As part of the Central Securities Depositories Regulation (CSDR), Settlement Discipline Regime (SDR) will start on 1 February 2022. The purpose of SDR is to prevent and address settlement fails and encourage the market participants to settle transactions on their intended settlement date.
SDR introduces rules for cash penalties and buy-ins across all CSDs in the European Economic Area. The CSDs are required to collect cash penalties from the participant that caused a settlement transaction to fail and to redistribute the cash penalties to the participant suffering from the settlement fail.
Prior to the regulation coming into force, Euroclear Finland launched its Penalty Engine for a dry run period on penalties for settlement. The dry run period started on 20 September, marking an important milestone in the Finnish market’s Infinity T2S roadmap. The majority of participants take already part in the dry run period, and initial signs from the first days have shown that the system works smoothly.