On April 14, AFG responded to ESMA’s consultation on settlement efficiency under CSDR. AFG supports ESMA’s objectives, particularly the strengthening of automation, which is essential in view of the transition to a one-day settlement (T+1). This involves improving deadlines and the exchange of information related to allocations and confirmations, as well as the use of electronic formats and international standards.
However, the Association emphasizes the importance of a proportionate approach that takes into account the capabilities of smaller entities. In this regard, for the majority of the proposed measures, we do not see a need for regulatory action. They can be encouraged through market best practices and harmonization at European level: CSD and custodian cut-off times, the use of real-time gross settlement, continuous data transmission, consistent use of the PSET field (settlement place), and the adoption of a standardized format for settlement instruction exchange (SSI). However, certain tools aimed at facilitating securities settlement, such as automatic partial settlement, should be made mandatory and available in all CSDs.
Finally, AFG calls for greater transparency in the publication of settlement fails’ data in order to improve understanding on the root causes of these incidents.
