EU CSDR Refit Regulation Mandates T+1 Settlement Cycle by 2027

• The European Commission launched a review of CSDR in 2020, leading to the adoption of Regulation (EU) 2023/2845.
• Regulation (EU) 2023/2845 modified several key aspects of CSDR, including settlement discipline regime and third-country CSD reporting requirements.
• The regulation mandated the transition to a T+1 settlement cycle by October 11, 2027.

The main objective of CSDR is to increase the safety and efficiency of securities settlement and settlement infrastructures (CSDs) in the EU.

The European Commission launched a review of the Central Securities Depositories Regulation (CSDR) in 2020. This review aimed to assess the effectiveness of CSDR and identify areas for improvement. In May 2021, the European Securities and Markets Authority (ESMA) presented proposals for the review to the European Commission. The resulting legislative proposal was published on March 16, 2022, which led to the adoption of Regulation (EU) 2023/2845 (CSDR Refit). This regulation modified several key aspects of CSDR, including the settlement discipline regime and third-country CSD reporting requirements. Additionally, the regulation mandated the transition to a T+1 settlement cycle by October 11, 2027, with corresponding legislative amendments published in Regulation (EU) 2025/2075.

The Central Securities Depositories Regulation (CSDR) was first introduced on September 17, 2014. The regulation aimed to harmonize certain aspects of the settlement cycle and settlement discipline across the European Union. CSDR plays a crucial role in post-trade harmonization efforts in Europe by enhancing the legal and operational conditions for cross-border settlement. The main objective of CSDR is to increase the safety and efficiency of securities settlement and settlement infrastructures (CSDs) in the EU. ESMA has been actively involved in developing Level 2 measures and supervisory convergence measures related to CSDR, providing information to the market under the Settlement Finality Directive, and coordinating authorities involved in the supervision of CSDs using Target2-Securities.

The changes introduced by Regulation (EU) 2023/2845 have significant implications for lawyers and compliance officers. They must review their current practices to ensure compliance with the new rules, particularly regarding settlement discipline regime and third-country CSD reporting requirements. The transition to a T+1 settlement cycle by October 11, 2027, also requires careful planning and implementation. Lawyers and compliance officers should be aware of these changes to avoid any potential non-compliance issues and ensure a smooth transition to the new regulatory framework.

Lawyers and compliance officers should be aware of the changes introduced by Regulation (EU) 2023/2845, which modified the settlement discipline regime and third-country CSD reporting requirements under CSDR. They should review their current practices to ensure compliance with these new rules.

Source: Original reporting via European Commission webpage on Central Securities Depositories