CSDR 2

Level 2

Measures to prevent settlement fails

ESMA, in close cooperation with the members of the European System of Central Banks (ESCB), to develop draft regulatory technical standards to specify the measures to prevent settlement fails in order to increase settlement efficiency and in particular:

• the measures to be taken by investment firms in accordance with Article 6(2) (Measures to prevent settlement fails);
• the details of the procedures that facilitate settlement referred to in Article 6(3), which could include the shaping of transaction sizes, partial settlement of failing trades and the use of auto-lend/borrow programmes provided by certain CSDs; and
• the details of the measures to encourage and incentivise the timely settlement of transactions referred to in Article 6(4).

_

Update 13 October 2025: ESMA published its final report on amendments to the regulatory technical standards on settlement discipline. ESMA encourages market infrastructures, financial intermediaries and their clients to treat these regulatory changes as a central element of their T+1 transition strategy. 

Level 2

Measures to address settlement fails

EU Commission empowered to adopt delegated acts to supplement the CSDR by specifying parameters for calculating a deterrent and proportionate level of the cash penalties referred to in Article 7(2), third subparagraph (Measures to address settlement fails) based on the following:

• asset type;
• liquidity of the financial instrument;
• type of transaction;
• duration of the settlement fail.

EU Commission to review the parameters for calculating the level of the cash penalties at least every four years.

The delegated act adopted pursuant to Article 7(14) as applicable before 16 January 2024(Commission Delegated Regulation (EU) 2017/389) remains in force until the new delegated act under Article 7(5) takes effect.

_

Update 19 November 2024: ESMA technical advice on CSDR penalty mechanism.

Level 2

Measures to address settlement fails

EU Commission empowered to adopt delegated acts to supplement the CSDR by specifying:

• the underlying causes of settlement fails that are considered as not attributable to the participants in the transaction under
  Article 7(3)(a) (Measures to address settlement fails); and
• the circumstances in which operations are not considered as trading under Article 7(3)(b).

_

Update 26 June 2025: ESMA technical advice on the scope of CSDR settlement discipline..

Level 2

Measures to address settlement fails

ESMA, in close cooperation with the members of the European System of Central Banks (ESCB), to develop draft regulatory technical standards to specify:

• the details of the system monitoring settlement fails and the reports on settlement fails referred to in Article 7(1) (Measures to address settlement fails);
• the processes for collection and redistribution of cash penalties and any other possible proceeds from such penalties in accordance with Article 7(2);
• the conditions under which a participant is deemed to fail, consistently and systematically, to deliver the financial instruments as referred to in Article 7(7).

The delegated act adopted pursuant to Article 7(15)(a), (b) and (g) as applicable before 16 January 2024(Commission Delegated Regulation (EU) 2018/1229) remains in force until the new delegated act under Article 7(10) takes effect.

_

Update 13 October 2025: ESMA published its final report on amendments to the regulatory technical standards on settlement discipline. ESMA encourages market infrastructures, financial intermediaries and their clients to treat these regulatory changes as a central element of their T+1 transition strategy. 

Level 2

Mandatory buy-in process

Without affecting the penalty mechanism in Article 7(2) (Measures to address settlement fails) or the right to cancel a transaction bilaterally, the EU Commission may, after consulting the European Systemic Risk Board (ESRB) and considering ESMA’s cost-benefit analysis, adopt an implementing act to decide which financial instruments under Article 5(1) (Intended settlement date), or categories of transactions in those instruments, must be subject to the mandatory buy-in process in Article 7a(4) to (10) where the EU Commission finds that mandatory buy-ins are necessary, appropriate and proportionate to address settlement fails in the EU.

The EU Commission may adopt this implementing act only if both of the following conditions are met:

• the application of the penalty mechanism referred to in Article 7(2) has not resulted in a long-term sustainable reduction of settlement fails in the EU or in maintaining a reduced level of settlement fails in the EU, even after a review of the level of cash penalties in accordance with Article 7(5), second subparagraph;
• the level of settlement fails in the EU has or is likely to have a negative effect on the financial stability of the EU.

EU Commission to review its decision under the implementing act on a regular basis and at least every four years to assess whether the above conditions remain fulfilled.

_

Update 6 October 2025:

EU Commission included the implementing act in its list of non-essential Level 2 acts that it will not adopt before 1 October 2027.

Level 2

Mandatory buy-in process

EU Commission must, without undue delay after receipt of the recommendation (issued by ESMA to the EU Commission in accordance with Article 7a(13), first subparagraph) and on the basis of the reasons and evidence provided by ESMA, either suspend the mandatory buy-in mechanism referred to in Article 7a(1) to (10) for the specific categories of financial instruments by means of an implementing act, or reject the recommended suspension. 

_

Update 6 October 2025:

EU Commission included the implementing act in its list of non-essential Level 2 acts that it will not adopt before 1 October 2027.

Level 2

Mandatory buy-in process

ESMA, in close cooperation with the members of the European System of Central Banks (ESCB), to develop draft regulatory technical standards to further specify:

• the details of the operation of the appropriate buy-in process referred to in Article 7a(4) to (10) (Mandatory buy-in process), including appropriate timeframes, calibrated taking into account the asset type and liquidity of the financial instruments, for the delivery of the financial instrument following the buy-in process;
• the circumstances under which the extension period could be prolonged according to asset type and liquidity of the financial instruments, in accordance with the conditions referred to in Article 7a(4), second subparagraph, taking into account the criteria for assessing liquidity under Article 2(1)(17) (Definitions – liquid market) of Regulation (EU) No 600/2014, known as MiFIR;
• the details of the pass-on mechanism under Article 7a(6);
• other types of transactions that render the buy-in process unnecessary as referred to in Article 7a(7)(c), such as financial collateral arrangements or transactions that include close-out netting provisions;
• a methodology for the calculation of the cash compensation referred to in Article 7a(9);
• the necessary settlement information referred to in Article 7a(11), second subparagraph; and
• the details of how the participants of the CSDs, the CCPs and the trading venue members are to take into account the specificities of retail investors when executing the mandatory buy-in in accordance with Article 7a(11).

