On 26 May 2026, the European Securities and Markets Authority (ESMA) published a consultation paper proposing amendments to its Guidelines on standardised procedures and messaging protocols under the Central Securities Depositories Regulation (CSDR). The document seeks stakeholder feedback on changes aimed at improving the efficiency and harmonisation of securities settlement processes across the EU, directly impacting central securities depositories (CSDs), investment firms, and market infrastructure operators.
The consultation paper, issued by ESMA's Markets and Market Infrastructures unit, outlines proposed revisions to the existing guidelines first adopted in 2018. The amendments focus on standardising messaging formats, streamlining settlement instructions, and enhancing interoperability between CSDs. ESMA invites comments from market participants, national competent authorities, and other stakeholders by 26 August 2026, a three-month consultation period.
Policy orientations and trade-offs
The proposed amendments aim to reduce settlement failures and operational risks by mandating more uniform messaging protocols, such as ISO 20022 standards, and clarifying procedures for settlement discipline. However, the changes may impose compliance costs on smaller CSDs and investment firms that need to update their IT systems and adapt to new reporting requirements. ESMA balances these costs against the expected benefits of increased market efficiency and reduced cross-border settlement friction.
Impact on stakeholders - Central securities depositories (CSDs): Will face direct compliance obligations to update messaging systems and procedures, potentially requiring significant investment. However, harmonised standards may lower long-term operational complexity and facilitate cross-border links. - Investment firms and banks: Must adapt their settlement instruction processes to align with new protocols, incurring IT and training costs. They may benefit from faster and more reliable settlement, reducing capital charges tied to failed trades. - National competent authorities (NCAs): Will need to supervise compliance with the updated guidelines, requiring additional resources and coordination with ESMA. - Market infrastructure operators (e.g., trading venues, clearing houses): Indirectly affected as settlement efficiency improvements could reduce systemic risk and enhance post-trade harmonisation.
Expected institutional follow-up Following the consultation period, ESMA will analyse responses and publish a final report with revised guidelines, expected in late 2026 or early 2027. The guidelines will then be translated into EU official languages and become applicable after a transitional period. ESMA may also coordinate with the European Commission and the European Banking Authority to ensure consistency with related regulatory initiatives under CSDR and the broader securities markets framework.
← Atlas › News › Economy & Taxation