As previewed, the RTS to postpone the application of the CSDR settlement discipline regime (“SDR”) until 1 February 2021 has been published in the OJ. Readers will recall that this delay was intended to give market participants some minimal extra time, to repaper documentation and allow IT systems to incorporate mandates due to be imposed after the original 1 September 2020 deadline. ESMA continues to work on the delay to the delay occasioned by the pandemic, which will push the (presumably) final deadline out to 1 February 2022. ISDA have announced that in light of the new timeline, work on the development of potential documentation amendments will pause for the time being.
The post-Brexit-transition timing of this first delay opened a loophole, allowing the UK to confirm that the SDR regime will not be included in the wholesale onshoring of all European regulations in force at the departure date. However, given the regulation’s extraterritorial reach, application in the UK will still be extensive even if indirect. The next and longer delay affords breathing space (presumably masked), but also adds SDR to the oncoming compliance car crash- too many complex projects with effectively coincident deadlines. Regulators worldwide have been consistently insistent that Libor’s date with destiny remains unchanged at end of 2021. UK-based or not, it would be a mistake to simply shelve the challenges posed by the SDR until larger and currently more urgent problems are met.Contact Us