_

Update 6 October 2025:

EU Commission included the regulatory technical standards in its list of non-essential Level 2 acts that it will not adopt before 1 October 2027.

Level 2

Supervision of CSDs – review and evaluation

ESMA, in close cooperation with the members of the European System of Central Banks (ESCB), to develop draft regulatory technical standards to specify the following:

• the information that the CSD is to provide to the competent authority for the purposes of the review and evaluation referred to in Article 22(1) (Review and evaluation);
• the information that the competent authority is to supply in accordance with Article 22(7);
• the information that the competent authorities referred to in Article 22(8) are to supply one another.

ESMA, in close cooperation with the members of the ESCB, to develop draft implementing technical standards to determine standard forms, templates and procedures for the provision of information referred to in Article 22(10).

_

Update 20 February 2025: ESMA final report containing draft technical standards amending Regulation (EU) 2017/392 and Regulation (EU) 2017/394 under CSDR on review and evaluation.

Level 2

College of supervisors

ESMA to develop draft regulatory technical standards specifying the criteria under which the activities of a CSD in a host Member State could be considered to be of substantial importance for the functioning of the securities markets and the protection of investors in that host Member State.

_

Update 20 February 2025: ESMA final report containing draft regulatory technical standards on the substantial importance of CSDs.

Level 2

Relations with third countries

ESMA to develop draft regulatory technical standards to specify the information that a third-country CSD is to provide to ESMA in the notification referred to in Article 25(2a) (Third countries). Such information to be limited to what is strictly necessary, including, where applicable and available:

• the number of participants located in the EU to whom the third-country CSD provides or intends to provide the services referred to in Article 25(2a);
• the number and volume of transactions in financial instruments constituted under the law of a Member State settled during the previous year;
• the number and volume of transactions settled by EU participants during the previous year.

Relations with third countries – transitional provisions

The national rules on recognising third-country CSDs remain in effect until a CSDR decision on recognition is made or until 17 January 2027, whichever comes first.

ESMA to develop draft regulatory technical standards to specify the information that the third-country CSD is required to provide to ESMA in the notification referred to in Article 69(4a), second subparagraph (Transitional provisions). Such information to be limited to what is strictly necessary including, where applicable and available:

• the number of participants to whom the third-country CSD provides or intends to provide the services referred to in Article 69(4a), second subparagraph;
• the categories of financial instruments in respect of which the third-country CSD provides such services; and
• the total volume and value of such financial instruments.

_

Update 20 February 2025: ESMA final report containing draft regulatory technical standards on the information notified by third-country CSDs.

Level 2

CSD organisational requirements – general provisions

EBA, in close cooperation with ESMA and the members of the European System of Central Banks (ESCB), to develop draft regulatory technical standards to further specify the details of the rules and procedures referred to in Article 26(2), second subparagraph (CSD organisational requirements – general provisions).

Level 2

Deferred net settlement

ESMA, in close cooperation with EBA and the members of the European System of Central Banks (ESCB), to develop draft regulatory technical standards to specify the details of the measuring, monitoring, management and reporting of credit and liquidity risks by CSDs in relation to deferred net settlement.

_

Update 6 October 2025:

EU Commission included the regulatory technical standards in its list of non-essential Level 2 acts that it will not adopt before 1 October 2027.

Level 2

Authorisation and designation to provide banking-type ancillary services

EBA, in close cooperation with ESMA and the members of the European System of Central Banks (ESCB), to develop draft regulatory technical standards to determine the additional risk-based capital surcharge referred to in Article 54(3)(d) and (4)(d) (Authorisation and designation to provide banking-type ancillary services).

_

Update 6 October 2025:

EU Commission included the regulatory technical standards in its list of non-essential Level 2 acts that it will not adopt before 1 October 2027.

Level 2

Authorisation and designation to provide banking-type ancillary services

EBA, in close cooperation with the members of the European System of Central Banks (ESCB) and ESMA, to develop draft regulatory technical standards to determine the threshold referred to in Article 54(5) (Authorisation and designation to provide banking-type ancillary services) and accompanying appropriate risk management and prudential requirements to mitigate risks in relation to the designation of credit institutions in accordance with Article 54(2a).

_

Update 14 March 2025: EBA consultation paper on draft regulatory technical standards on the determination of the threshold referred to in Article 54(5) and accompanying appropriate risk management and prudential requirements to mitigate risks in relation to the designation of credit institutions in accordance with Article 54(2a).

Level 2

Prudential requirements applicable to credit institutions or CSDs authorised to provide banking-type ancillary services

EBA, in close cooperation with ESMA and the members of the European System of Central Banks (ESCB), to develop draft regulatory technical standards to further specify details of the frameworks and tools for the monitoring, measuring, management, reporting and public disclosure of credit and liquidity risks, including those which occur intra-day, referred to in Article 59(3) and (4) (Prudential requirements applicable to credit institutions or CSDs authorised to provide banking-type ancillary services), as well as the rules and procedures referred to in Article 59(4a). The draft regulatory technical standards must, where appropriate, be aligned to the regulatory technical standards adopted in accordance with Article 46(3) of Regulation (EU) No 648/2012, known as EMIR.