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CSDR mandatory buy-ins and the treatment of SFTs
ICMA publishes CSDR Mandatory Buy-in Impact Study

The inclusion of a mandatory buy-in regime in CSD Regulation has been highly contentious, and many market participants question whether it can improve settlement efficiency. The ICMA study illustrates that if, or when, mandatory buy-in regulation is implemented (scheduled for early 2016), liquidity across secondary European bond and financing markets will reduce significantly, while bid-offer spreads will widen dramatically. The results suggest that even the most liquid sovereign bonds will see bid-offer spreads double, while secondary markets in less liquid corporate bonds may effectively close. The survey further suggests that for many less liquid bonds, including sovereign and public issues, market-makers will retrench from providing liquidity altogether.

The study also highlights the potential costs of these impacts, that will be borne by investors and issuers (public and private), and so constitute a cost to the real economy.

Click here to view the study.

Published February 2015




The regulation on central securities depositories and securities settlement (otherwise known as CSDR) establishes a framework designed to enhance settlement discipline (Article 7), including the provision for penalties for settlement fails and a mechanism for executing mandatory buy-ins against failing transactions in financial securities. The text provides that buy-ins should be initiated in the event of a transaction failing for 4 business days (the ‘extension period’), with the scope for this to be increased up to 7 business days ‘where a shorter extension period would affect the smooth and orderly functioning of the financial markets concerned’.

This briefing note covers existing remedies for failing SFTs; SFTs and secondary market liquidity; collateral fluidity; CSDR mandatory buy-ins and SFTs; and the ICMA ERC* position on mandatory buy-ins and SFTs.

Click here to view the briefing note.

Published September 2014


*On 4 December 2015, the name of the European Repo Council (ERC) was changed to the European Repo and Collateral Council (ERCC).