Meritsoft, a Cognizant company, and Taskize, owned by Euroclear, are joining forces to launch an end-to-end integrated Central Securities Depositories Regulation (CSDR) management solution. Firms will not only be able to monitor their trade settlement fails but also have an audit trail and fail-resolution workflow.
Through the combination of Meritsoft’s FINBOS CSDR Manager and the Taskize Connect solutions, the real time platform will be available to banks, brokers and buy-side firms to help firms better identify and prevent settlement fails.
In addition, the solution enables firms to automate a significant amount of anticipated CSDR workloads, including CSD reporting and cash compensation management.
The CSDR, which aims to improve the settlement process, has been postponed until February 2021 from this September. Two of the most contentious issues are the mandatory buy-in regime which will be initiated in the event of a transaction failing and the settlement discipline regime which introduces fines for settlement fails when securities are not delivered.
The European Central Bank’s 2019 Target2-Securities report card showed that T2S processed a daily average of 606,938 transactions worth €1.1 bn. T2S uses two settlement efficiency ratios with the MSEI: Market Settlement Efficiency Indicator seen as the better way to monitor market behaviour. Last year, the ratio was 93% for both volume and value of trades which translated into 7% of trades that could be penalised.
The alternative settlement efficiency measure or PSEI includes several system generated transactions. Its figure was 97% although the mid-point number which was two percentage points lower, is viewed as the real measure. This means that 5% of trades failed, a slightly higher number than most industry estimates.
“With the February 2021 CSDR deadline front of mind for financial houses, market participants need to be able to mitigate the potential risks and costs of upcoming penalties and buy-ins under CSDR,” says Meritsoft CEO Kerril Burke. “They must do this through efficient issue resolution while providing business managers and traders with the information required to factor CSDR implications into their decisions. We are pleased to be collaborating and innovating with Taskize to offer market participants this enhanced platform.”
John O’Hara, CEO at Taskize, adds: ““This will enable seamless flows of activity both within and between financial services firms and facilitate adherence to CSDR’s requirements. As the world of regulatory compliance continues to expand, we look forward to identifying opportunities to create value for clients with collaborators such as Meritsoft to service the wider financial services industry.”