Deutsche Börse Group’s buy-in agent, Eurex Securities Transactions Services GmbH (Eurex STS), announced on Monday its decision to wind down its services, effective from 30 June 2022.
The drastic move came in response to the 'Refit' draft of the Central Securities Depository Regulation (CSDR) published last week by the European Commission. It primarily proposed the removal of mandatory buy-ins for not settled securities deliveries.
CSDR regulations oblige the buyer in a securities transaction to initiate a buy-in process against the seller if the settlement of a transaction fails after a certain period.
The buy-in agents act as a third-party, enabling market participants to comply with the new regulation , thus increasing the efficiency of securities settlements.
“Since its initial proposal in 2012, the CSDR and its Settlement Discipline Regime (SDR) provided for cash penalties in case a transaction fails to settle and a mandatory buy-in procedure as a final backstop. Originally planned for September 2020 and postponed several times, the SDR finally came into force in February 2022, albeit without the mandatory buy-in component,” the announcement stated.
“The decision by the European Commission to propose the removal of the buy-in obligation from the SDR for an indefinite time renders the business proposition of Eurex STS unviable.”
Offering Crucial Services
Eurex STS was founded by Deutsche Börse in 2019. Its purpose was to support the financial industry and the regulatory agenda with mandatory buy-in solutions and to address settlement failures, which are higher in the European Union compared to other jurisdictions.
Eurex STS obtained a banking license from the German Federal Financial Supervision Authority (BaFin) in early 2020, Finance Magnates then reported. It was termed a key milestone for the company.
