Central Securities Depositories Regulation (CSDR) – regulation memo

CSDR aims to improve securities settlement in the European Union.

Our experts explore what is next for CSDR post-implementation, the settlement discipline regime and the future of mandatory buy-ins.

The Central Securities Depositories Regulation (CSDR) applies to European Central Securities Depositories (CSDs), their participants and to securities settlement systems in the European Union (EU).

About CSDR

What is the objective of CSDR?

The objective of CSDR is to introduce a European regime governing various issues related to Central Securities Depositories (CSDs), including:

  • Rules on the authorisation, supervision and passporting of CSDs as well as their minimum organisational requirements
  • Conditions under which CSDs may provide banking services
  • Minimal harmonised rules governing securities settlement and settlement discipline
  • Internalised settlement


CSDR was published in the Official Journal in August 2014. In March 2017, the European Commission published Regulatory Standards on:

  1. authorisation and supervision of CSDs;
  2. prudential requirements for CSDs;
  3. reporting of internalised settlement; and
  4. cash penalties.

The authorisation of CSDs in Q1-Q2 2018 was a major step in the effective implementation of CSDR.

Scope of CSDR

CSDR contains rules on dematerialisation of securities and on securities settlement systems. The Central Securities Depositories Regulation applies to:

  • CSDs, i.e. entities that operate a Securities Settlement System and accept issuance from the issuer and/or hold securities at a centralised level
  • Issuers that issue securities in EU CSDs
  • Participants to CSDs
  • Banks that offer banking services to CSDs

Industry implications of CSDR

CSDR requirements

The CSDR requirements provide detailed legislative provisions on:

  • Settlement: harmonisation of settlement cycles to T+2; dematerialisation of issuances (2020) and entry into force of level 2 legislation; harmonisation of settlement discipline rules
  • Central Securities Depositories: provisions on internal organisation including user committees, board members, minimum obligations such as reconciliation, acceptance of issuances from issuers, fair and open access to CSDs
  • Banking services: conditions under which CSDs may provide banking services or use banks
  • Intermediaries: disclosure of settlement internalisation and use of segregated accounts under certain conditions

In March 2022, the European Commission proposed a review (“Refit”) of CSDR covering passporting rules, supervisory convergence, a review of the rules governing bank-type ancillary services and a revised approach to settlement discipline with the introduction of a 2-step approach to mandatory buy-ins (“MBIs”). The Refit proposal is still under discussion and is expected to be finalised in 2023.

CSDR and its Refit changes can have far-reaching consequences, namely:

  • Passporting could lead to a reduction in the number of CSDs operating in the European Union.
  • Simplification of issuance abroad and facilitated cross-border settlement (key feature of T2S and CSDR Refit) as issuers can issue securities in any EU CSD
  • The review of the mandatory buy-ins regime could influence market liquidity positively, following ESMA’s proposal to suspend mandatory buy-ins for a 3-year period
  • Improvement of the penalty mechanism for settlement fails, which had a difficult start
  • Settlement internalisers, i.e. any institution which executes transfer orders on behalf of clients or on its own account other than through a securities settlement system, have to report (since July 2019) to the national competent authority of their place of establishment, on a quarterly basis, the aggregated volume and value of all securities transactions which they settle outside securities settlement systems

Securities Services’ view

We believe that CSDR is an important step forward to build safer and more integrated post-trade infrastructures as well as increase efficiency of securities settlement. CSDR is a crucial element of T2S’ success.

While we support the newly defined settlement discipline framework for penalties as it aims to reduce settlement fails without jeopardising market liquidity, we believe settlement discipline rules require strong adaptation from all market participants. We actively participate in ensuring effective implementation of this framework and its review under CSDR Refit and engage closely with clients to support them.

Key dates of CSDR

August 2014 – Publication of CSDR in the Official Journal

17 September 2014 – CSDR entered into force

March 2017 – Publication of level 2 measures (excluding settlement discipline) in the Official Journal

September 2017 – Deadline for CSDs to apply for re-authorisation

May 2018 – Publication of the European Commission’s delegated acts on settlement discipline

March 2019 – Entry into force of level 2 legislation on the calculation of cash penalties and internalised settlement

September 2019 – Start of the revision process of level 1 legislation

December 2020 – European Commission’s consultation on CSDR review

June 2021 – European Commission’s report on CSDR published

November 2021 – CSDR Refit calendar update with mandatory-buy ins (MBIs) deferral agreement (decoupling of penalties and MBIs)

1 February 2022 – Entry into force of settlement discipline rules without mandatory buy-ins

March 2022 – CSDR Refit initiative published by the European Commission

2023 – Expected timing for the publication of the CSDR Refit proposal in the official Journal