News 03/12/24

ESMA Proposes Transition to T+1 Settlement by October 2027

The European Securities and Markets Authority (ESMA) has published its report on the assessment of shortening the settlement cycle in the European Union (EU). The report recommends transitioning to a T+1 settlement cycle by 11 October 2027. This move aims to enhance the efficiency and resilience of post-trade processes, contributing to market integration and the objectives of the Savings and Investment Union.

Important benefits for EU capital markets

The proposed shift to a T+1 settlement cycle aims to enhance the efficiency and resilience of post-trade processes. This change is expected to reduce risks, save margins, and lower costs associated with misalignment with other major jurisdictions globally.

Challenges and next steps

The transition will, among other things, require amendments to the Central Securities Depositories Regulation (CSDR) and the settlement discipline framework. Harmonisation, standardisation, and modernisation efforts will be necessary across the financial system. ESMA will continue its regulatory work on settlement efficiency and T+1 governance in collaboration with the European Commission (EC) and the European Central Bank (ECB).