Deutsche Bank has released a toolkit to help clients prepare for the Settlement Discipline Regime (SDR), an element of the Central Securities Depositary Regulation (CSDR), which comes into force on 14 September 2020.

SDR effectively binds together trade and post-trade, seeking to improve the safety and efficiency of securities settlement by ensuring that buyers and sellers receive their securities and money on time and without risk. To achieve this, the regulation provides a set of measures to prevent and address settlement failures: cash penalties, mandatory buy-ins and monitoring and reporting measures to be taken by the CSDs.

“The market should treat these as a ‘call to action’ to be operationally more efficient,” says James Cox, Head of Securities Services, EMEA, Deutsche Bank. “From timely and accurate trade bookings through to allocation, confirmation, settlement and inventory management - front, middle and back offices are impacted. Given that an institution may be performing many different roles - from trading to settlement - everyone needs to understand their obligations and start to take action.”

Deutsche Bank’s toolkit seeks to help on this journey by outlining the impact and obligations on market participants. Operational, trading and risk processes will need to be reviewed and enhanced, with a number of actions required over the course of the settlement lifecycle.

Cox adds: “Ultimately, the custodian will play the role of a valuable information conduit sitting between the CSDs, their clients and their trading parties. In this vein, Deutsche Bank is exploring how real-time data and settlement analytics can provide clients with a risk view of their settlement horizon.”

These dashboards will provide performance-related insights such as where and why trades are failing, suggesting remedial action that can be taken.

Deutsche Bank Securities Services has adopted an innovative approach to technology with rapid prototyping and client co-development over the last two years which includes Sesil, for intraday liquidity management, and the chatbot Debbie for settlement statuses.