (v) a phased-in implementation timeline to begin in December 2026 and conclude by 11 October 2027 to ensure a smooth transition to the new regime. The final draft RTS have been submitted to the European Commission, which has three months to decide whether to adopt them.

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