Introduction of new mandatory buy-in regime according to EU Central Securities Depository Regulation
Regulatory background
In February 2022, harmonised standards to increase settlement discipline for securities transactions will come into force in the European Union as part of the Central Securities Depository Regulation (CSDR; Regulation (EU) 909/2014).
The new regulatory framework provides for mandatory buy-ins by a neutral buy-in agent should the securities delivery fail beyond a certain period. In the future, these mandatory buy-ins will affect all types of securities transactions, irrespective of the origin and settlement of the transaction (OTC, on-exchange/MTF, cleared, non-cleared).
Since each market participant processing securities via an EU CSD must be prepared for the situation of a buy-in, Deutsche Börse Group has decided to offer a comprehensive Buy-in Agent Service operated by the newly established company Eurex Securities Transactions Services GmbH (Eurex STS), a subsidiary of Eurex Frankfurt AG. The solution will provide a high level of standardisation and automation in order to resolve the operational burden which is associated with the new mandatory buy-in process.
Eurex STS is expected to take over the execution of buy-ins for centrally cleared transactions of Eurex Clearing AG already in summer 2021 and will also accept buy-in orders from registered customers from non-centrally cleared transactions as of the entry into force of the EU Regulation in February 2022.
Service description
To implement the Buy-in agent, Eurex STS is offering a new core IT platform. Customers of Eurex STS will be able to submit buy-in requests to the system via a GUI or an API.
Based on the buy-in requests from its customers, Eurex STS will conduct scheduled, automised auctions in order to source the securities from Network Partners and deliver the securities onward to the buyer in the original transaction. In line with CSDR, service fees charged by the Buy-in agent as well as potential price differences shall be borne by the Failing Counterparty in the original transaction.
Network Partners are customers of the Eurex STS Buy-in Agent providing liquidity during the scheduled auctions. Network Partners will have to register for this role and will be assigned dedicated user IDs for their activities in the Network Partner role.
Information for customers
Usage of the Eurex STS Buy-in Agent service will require a contractual relationship with Eurex Securities Transactions Services GmbH. Eurex STS invites all market participans to commence with the onboarding. A dedicated simulation environment is made available to clients after triggering the onboarding process. This ensures that clients have sufficient time to get familiar with the functionalities and processes before the Settlement Discipline Regime under CSDR becomes effective.
Clearstream customers who
- are interested in the new service to comply with its obligations under CSDR or
- would like to provide liquidity through a role as Network Partner
are invited to request more detailed information via
Customers who contact the project team through this email address will be registered and will receive updates on the Eurex STS Buy-in Agent Service exclusively via this channel in the future.