Securities Finance Industry News | Eurex STS ceases its activities from June 30

Eurex Securities Transactions Services will cease to offer services from June 30, following the removal of compulsory redemptions from the settlement discipline regime of the Central Securities Depositories Regulation (CSDR).

Deutsche Börse created Eurex STS in 2019 to meet the needs of the financial services industry for a mandatory redemption solution under CSDR and to manage settlement failures.

The original design of the settlement discipline regime (SDR) under CSDR – which was introduced through a phased migration from 2014 – proposed a system of settlement fines for parties found liable for a settlement failure , as well as mandatory redemptions to ensure the necessary safeguards were in place at the point of settlement.

Industry trade associations and market players have put pressure on the European Commission and the European Securities and Markets Authority for the removal of the mandatory redemption element under the SDR.

When the SDR was enacted in February 2022, this included the enforcement of settlement fines and the enforcement of settlement reporting obligations under CSDR, but without the mandatory purchase element. The European Commission has undertaken to review this provision at a later date, if the efficiency requirements of the regulation make it necessary.

Deutsche Börse says in a public statement that the decision of the European Commission to propose the removal of the obligation to buy back SDR for an indefinite period “renders the business proposal of Eurex STS unviable”.

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