Eurex Securities Transactions Services will cease to offer services from 30 June, following the removal of mandatory buy-ins from the settlement discipline regime of the Central Securities Depositories Regulation (CSDR).
Deutsche Börse established Eurex STS in 2019 to meet the needs of the financial services industry for a solution for mandatory buy-ins under CSDR and to manage failed settlements.
The original design of the settlement discipline regime (SDR) under CSDR – which has been introduced through a phased migration from 2014 – proposed a system of settlement fines for parties deemed to be responsible for a settlement failure, along with mandatory buy-ins to ensure that necessary securities were in place at point of settlement.
Industry trade associations and market participants have lobbied the European Commission and the European Securities and Markets Authority for the mandatory buy-in element under the SDR to be removed.
When the SDR was enacted in February 2022, this included application of settlement fines and the enforcement of settlement reporting obligations under CSDR, but without the mandatory buy-in element. The European Commission made a commitment to revisit this provision at a later date, should settlement efficiency requirements make this necessary.
Deutsche Börse says in a public statement that the decision of the European Commission to propose the removal of the buy-in obligation from SDR for an indefinite period “renders the business proposition of Eurex STS unviable”.
