Industry attacks Esma buy-in proposals

摘要

Banks and asset managers have attacked European regulator plans for new procedures to settle failed transactions, claiming that the three proposals are unworkable and will cost billions of euros to implement. European Securities and Markets Authority draft rules published under Central Securities Depository Regulations on June 30 set out three potential models for so-called buy-ins, under which the injured party in a failed securities or repo transaction can require its counterparty to make good by sourcing the security on the open market. The right to buy in is already a common contract term, but under Esma's proposals it will be mandatory; a change that will have a dramatic impact on prices and liquidity, market participants say. Under the rules, securities depositories must implement a penalty mechanism for fails, required to be heavy enough to serve as an effective deterrent.