Published at the start of Q3, AFME’s guidance paper CSDR Settlement Discipline Penalties – Market Practice for Bilateral Claims looked at one of the many issues that financial organizations need to address under the new rules. With CSDR implementation delayed until early 2022, that extra time will prove a boon to those firms preparing for its impact.
Anticipating that a CSD may not be able to establish with certainty the party at fault in a failed settlement, firms will not only need to track their fails and identify accountability, but the two parties may be obliged to bilaterally agree a cash payment to reimburse the resulting penalties.
Collating your view of the data with that of the CSD for determination of fault (which could change) is the just the start of this process. Managing the necessary exception and authorization workflows and client communications, via various preferred direct and indirect mediums, becomes a long-winded process. Dispute resolution may take time, and repeated reminders to pay or recover fees will further lengthen the process and increase your costs.
Add to this general ledger integration for financial accruals and payments automation, and it’s clear that solving these issues is no quick fix.
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