Europe’s capital markets watchdog has confirmed that it has sought a delay in the implementation of its long-awaited settlement regulation.

The European Securities and Markets Authority (Esma) issued a statement confirming that it has written to the European Commission calling for a change to the mandatory buy-in part of the Central Securities Depositories Regulation (CSDR).

The original date for mandatory buy-ins was set for February 2022 but this could now be put back by two to three years.

The decision was welcomed by asset servicers. "JP Morgan very much welcomes the decision to decouple buy-ins and review the regime,” said Alex Dockx, executive director of JP Morgan Securities Services. “This is a very positive development for European financial markets.”

According to Dockx, mandatory buy-ins had to the potential to “impact market liquidity, especially in stressed circumstances” and would also “create a huge burden for investors to enforce buy-ins”.

Efama, the trade association for Europe’s asset managers, had also stated its opposition to mandatory buy-ins earlier this year and called for a delay to implementation.

However, the decision to delay the implementation of one part of the regulation but not others, such as penalties for failed trades, does create the prospect of a disjointed regulation.

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