There are two European developments we wanted to bring to your attention, somewhat confusingly referred to as SDR (Settlement Discipline Regime) and SRD II (Shareholder Right Directive).

SDR concerns the European Union’s (EU) Central Securities Depositories Regulation (CSDR). The common requirements apply to central security depositories that operate across the EU. SDR introduces a number of measures to prevent trade settlement fails by ensuring that all transaction details are provided to facilitate settlement and incentivises timely settlement by cash penalty fines. Canadian firms trading securities that ultimately settle at a CSD domiciled in the EU may be subject to these rules and, consequently, also potentially the fines.

SRD is a directive that concerns the EU’s requirements related to transparency and corporate governance. Provisions include those relating to the remuneration of directors, identification of shareholders (for engagement purposes), facilitation of exercising shareholder rights, and the transmission of information. Some of these provisions may apply to particular parties that transact with securities that are in-scope (e.g. traded on a European exchange).

February 28, 2022